How Danone is pushing carbon further down its ingredients list

Like most food and beverage companies, the bulk of Groupe Danone’s environmental impacts come from its products. In the case of Danone, one of the world’s largest dairy producers, those impacts come from its 35,000-plus offerings.

Not content with just determining the carbon footprint of general product categories, Danone has developed a system — with the help of SAP — that can compare the environmental impacts of products that vary by just a few different ingredients.

“Now you can understand the embedded carbon in strawberry yogurt versus banana yogurt versus strawberry-banana yogurt,” said Scott Bolick, vice president of sustainability solutions at analytical services company SAP. Danone, which already had been using SAP services, worked with SAP to build a new system that pulls in information from Danone, adds missing information and analyzes it all to measure the carbon emissions for each individual product.

“If you just add the 20 percent of data that is not in the system and you apply the calculation system we had already, you are able to calculate automatically — and as often as you want, and with the granularity you need — the carbon impact,” said Jean-Marc Lagoutte, vice president of IT at Danone.

Not only can Danone see the overall emissions, but it also can figure out what stages of a product’s lifecycle have the biggest impact. “It’s really designed to help people understand the footprint and where you see hot spots,” Bolick said. “Where are the areas where you have the largest embedded carbon for that product, where are you potentially out of line in a certain process?”

To further push employees to seek out carbon savings, Danone linked 30 percent of its 1,400 global managers’ bonuses to their progress in shrinking their carbon footprints. Many managers, Lagoutte said, have used the system to find more efficient transportation routes or made other changes to product transportation networks. Others have changed packaging, either by using less material or adding bioplastics.

“A lot of the footprint is created by the packaging itself,” Lagoutte said, “If you take a bottle of Evian, for example, the less plastic you put in there, the lower your footprint.”

And in other cases, the company has altered its product recipes — or its suppliers — based on the results generated by the system.

The drive to seek out carbon savings in any possible part of any product is part of Danone’s goal to cut its carbon emissions 30 percent between 2008 and 2012. That target includes emissions from its entire supply chain, including factories, packaging, disposal, transportation and storage. And Danone already posted a 22 percent reduction by the end of 2010.

Before creating the new system with SAP, it took Danone more than a week to work out the emissions for one product, and the company was only calculating product emissions once a year at most, Bolick said. Once Danone began talking about its needs with SAP, it became clear that Danone already had 80 percent of the data that it needed available in an SAP system it was already using, Bolick said.

The companies then linked that information up with carbon footprint data on raw materials, product and delivery orders, transportation details and energy use at different sites. “They’re able to collect that information; they’re able to match that up to emissions factors,” Bolick said. “And instead of looking at a product footprint calculated over a 10-day period on an annual basis, they can instantly look at the carbon footprint of 35,000 distinct SKUs (stock-keeping units).”

The product emissions system was first tested by two Danone companies in Spain, then rolled out to a couple of Belgian dairy businesses and Stonyfield Farm in the U.S. By the end of 2011, the system was operating in 22 business units; now it’s in 30. Danone plans to have the system installed in 40 of its business units — or about 70 percent of its business — by the end of 2012, and then in the rest of its units in 2013.

Other companies that have complex supply chains — and that want to understand where the carbon, water and energy is in those chains so they can reduce their risk and cost — also could benefit from this solution, Bolick claims.

Even though the system was developed specifically for Danone, the company has agreed to let SAP market the service to other companies. “We are two, three years ahead of competition,” Lagoutte said, adding that if more companies use it, that would benefit the environment while also improving the system.

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