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W18733

DANONE: ADOPTING INTEGRATED REPORTING OR NOT? (A)

Ken Mark wrote this case under the supervision of Professors Diane-Laure Arjaliès, Delphine Gibassier, and Michelle Rodrigue
solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a
managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
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Copyright © 2018, Ivey Business School Foundation Version: 2018-11-26

By June 2013, almost two years had passed since the Nature team at Danone SA (Danone) had agreed to
pilot a new reporting standard, the integrated report (<IR>), 1 for the International Integrated Reporting
Council (IIRC). The IIRC promoted <IR> as the next generation of corporate reporting and had an
ambitious goal: to champion integrative thinking as the new norm for business reasoning in public and
private firms. The IIRC’s aim was for organizations to adopt <IR>, making better information available to
capital providers—their main stakeholders.

As envisioned by the IIRC, an <IR> would combine a range of data highlighting the factors that affected
an organization’s ability to create value, using a streamlined approach. The report would improve
stakeholders’ awareness of an organization’s various capitals (e.g., financial, manufactured, intellectual,
human, social/relational, and natural) and explain how these capitals were interrelated. The report was
also envisioned as a potential catalyst for higher-quality thinking and decision making, with the objective
of creating more value over time. 2

Adopting a third-party standard would be a significant change for Danone, which had pioneered in
advocating a dual social and economic goal for over 40 years. Throughout the years, it had developed and
relied upon socially responsible standards and practices. For example, Danone had elaborated and
implemented a comprehensive carbon accounting program. However, while its carbon accounting
program was robust and comprehensive, it did not adhere to the carbon accounting standards that other
companies relied on at the time. This meant that even though Danone’s internal carbon accounting
program was thought to be more comprehensive, the firm was not given external credit for its initiative.

Danone joined the IIRC’s pilot project in September 2011. Danone’s initial intention was to develop a
model integrated report, 3 under the form of a “mock report,” or a shadow report from currently available
data while continuing with its internally developed sustainability report. The integrated reporting project
had experienced setbacks at Danone: there had been unwanted external pressure to commit to the
standard, dissent over who was the report’s primary audience, and questions about the suggested metrics.
1
The International Integrated Reporting Council (IIRC) identified its integrated reporting framework using the abbreviation “<IR>.”
2
International Integrated Reporting Council, The International <IR> Framework: Integrated Reporting <IR>, accessed April 17,
2018, [Link]
3
“Integrated report” indicates Danone’s view of an integrated report, whereas <IR> designates the integrated approach put
forward by the IIRC.

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A corporate cost reduction plan, announced in December 2012, seemed to have tipped the scales in favour
of business-oriented choices. Consequently, the integrated reporting project was put on hold.

In early June 2013, Laura Palmeiro, vice-president of Finance for Danone’s Nature division, felt that she
had come to a crossroads. She needed to decide whether Danone should (1) commit to adopting <IR>; (2)
decline to continue and revert to producing the traditional report about corporate social responsibility
(CSR) that the company had been committed to for the past 20 years; or (3) refine its own version of
integrated reporting, which it had been working with since 2012. At this point, the IIRC had already
consulted stakeholders twice about draft versions of the <IR> framework, and it was close to publishing
the final framework, which was due in December 2013. Many questions were raised about integrated
reporting and whether it fit with Danone’s strategic goals. If Palmeiro wanted to stop the integrated report
project at Danone, she had to act very soon.

DANONE: A HISTORICAL FOCUS ON BOTH ECONOMIC AND SOCIAL IMPACT

In 1919, Isaac Carasso launched a yogurt brand in Barcelona, Spain, and named it after his son Daniel,
whose nickname was “Danon.” The company’s first factory in France was built in 1929. In 2012,
Danone’s sales were €21 billion,4 and 60 per cent of its total sales were outside of Europe. The company
had four key business lines. Fresh dairy products accounted for 56 per cent of sales, and water accounted
for 18 per cent of sales; the two remaining business lines—baby nutrition and medical nutrition—
accounted for 20 per cent and 6 per cent of sales, respectively. Danone’s key brands included Danone and
Activia yogourt, Milupa and Cow & Gate baby food, and Evian and Volvic bottled water.

Starting in the 1970s, Danone’s management team had outlined business values that combined economic
impact with social impact. The company’s founder had spoken about the organization’s purpose being
both social and economic—it was a dual project that would provide benefits for all stakeholders
involved—and this foundation was the source of values that Danone had adhered to for the past 40 years.
These values were based on the intuition that human development and economic performance were
complementary goals. Danone summed up its key values with the acronym HOPE, which stood for
humanism (sharing, responsibility, respect for others); openness (curiosity, agility, simplicity); proximity
(accessibility, authenticity, empathy); and enthusiasm (boldness, passion, appetite for change).5

The Danone Way (2001)

Danone’s sustainable development strategy, called the “Danone Way,” was launched in 2001 after three
decades of continuous social and environmental commitment. The goal was for all of Danone’s country
business units (CBUs) to reach sustainable development targets. A comprehensive list of CSR criteria was
created to track Danone’s progress towards its sustainability goals, which related to the environmental
effects of product lifecycles; human rights and human relations within Danone and with its suppliers and
others; and product nutritional standards and consumer health.

Each CBU administered an annual self-assessment program that covered 16 areas under five broad
themes: human rights, human relations, environment, consumers, and governance. The prerequisite was
that the company would use no child labour or forced labour. Human rights themes included equal

4
€ = EUR = euro; €0.7628 = US$1.00 in June 2013.
5
“Our Company Culture / Distinctive Values,” Danone, accessed July 27, 2018, [Link]/impact/people-
communities/[Link].

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opportunities and diversity, safety at work, and health at work. Human relations themes included social
dialogue, working hours, wage policy, and development and training. Environmental themes included
management of environmental footprint, control of environmental risks, raw materials management, and
reduction in packaging. Consumer themes included quality management, and standards on nutrition and
health. Finally, governance themes included a policy for conducting business, CSR applied to suppliers,
and a relationship with local communities.

CBUs established their own policies, which corresponded to established formalized and documented
management practices, and their own assessment criteria—figures that could be used to measure social
performance. The annual self-assessment allowed CBUs to evaluate their progress towards their 16 goals
based on a 1,000-point scale. CBUs with a score of 900 points and above were awarded five stars, the best
rank available. A score of 500 or fewer points meant that the CBU would be awarded zero stars, the
lowest possible rank. These self-assessments were reviewed and validated by the executive committee of
each CBU. Executive committees also set the objectives for the following year and devised appropriate
plans to reach the targets. Each CBU received a scorecard or dashboard containing the results of the
assessment (see Exhibit 1).

When the final self-assessed scores for a CBU were less than three stars (less than 700 points), the
Danone Way results were integrated into the bonus calculation process for the CBU’s general manager.
When the score was three stars or higher, inclusion of the Danone Way results was at the discretion of the
CBU’s executive committee.

Reporting Using the Global Reporting Initiative (2004)

Starting in 2004, Danone had been reporting externally based on guidelines from the Global Reporting
Initiative (GRI). GRI, based in Boston, was an international, independent standards organization founded
in 1997 by the Coalition for Environmentally Responsible Economies (CERES) and the Tellus Institute
with the support of the United Nations Environment Programme. It focused on key performance
indicators on themes encompassing economics; environmental, social, and human rights; society; and
product responsibility. The goal of GRI was to allow firms to standardize their reporting on key areas so
that results could be compared from period to period and between firms. By the start of 2013, over 11,000
companies were using the GRI framework for their sustainability reporting. 6 Danone had been
consistently updating its reporting based on newer versions of GRI.

The Carbon Accounting Initiative (2006)

In 2006, Danone’s management decided to further emphasize economic and social considerations in its
strategy. Franck Riboud, chairperson and chief executive officer of Danone, explained:

The mission set by Danone, to “bring health through food to as many people as possible,” has
structured our whole approach and driven the decision to integrate, even more deeply, economic
and social considerations into our company’s strategy. Four issues closely related to the mission
have been defined.

6
Ben Tuxworth, “Global Reporting Initiative: A New Framework?,” The Guardian, February 22, 2013, accessed April 17,
2018, [Link]/sustainable-business/global-reporting-initiative-updates.

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The four issues and objectives were (1) health—to contribute to public health through nutrition; (2)
nature—to drastically reduce the environmental impact of the company’s activities throughout the
lifecycle of products; (3) people—to give all employees the opportunity to develop and anticipate
changes, and to give meaning to their work; and (4) overall—to create products and economic models
accessible to population groups with low purchasing power (see Exhibit 2).

In 2006, the overarching question related to the environment was how to find a single indicator—one that
anyone could understand and relate to—to represent the company’s performance with regard to nature.
With a single indicator, the company would be able to inform and motivate internal and external
stakeholders by showing them how their collective efforts would have an impact. The indicator had to be
certifiable, auditable, measurable, and generally accepted by environmentalists and other stakeholders. In
2007, the company narrowed its search down to the measurement and reduction of carbon emissions as
the key indicator. Danone believed that the non-financial priority of the company should be to decrease its
carbon footprint.

Given the social and environmental ramifications of climate change, the focus on carbon as a single
indicator was thought to be the best way to show Danone’s progress on its social responsibility goals. The
company aimed to build a best-in-class carbon-reduction program that was integrated throughout the
value chain. It also altered its compensation structure to provide an incentive across the organization to
see the program succeed.

Danone built its carbon accounting methodology in 2007, based on the life cycle assessment approach
used by the International Organization for Standardization’s ISO 14040 and the British Standards
Institution’s publicly available specification (PAS) 2050. The objective of carbon reduction was
integrated into the compensation plans of 1,400 top executives—general managers of CBUs and group
directors. The company announced an ambitious target of a 30-per-cent reduction in carbon over four
years. It also created a new “Nature” team to replace a small corporate environmental team. The Nature
team’s objective was to oversee the environmental management strategy at Danone. Data related to the
strategy were tracked by product and centralized in a Microsoft Excel database that Danone called
Danprint. There were more than 800 total carbon footprints calculated for individual products that either
accounted for 80 per cent of the volume of products sold in a category or were the top 10 products in a
category, based on sales.

The key challenge Danone faced was that external stakeholders had no way to compare Danone’s carbon
results to those of other firms. Danone was therefore considered by most non-governmental organizations
and third parties to be a poor performer from a carbon footprint perspective. This refusal by external
stakeholders to acknowledge the legitimacy of Danone’s internally developed carbon accounting process
prompted concern inside the company. Although the Nature team believed Danone was doing a great job
of reducing the company’s carbon footprint, it eventually chose in 2010 to reconcile its carbon accounting
process with that of the greenhouse gas (GHG) Protocol Corporate Accounting and Reporting Standard
(GHG Protocol), which had earned external recognition. Palmeiro believed that Danone needed to comply
with existing standards to provide proof of the organization’s performance to its stakeholders. Danone
had kept its own internal carbon accounting system, integrated within its enterprise resource planning
system co-created with SAP SE; it also reported using the internationally recognized GHG Protocol
framework.

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INTERNATIONAL INTEGRATED REPORTING COUNCIL’S INTEGRATED REPORT (<IR>)

Danone discovered <IR> in 2010 through a survey of the market. Following the challenges linked to the
external reception of Danone’s carbon accounting initiative, Palmeiro asked her controllers to undertake a
review of available sustainability accounting initiatives. She wanted to make sure that Danone was well
aware of all the initiatives in which it could participate. One controller brought IIRC’s <IR> to her attention.
At the same time, Danone’s chief financial officer (CFO) was invited to participate in meetings hosted by
Accounting for Sustainability, an organization dedicated to encouraging corporations and the public sector
to consider environmental and societal goals as part of their planning processes. During one of these
meetings, the CFO discovered <IR>. Palmeiro and the CFO wondered if <IR> would be the next
sustainability framework. In July 2011, an academic in a key opinion leaders’ meeting at Danone reinforced
their position by stating that, considering the company’s past achievements related to its dual project, it
should consider becoming part of the <IR> pilot. Palmeiro and the CFO saw an exceptional opportunity and
agreed that Danone should be part of the <IR> pilot project starting as soon as September 2011. Integrated
reporting, after all, seemed well aligned with the dual social and economic project of the company.

The IIRC developed <IR> in August 2010 to “create a globally accepted framework for a process that
results in communications by an organization about value creation over time.” 7 <IR> was to be the latest of
several attempts to integrate social, economic, and environmental performance in reporting. Calls for such
integration had already been issued in publications such as The Corporate Report (1975), Corporate Social
Accounting (1976), and The Greening of Accountancy (1990), 8 and through the GRI’s Sustainability
Reporting Guidelines (2000) 9 and the A4S Connected Reporting Framework (2007). 10 The common theme
throughout all of these reporting standards, including <IR>, was the need to include details on economic,
social, and environmental performance in one report. The objectives for <IR> were as follows:

• Improve the quality of information available to providers of financial capital to enable a more
efficient and productive allocation of capital.
• Promote a more cohesive and efficient approach to corporate reporting that draws on different
reporting strands and communicates the full range of factors that materially affect the ability of an
organization to create value over time.
• Enhance accountability and stewardship for the broad base of capitals (financial, manufactured,
intellectual, human, social and relational, and natural) and promote an understanding of their
interdependencies.
• Support integrated thinking, decision making, and actions that focus on the creation of value over the
short, medium, and long term. 11

The <IR> framework focused on these areas:

• Organizational overview and external environment: What does the organization do and what are the
circumstances under which it operates?

7
Deloitte, “International Integrated Reporting Council (IIRC), IASPlus, accessed October 19, 2018,
[Link]/en/resources/sustainability/iirc.
8
ICAEW, The Corporate Report: A Discussion Paper (London, Accounting Standards Steering Committee, 1975); Ralph W.
Estes, Corporate Social Accounting (Hoboken, NJ: Wiley, 1976); R.H. Gray, The Greening of Accountancy: The Profession
After Pearce (n.p.: Certified Accountants Publications, 1990).
9
Global Reporting Initiative, Sustainability Reporting Guidelines, 2000, accessed May 16, 2018,
[Link]/resourcelibrary/[Link].
10
Accounting for Sustainability, “The Connected Reporting Framework,” 2007.
11
International Integrated Reporting Council, The International <IR> Framework: Integrated Reporting <IR>, op. cit., 3.

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• Governance: How does the organization’s governance structure support its ability to create value in
the short, medium, and long term?
• Business model: What is the organization’s business model?
• Risks and opportunities: What are the specific risks and opportunities that affect the organization’s
ability to create value over the short, medium, and long term, and how is the organization dealing with
them?
• Strategy and resource allocation: Where does the organization want to go and how does it intend to
get there?
• Performance: To what extent has the organization achieved its strategic objectives for the period and
what are its outcomes in terms of effects on the capitals?
• Outlook: What challenges and uncertainties is the organization likely to encounter in pursuing its
strategy, and what are the potential implications for its business model and future performance?
• Basis of presentation: How does the organization determine what matters to include in the integrated
report and how are such matters quantified or evaluated? 12

The <IR> strategy was aimed at showing how the various capitals and interdependencies were integrated
and how they would drive long-term gains in shareholder value if they were properly aligned. The
inspiration for <IR> came from an initiative led by three firms. Novozymes, a Danish biotechnology firm,
published an “Integrated Annual Report: Environmental and Social Report” in 2002;13 Natura, a Brazilian
cosmetics firm, included analysis of “economic-financial, environmental and social results” in its annual
report in 2003; 14 and Novo Nordisk, a Danish pharmaceutical firm, had been publishing a triple-bottom-
line integrated report since 2004. 15

With the objective of presenting <IR> as the preferred reporting option for organizations, the IIRC aimed
to provide information that stakeholders could use to evaluate firms’ long-range prospects. As <IR> was
being developed, the IIRC was looking for companies interested in conducting pilot projects, helping to
shape the new standard, and promoting it. Following the official announcement that Danone would join
the IIRC pilot program in September 2011, the first IIRC pilot meeting was held in October 2011 (see
Exhibits 3 and 4).

CONTRASTING PERSPECTIVES: DANONE’S INTEGRATED REPORTING AND IIRC’S INTEGRATED

REPORTING

In January 2012, Palmeiro and her Nature finance team (see Exhibit 5) were working on an integrated report
presentation to be shared with the top managers of the company. Many concepts in <IR> were yet to be
defined, and it was clear to the team that Danone would be part of the process of defining these concepts for
others. The team believed that Danone had all the data necessary to create an integrated report and could be
a leader in this form of reporting. Given that there were unanswered questions about what an integrated
report should look like, the Nature team agreed that Danone would carry out its reporting in the spirit of
integrated reporting but without any firm commitment to the <IR> framework. The team wanted to retain
the ability to do integrated reporting its own way. An external consulting firm was hired to facilitate the
development of the shadow report, and the process launched internally in May 2012.

12
International Integrated Reporting Council, The International <IR> Framework: Integrated Reporting <IR>, op. cit., 5.
13
“Novozymes,” [Link], accessed April 17, 2018, [Link]
14
Natura, Annual Report 2003, 26, accessed April 17, 2018,
[Link]
15
Novo Nordisk, Annual Report 2017, accessed April 17, 2018,
[Link]/sustainability/performance/[Link].

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The IIRC, eager to advance the process, insisted on following up with Danone with regular online
progress updates. However, as soon as the Nature team began working with the IIRC, team members
realized that there was a disconnect between the project of <IR> put forward by the IIRC and their own
vision of integrated reporting. They felt that the culture of Danone was not translated into the framework
envisioned by the IIRC.

The Nature team could not decide alone what an integrated report should look like for Danone but had to
involve the rest of the company in the process. To facilitate discussions about what integrated reporting
could mean for Danone, the Nature finance team decided to organize five workshops with internal
stakeholders. The goal of the workshops was to design the company’s first shadow report, which would
be populated with existing data and would demonstrate to internal stakeholders what an integrated report
could look like, and garner the stakeholders’ support for the development of an authentic integrated report
in future. Internal stakeholders who were consulted included top managers from the departments of
strategy, finance, CSR, investor relations, and communications, and from the health and risk management
teams (see Exhibit 6). It was clear to all participants that defining the integrated report would be an
emergent process, as Palmeiro explained: “The idea of an integrated report is new and there is no known
example of an <IR> out there. Our participation in the pilot is novel because we are watching the
development, in real time, of a new standard.”

During these workshops, top managers from all departments kept raising the same questions: How can an
integrated report be more “aspirational” for the company? How can a broader set of stakeholders be
included? What does an integrated report tell about us? People at Danone wondered whether the IIRC’s
focus actually was a triple-bottom-line standard (i.e., environmental, social, and economic performance)
since it seemed to focus on investors only. This approach was not aligned with Danone’s dual project.

In addition, the IIRC <IR> project appeared to suggest that non-financial outcomes could only be
considered positive if they somehow contributed to increasing the firm’s financial bottom line. Instead,
Danone’s managers questioned the usefulness of attempts to value the different types of capital in
monetary terms. A manager explained:

Putting a monetary value on an indicator may not be ideal when dealing with issues of employee
health and the environment. First, it is very difficult to put a value on something that is inherently
subjective. We can still include data points to allow for the data to be integrated. But we do not
need to put a dollar figure on everything.

The team delved further, wondering how managers should put a figure on the non-financial capitals—
intellectual, human, social and relational, and natural—being tracked. Danone dedicated a workshop to
quantifying these key performance indicators. While it was simple to report on the financial capitals,
which involved figures, putting a monetary value on human or intellectual capital seemed more
problematic. For example, the quest to build integrated key performance indicators included indicators
that were, by nature, “unmeasurable” and “soft,” such as improving the engagement of employees and
improving the firm’s reputation.

Members of the Danone team also felt that complying with the IIRC’s framework would impair their
ability to describe the entire range of issues as they saw them at Danone. For example, the <IR>
framework seemed to de-emphasize some key reporting points. For example, Danone team members
believed that “well-being and health” was an important capital for demonstrating Danone’s business
model, but this was absent from the IIRC framework. They suggested that the capitals should be adapted
to each company’s own strategy and value creation process.

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As workshops unfolded, the Nature team realized they needed to decide which stakeholders were most
important for Danone and which topics to favour. The team started listing the stakeholders potentially
concerned by <IR>—that is, employees; suppliers; local, regional, and national political representatives;
consumers; communities; non-governmental organizations; and shareholders. The team believed that
Danone’s version of an integrated report could be a useful tool for explaining the distinctiveness of
Danone’s dual social and economic objectives to these stakeholders.

The Nature team noted that Danone and the IIRC had differing definitions of what was deemed material.
The IIRC seemed to suggest that monetary values should be assigned to each indicator and that every
footprint reduction or social program should be viewed through the lens of shareholder value. The
premise, from the IIRC’s perspective, was that information contained in the integrated report was
included because it was relevant to understanding the firm’s financials and had an impact on the firm’s
long-term financial success. Including information to satisfy stakeholders other than shareholders was
important as long as the information was linked in some way to shareholder value.

In contrast, Palmeiro and her team concluded that they wanted Danone’s integrated report to focus on
both social and economic aspects and not to favour one stakeholder over another (see Exhibit 7).

MOVING FORWARD

While the Nature team was working on the shadow report, the IIRC began reshaping its objectives for
<IR>. In 2011, IIRC had initially wanted <IR> to replace the other reports companies were producing,
leading to one report, 16 but it changed this objective in early 2013, stating that the integrated report could
be one among other reports. Danone, instead, insisted on adhering to the initial concept of one report that
could integrate all of its existing internal work on reporting. The emerging differences between Danone’s
views of integrated reporting and its understanding of the conceptualization proposed by the IIRC led the
company to step back from active participation in the IIRC pilot by mid-2012. Danone officially refused
the IIRC’s request to showcase it as a pilot project. In the meantime, the Sustainability Accounting
Standards Board (SASB) had appeared with a new reporting standard. Although this reporting standard
was not directly linked with the IIRC, it intended to encourage U.S. companies to report on their non-
financial capital using a financial risk approach in their annual Form 10-K reports to the U.S. Securities
and Exchange Commission. Meanwhile, companies such as Kering SA (Kering) were starting to
experience triple-bottom-line accounting. In 2011, Kering published its first environmental profit and loss
statement for its brand Puma, marking a first attempt at monetizing externalities and demonstrating how
the environment could be financialized as the “natural capital” of companies.17 Members of the IIRC
showcased this as an example for other companies to follow.

Danone had been experiencing growth in social and environmental accounting and reporting standards in
organizations such as GRI, IIRC, and SASB since the year 2000 (see Exhibit 8). Keeping up with these
standards and making sure Danone was adhering to their underlying concepts was becoming difficult.
Danone was often critical of emerging or evolving standards that seemed to take the company away from its
view of how calculations should be made or how reports to external stakeholders should be drafted.

16
Robert G. Eccles and Michael P. Krzus, One Report: Integrated Reporting for a Sustainable Strategy (Hoboken, NJ: John
Wiley & Sons, 2010).
17
“Kering Sustainability Technical Advisory Group Appointments Announced,” Kering, July 2013, accessed April 17, 2018,
[Link]/en/press-releases/kering_sustainability_technical_advisory_group_appointments_announced.

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In December 2012, Danone had undertaken a reorganization to reduce costs by €200 million, and this had
resulted in the layoffs of 900 managers. At the same time, the company announced that its sales growth
would slow and profits would decline. Palmeiro wondered what effect the recent announcement would
have on her team and on the integrated report project.

Despite the uncertainty regarding the economic future of the company, efforts to produce a shadow
integrated report continued in 2013. However, Palmeiro wondered: Should Danone publish an integrated
report according to its own beliefs or according to the future <IR> framework? Should the Nature team
stop the integrated report project altogether? If Danone decided to publish an integrated report, which
metrics should it use?

The Ivey Business School gratefully acknowledges the generous support of the CPA-Ivey Centre for
Accounting & the Public Interest in the development of this case.

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EXHIBIT 1: THE DANONE WAY SCORECARD

Source: Company files.

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EXHIBIT 2: DANONE—FOUR THEMES TO BE PRIORITIZED BY DANONE

Source: Company files.

EXHIBIT 3: DANONE—TIMELINE OF EVENTS

Note: IIRC = International Integrated Reporting Council; <IR> = the IIRC’s integrated report; KPIs = key performance
indicators
Source: Created by the case writers.

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EXHIBIT 4: IIRC—TIMELINE OF EVENTS

Comments to be Comments to be Comments to be Public

Submitted Submitted Submitted Communication on
<IR> by the IIRC

Sept. 2011 Jan. 2012 June/July 2012 June 2013 Dec. 2013 2014 2015

Discussion Paper Draft Draft Publication of <IR>

Outline Framework Framework

Consultation Draft
Note: IIRC = International Integrated Reporting Council; <IR> = IIRC’s integrated report
Source: Created by the case writers.

EXHIBIT 5: DANONE—THE NATURE TEAM

Group CFO General Manager: (X) Products

Co-Sponsor of Nature Co-Sponsor of Nature

General Manager Nature

Vice-President Finance Nature Environment Director Group

Project Leader: Offset Projects,

Nature Controller (1)
Environmental Reporting

Nature Controller (2)

Note: CFO = chief financial officer

Source: Created by the case writers.

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EXHIBIT 6: DANONE—INTERNAL STAKEHOLDERS

Stakeholder Main Difficulties/Attempts Regarding Integrated Reporting

<IR> was too focused on investors; monetization of non-financial indicators
Nature Team
would not help. The team disagreed with the six capitals approach.
Investor Relations The integrated report should provide information for investors to get a
Manager comprehensive view of the company, a view of its value creation process.
The integrated report should allow for a better view of the firm’s activities
Strategy Manager
(such as manufacturing products or delivering them).
Communications The integrated report should offer information and data for all stakeholders,
Manager not just financial stakeholders.
The integrated report should be aligned with the economic concerns of the
Finance Manager
company.
<IR> did not seem to be aligned with Health’s interest in a more holistic
Health Manager
framework.
<IR> did not seem to be aligned with Nature’s goal of developing a more
Nature Manager
aspirational framework.
The integrated report should allow for some reporting of environmental cost
Environmental
savings, but it might not necessarily capture the full impact of environmental
Reporting Manager
benefits, some of which were intangible and unquantifiable.
Sustainability
<IR> did not seem to allow reporting on intangible benefits.
Reporting Manager
<IR> could potentially be beneficial for risk assessment, but it was unclear
Risk Manager
how.

Note: <IR> = the International Integrated Reporting Council’s integrated report

Source: Created by the case writers.

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Page 14 9B18B017

EXHIBIT 7: SELECTED REPORTING STANDARDS ON MATERIALITY

Definitions/Principle Scope/Boundaries Comments/Discussion

Global “Material Aspects” are those Stakeholders are broadly Materiality is the threshold at
Reporting that reflect the organization’s defined as entities or which Aspects become
Initiative significant economic, individuals that can sufficiently important that
(GRI) environmental, and social reasonably be expected to be they should be reported (i.e.,
impacts, or that substantively significantly affected by the they become “Material
influence the assessments organization’s activities or Aspects”).
and decisions of products and services, and
stakeholders. whose actions can
reasonably be expected to
affect the ability of the
organization to successfully
implement its strategies and
achieve its objectives.
“Aspects” refers to the list of
subjects covered by GRI
guidelines and cover a range
of a reporting entity’s
economic, environmental, and
societal activities and
impacts.
International A matter is material if it could Scope of reporting is towards Frame of reference for
Integrated substantively affect the providers of financial capital assessing materiality is the
Reporting organization’s ability to with focus on what is material organization’s value
Council create value in the short, to an assessment of how an creation process. This
(IIRC) medium, or long term. organization creates value process is influenced by a
over time. range of factors, including the
organization’s use of or
effects on “the capitals.” The
international <IR> framework
categorizes these capitals as
financial, manufactured,
intellectual, human, social
and relationship, and natural.
The materiality determination
process applies to both
positive and negative
matters, including risks and
opportunities and favourable
and unfavourable
performance or prospects. It
also applies to both financial
and other information.

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Page 15 9B18B017

EXHIBIT 7 (CONTNUED)

Sustainability SASB standards are SASB standards are SASB standards are
Accounting developed using the developed for 79 industries in designed to be integrated
Standards definition of “materiality” 10 sectors and can be used into the MD&A and other
Board (SASB) applied under the U.S. by all public companies. The relevant sections of
federal securities laws. standards apply to U.S. and mandatory SEC filings such
That definition, set forth non-U.S. companies that as the Form 10-K and 20-F,
by the U.S. Supreme access capital in the U.S. so that information is reliable
Court in TSC Industries v. markets and are subject to and that all investors have
Northway, 426 U.S. 438 SEC reporting requirements. access to material,
(1976), is that a fact is comparable information
material if “there is a The SASB recommends that without the need to source it
substantial likelihood” that issuers follow the same from questionnaires or
a “reasonable investor” boundaries and timing as they purchase it from commercial
would view its omission use for financial reporting to vendors.
or misstatement as the SEC, thus ensuring that
“having significantly financial fundamentals and SASB’s standards
altered the total mix of material sustainability development process is
information.” fundamentals can be evidence-based and market-
analyzed in a similar context informed in order to ensure
SASB identifies and compared year on year. the standards are focused on
sustainability topics that information that is material,
are reasonably likely to are cost-effective for
be material for a specific companies, and are decision-
industry and then useful for investors.
develops corresponding
metrics. A company’s
management must
determine whether the
relevant SASB standard
should be used to comply
with the disclosure
requirements of the
federal securities laws.

Note: <IR> = the International Integrated Reporting Council’s integrated report; SEC = the U.S. Securities and Exchange
Commission; MD&A = management discussion and analysis
Source: Excerpted from Corporate Reporting Dialogue, “Comparison of Materiality Definitions and Approaches by Corporate
Reporting Dialogue Participants,” in Statement of Common Principles of Materiality of the Corporate Reporting Dialogue, 5–
8, accessed May 16, 2018, [Link]
[Link].

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Page 16 9B18B017

EXHIBIT 8: AN OVERVIEW OF SELECTED REPORTING STANDARDS

Key Focus Corporate Citizenship Corporate Audience

Footprint
Global Objective: Corporate • Information on • Tracking of • Multi-stakeholder
Reporting interest and corporate workforce, physical inputs focus
Initiative (GRI)– incentives aligned including and outputs • Information from
1997 with the communities labour/management such as reports to be
in which the company relations, materials, relevant to both
operated health/safety training, energy, corporations and
Outcome: and gender and biodiversity, their peers and
Transparency on diversity statistics emissions, non-corporate
environmental, social, • Disclosure on effluents, and stakeholders
and governance corporate record on waste
(ESG) issues and human rights in • Disclosure on
comparative ESG society, including environmental
information between child labour initiatives and
firms, prompting monitoring, support of recycling rate of
laggards to improve collective bargaining products;
rights, social effect on information on
communities, and environmental
adherence to laws fines and
and regulations corporate
investment in
the environment
International Objective: Placing a • High-level guidance • High-level • Information
Integrated value on intangible to corporations with guidance to designed to be
Reporting assets, or “capitals,” companies corporations relevant primarily
Council (IIRC) to complement a determining how best with companies to providers of
2011 firm’s financial to answer the determining how financial capital
assets; advocating questions; asking best to answer (investors or
integrative thinking firms to apply the questions; shareholders)
Outcome: Creating judgment in asking firms to and to other
an efficient way to determining what apply judgment stakeholders
disseminate information to include in determining
comprehensive and • Use of intellectual what information
quantitative capital, human to include
information to capital, and social • Use of natural
shareholders and and relationship capital to report
other stakeholders so capitals are to report on a
they can evaluate a on corporate corporation’s
firm’s long-term citizenship footprint
prospects; within a
firm, access to
information on other
“capitals” should lead
to better corporate
decision making

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Page 17 9B18B017

EXHIBIT 8 (CONTINUED)

Sustainability Objective: Assisting • Industry-specific • Industry-specific • Designed for

Accounting firms and reporting reporting corporations and
Standards Board shareholders to requirements requirements shareholders
(SASB) 2012 manage and reduce • Tracking legal • Reporting on
“material” risks as compliance with legal limits for
defined by the U.S. social issues such GHG emissions,
Securities and as human rights, energy and fuel
Exchange community use, volume and
Commission (SEC) relations, data and management of
Outcome: Enabling customer privacy waste, water and
firms to disclose issues, fair hazardous
industry-specific disclosure and materials, and
“material” factors so labelling, and effects on the
as to be in adherence to environment,
compliance with SEC marketing and such as air
standards advertising quality
standards
• Employee relations
data including
labour relations,
diversity,
compensation and
benefits, and
labour practices
• Governance data
including accident
and safety metrics
and information on
ethics,
transparency of
payments, and
competitive
behaviour

Source: Created by the case writers using data from “Getting Started with the GRI Standards,” Global Reporting Initiative,
accessed May 16, 2018, [Link]/standards/getting-started-with-the-gri-standards; International Integrated
Reporting Council, The International <IR> Framework, accessed May 16, 2018, [Link]
content/uploads/2015/03/[Link]; and the Sustainability Accounting
Standards Board website, accessed May 16, 2018, [Link]/standards/download/.

This document is authorized for use only by Debura Nila Anggraini in 2023.