DANONE - Registration document 2015

Social, societal and environmental responsibility

5.3 Funds sponsored by Danone

DANONE

REGISTRATION DOCUMENT 2015

200

5.3 FUNDS SPONSORED BY DANONE

danone.communities

The danone.communities mutual investment fund (Société d'Inves-

tissement à Capital Variable-SICAV) and the danone.communities

professional specialized investment fund (Fonds Professionel

Spécialisé – FPS, formerly the fonds Commun de Placements à

Risques – FCPR) were created in 2007 at Danone's initiative:

•

along with several partners, the FPS invests in businesses with

significant social impact located mainly in emerging countries,

in accordance with Danone's mission;

•

the SICAV invests (i) at least 90% of its assets in a selection of

shares or units of mutual funds or investment funds invested

in money market instruments, government bonds and bonds of

companies in the euro zone that favor a “Socially Responsible

Investment” (SRI) approach, and (ii) up to 10% of its assets in the

danone.communities FPS.

As of December 31, 2015, the danone.communities SICAV had assets

under management totaling approximately €68 million.

Investment by Danone and its employees in the

danone.communities SICAV and FPS

At the time of the creation of the danone.communities SICAV in

May 2007, 99.77% of Danone's shareholders approved the imple-

mentation of the danone.communities project and the Company

subscribed for €20 million of its capital.

Since 2007, Danone hasmade a financial contribution each year to the

danone.communities project up to amaximumset by Danone's Board

of Directors, upon the recommendation of the Social Responsibility

Committee. In 2015, this contribution amounted to €3.6 million

(same as in 2014).

In June and July 2015 Danone operated a reallocation of its investment

in danone.communities by completing the following transactions:

•

partial divestment from the SICAV through the SICAV's purchase

of shares held by Danone at their net asset value, in accordance

with the SICAV by-laws, for a total of €11.4 million;

•

acquisition of existing shares in the FPS from the SICAV at a price

equal to the net asset value for a total amount of €1.4 million;

•

subscription of new shares in the danone.communities FPS at

a price based on the most recent audited net asset value as of

December 31, 2014, adjusted for fund-raising calls, for a total

amount of €6.1 million;

•

reinvestment in the danone.communities SICAV of the balance

of the amounts obtained by the Company in connection with

the abovementioned partial divestment for a total amount of

€3.8 million.

These transactions ensure that the FPS has the additional resources

needed to continue ongoing projects and to develop new projects

by replicating existing models without increasing Danone's total

commitment to danone.communities.

As of December 31, 2015, Danone therefore held approximately

17% of the capital of the SICAV and 63.6% of the capital of the FPS.

For more information about these reallocation transactions, see

section 6.5

Statutory auditors' special report on regulated agreements

and commitments

In addition, the employees of the Company and its French subsid-

iaries participate in the danone.communities project by investing

in the SICAV through the danone.communities company investment

fund (Fonds Commun de Placement d'Entreprise – FCPE) as part

of the Group Savings Plan.

As of December 31, 2015, approximately 34% of Danone's employees

in France had subscribed to the danone.communities FCPE for a

total amount of €14.1 million (an increase of approximately 13.7%

compared to 2014).

Projects supported by the danone.communities FPS

Since its creation, the danone.communities FPS has carried out

eight investments.

In accordance with the danone.communities Governance Charter,

the Company's Social Responsibility Committee is consulted prior

to each investment by the danone.communities FPS and issues an

opinion as to its compliance with this charter.

In 2012, Danone decided to invest alongside the danone.communities

FPS directly in the capital of three projects to ensure the viability

and sustainability of each of the projects: Grameen Danone Foods

Limited in Bangladesh, Laiterie du Berger in Senegal and NutriGo

in China. Under the terms of the danone.communities Governance

Charter, the Company may invest, directly or indirectly, in com-

panies in which the danone.communities FPS invests, but only if

these co-investments: (i) comply with Danone's corporate purpose,

(ii) strengthen the mission, governance and sustainability of the

companies concerned, and (iii) are made in agreement with the

shareholders of these companies. Each co-investment is subject to

prior review by the Social Responsibility Committee, which issues

an opinion as to its compliance with these requirements.

The projects in which an investment has been made by the

danone.communities FPS (and, for three of them, by Danone di-

rectly) are described hereafter.

As of December 31, 2015, the total amount of the investments made

by the FPS and Danone in these projects was €7.6 million and

€4.3 million, respectively.

Grameen Danone Foods Ltd., Bangladesh

The danone.communities FPSmade its first investment in Grameen

Danone Foods Ltd., a company created in 2006 in Bangladesh at the

initiative of Grameen Bank and Danone.

Grameen Danone Foods Ltd. is a social business that built a factory

for manufacturing micronutrient-fortified (vitamin A, zinc, iron and

iodine) yogurts. Sold by “Grameen Ladies” and in small retail stores

at a price that the poorest families can afford, these yogurts make

it possible to combat children's nutritional deficiencies. In addition

to its health impact, the project also aims to create local jobs to

increase living standards in the community, protect the environment

and save resources.

1001 Fontaines, Cambodia

1001 Fontaines (together with the UV + Solaire company) gives

isolated villages in Cambodia access to a drinking water system

that eliminates the need for inhabitants to drink water from ponds,

which is the cause of a high infant mortality rate and diarrhea-related

illnesses. 1001 Fontaines uses an ultraviolet treatment process

and renders it drinkable at a minimal cost.