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Overview of activities, risk factors
2.7 Risk factors
DANONE
REGISTRATION DOCUMENT 2015
36
RISK IDENTIFICATION
RISK MONITORING AND MANAGEMENT
With respect to greenhouse gas emissions
Danone's activities are subject to the following regulations:
•
the European directive of 2003 establishing a trading system;
•
quotas for greenhouse gas emissions and the transposi-
tions of the National plans of allocation of quotas in the
European Union.
With respect to emissions quotas, five of Danone's plants in the
European Union are subject to such quotas (whose impact on
Danone's financial situation is not significant), while the other
sites are currently below the minimum eligibility threshold.
In the future, if Danone is unable to limit the emissions of these
five sites and comply with allocated quotas, it will incur a fine
and would have to purchase the shortfall on the market for
greenhouse gas quotas. The quantity of quotas allocated at no
charge will gradually diminish and be reduced to zero in the
years ahead, which will represent an additional cost for Danone.
More generally, Danone cannot guarantee that it will always
be in compliance with these multiple regulations, which are
complex and constantly changing. Also, bringing Danone's
activities into compliance with new regulations or changes
in existing regulations could be costly or even limit Danone's
ability to pursue or develop its activities.
Other regulations
As a player in the food and beverage industry operating in
numerous countries, Danone's activities are subject to extensive
laws and regulations enacted by many national and internatio-
nal authorities and organizations, notably with respect to tax,
commercial laws and regulations, competition authorities,
labor law, hygiene and food safety, quality control and the use
of water sources. Danone's activities are also subject to good
conduct rules such as those of the World Health Organization
(WHO) regarding the marketing of breast-milk substitutes and
the corresponding rules at the various local regulatory levels.
Danone is also subject to any customs duties, trade barriers
or penalties that may be imposed.
More particularly, Danone's activities are subject to numerous
laws and regulations that are always changing and becoming
increasingly restrictive, relating, in particular, to:
•
the protection of health and food safety, consumer protection,
nutrition and claims about the health benefits of products
marketed by Danone, the reimbursement of certain products
of the medical nutrition activity and Danone's advertising
and promotional activities. Any change in these laws or
regulations, any decision by an authority regarding these
laws or regulations or any other event that would challenge
the nutritional or health claims related to certain products
could have a significant impact on Danone's activities,
increase its costs, reduce consumer demand and possibly
result in litigation;
Danone's international development limits the concentration
of the risk of more restrictive regulations for a given country.
Furthermore, Danone has developed a legal organization at
the local (subsidiaries) and central levels. The Company and its
subsidiaries, assisted by their legal departments and/or exter-
nal legal advisors, take steps to ensure that they comply, at all
times, with applicable laws and regulations. In addition, Danone
developed and implemented internal policies and procedures
relating to compliance detailed in section 6.4
Internal control
and risk management
. In order to ensure that such measures
are commonly practiced at Danone, the Company has integrated
compliance into its quality approach and internal control sys-
tem. Lastly, with respect to risk monitoring and management
due to changes in accounting regulations, see Note 1.2 of the
Notes to the consolidated financial statements.
To the best of Danone's knowledge and as of the date of this
Registration Document, no governmental, court, arbitration
or any other proceeding to which the Company is a party
is currently ongoing that would be likely to have a material
impact on Danone's financial position or profitability other than
those mentioned in Note 14.2 of the Notes to the consolidated
financial statements.