This article first appeared in The Edge Malaysia Weekly on May 20, 2024 - May 26, 2024

When one thinks of certified B Corp companies, which are required to meet a third-party standard measuring their social, sustainability and environmental performance standards, Danone often comes to mind.

The multinational food product company aims to be the world’s largest B Corp-certified organisation by 2025. According to its website, 74.2% of its global sales are now covered by the certification, which requires companies to go through an assessment and audit process. Danone North America is currently the biggest certified B Corp.

Locally, Danone Malaysia became the first certified B Corp in the food sector — and 12th company overall — in Malaysia last November. ESG caught up with Koh Kok Meng, Danone Specialised Nutrition (Malaysia) Sdn Bhd’s country manager for Malaysia and Singapore, to get his insights.

The following is an excerpt from the interview. It has been edited for brevity.

ESG: What were the biggest challenges?

Koh Kok Meng: B Corp is strategic for us because we can talk about sustainability, but it’s even better when you are certified. We were quite optimistic that we would get certified because sustainability is not new to Danone. Since the mid-1970s, our ex-CEO already talked about dual purpose. It’s inside our DNA of how we operate, with a lot of sustainability being considered.

The challenge that we face is getting people on board with B Corp because we have to explain to them what it means and why it matters, even to our internal employees. The second is to manage the workload on top of our day-to-day job in a very challenging time frame of six months.

[I give] credit to the team. We are very appreciative [of their efforts] because they spent [time] beyond normal working hours to meet the timeline. The challenge is to collect the proof points to meet the requirements of B Corp.

You managed to pass the B Impact Assessment the first time?

We got it the first time and in fact, [Danone] Malaysia got the highest [score] in the region with 90.4. It’s good for the first time.

What benefit do you get from being B Corp certified in a market where the awareness of it is not high?

If you are B Corp certified, it means [you went] through a very high standard of audit practices. That’s one reason why we went on board. Of course, we also believe it’s a better way of measuring sustainability that is consistent across all markets.

If you look at ESG, there are different measurements. Sometimes, it’s not easy to understand outside of the corporate world. I think one benefit of B Corp is standardisation of how we want to communicate about this subject and how to measure it.

Second, B Corp has the benefit of driving internal engagement. It’s a very important engagement subject for our employees. One of the reasons why employees want to work in Danone is because of sustainability and the impact we are making.

What are the initiatives that contributed to your scores?

The one that we’re really passionate about and proud of is our Iron Deficiency Anaemia (IDA) Initiative. It’s a major health issue in this country. One out of three children under five years old have IDA risk. The sad thing is not everyone knows about it because it’s not a mandatory test for young children.

IDA impacts growth and cognitive development. Basically, your overall development and immunity are compromised. What are the normal symptoms of IDA? The child gets tired very easily. For example, they look pale and they get sick easily.

We asked if we could make a difference. The answer is yes, because nutrition is a solution to the health issue. Is it important? Yes. So, we embarked on this journey. We started to engage with many parties — doctors, professors and the government — to drive awareness of this subject. We even sponsored the Iron Strong Study. It’s a very broad study that covers children under five across multiple states. We shared the [outcomes] with governments [and other parties] to bring awareness to the subject.

IDA is a big initiative that Danone is truly passionate about. Last year, I came back to Malaysia and I had the chance to witness how we brought this agenda to the next level. We had a big activation. The first was via internet engagement, then to our distributor partners and promoters. Last year was the first mega campaign [where] we went all out to as many doctors and mothers as possible, doing consumer activation and education, so much so that the Ministry of Health set up a special committee to look into the subject.

We screened almost 15,000 children using a non-invasive testing gadget, and it has very high accuracy. This is one of our biggest initiatives that we’re super proud of.

What about your environmental impact, especially in emissions and waste from packaging?

In Southeast Asia, we have three primary focuses. Definitely, carbon emissions reduction is one of it, we target to be net zero by 2050. We source mainly from Thailand and some from Indonesia, so our supply point is managing it and sharing [updates] with us on a regular basis.

For packaging, 91% of it is already recyclable. We have a goal to be fully recyclable, reusable and combustible by 2030. Beyond that, all the equipment we are buying is energy saving.

Can the aluminium-based packaging be recycled?

Not many people know that aluminium foil can be used to keep food fresh after you finish the powder. You can use it to wrap fruits and vegetables because it’s a high food grade packaging material.

What areas do you hope to improve?

Now, the next phase we are in is to benchmark ourselves against all other peers. Where we are still focusing, of course, is the IDA subject. In fact, we are now exploring other health impacts we might want to do. For example, stunting is another big topic.

For us, we are in the specialist nutrition space. Our role is to provide nutrition to as many children as possible. [For instance,] we have a high energy milk powder designed for catch-up growth. It’s for children below the average weight and height and need some additional intervention.

We launched this product in November last year and during my visit across the country, I received questions from doctors because they know we are selling it [at] a little more affordable [price.] There are only three brands in the market. Two are selling at a super-premium price.

People ask us if our quality is different because the product is so cheap. I said no, our ingredient is at parity. In fact, in some areas we have more, like the Docosahexaenoic acid (DHA). The reason we chose to sell at an affordable price is because of our mission to provide food for health to as many people as possible.

It can be difficult to balance the responsibilities of making profits and achieving sustainability. It was in the news in 2021 when the global Danone CEO was let go, even though he was the one championing the sustainability efforts. What are your thoughts on it?

I think Danone is the perfect example of that, to be honest. If you look at what’s going to shape consumer preference, sustainability is definitely one of them. Sustainability is no longer an option, it’s an obligation.

I quote my CEO [Antoine de Saint-Affrique], I really like what he said that performance without sustainability has no future. We see more and more of that one. But he also said sustainability without performance has little impact. That, to me, is very profound.

I truly believe that when you drive sustainability, it’s not just a moral obligation. It’s how the sustainability agenda also contributes to your business. It has to be considered a key performance indicator and the centre of your business.

That’s why I’m so passionate about the IDA project because it’s one subject we can make a difference in by offering a superior product and education. We have three clear strategies [to achieve that]. One is to drive awareness to as many as possible. Second, it’s to keep improving our products to offer a superior solution and address IDA. And third, to influence systemic change because for some today, an IDA test is not mandatory.

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