Diageo

Sustainable development strategy
Diageo discloses a long-term sustainability strategy that covers issues related to the environment, nutrition and social inclusion. The company’s materiality table indicates that it is aligning its work with the UN Sustainable Development Goals. Diageo has set targets for its most relevant sustainability topics and reports progress against them.

Governance and accountability for sustainable development
Diageo’s long-term incentive awards include a measure based on environmental, social and governance (ESG) priorities and cover water efficiency, carbon reduction, positive drinking, and diversity and inclusion. All directors retain primary responsibility, rather than constituting a new standing committee of the board dedicated to ESG.

Stakeholder engagement
Diageo discloses its process for identifying and engaging with its stakeholders. The topics discussed and outcomes are organised according to why and how the company engages, what the stakeholder interests are and how it responds to stakeholder concerns. Issues raised cover topics related to the environment, nutrition and social inclusion.

Plastic use and packaging waste
Diageo has set four targets related to the reduction of plastic use and packaging and discloses its progress against these targets. The company can improve by achieving 100% sustainable packaging across its operations.

No leading practices were identified for the company in the nutrition measurement area.

No leading practices were identified for the company in the social inclusion measurement area.

Scope 1, 2 and 3 greenhouse gas emissions
Diageo has committed to achieving net-zero carbon emissions across its operations by 2030 and had already halved its emissions by 2020. However, the company’s target is not aligned with a 1.5-degree trajectory.

Soil health and agrobiodiversity
Diageo has established sustainable agriculture guidelines, which include the application of best-practice principles related to soil management and soil erosion prevention. The guidelines also provide instructions on the optimum use of pesticides. The company can improve its performance by setting a time-bound target for the percentage of products sourced from sustainable farming practices that improve soil health and agrobiodiversity.

Water use
Diageo has set several time-bound targets to reduce water withdrawals and reports its progress against all of these. The company recently set 2030 targets for its supply chain as well. Diageo uses the Water Resources Institute’s Aqueduct tool to understand its exposure in water-stressed areas across its own operations. However, it can improve by providing evidence of its dependency on water-stressed areas in its supply chain and how it engages with suppliers in these areas.

Availability of healthy foods
Diageo does not disclose a commitment or activities to increase the availability of healthy and nutritious products, such as low calorie or low sugar drinks.

Clear and transparent labelling
While Diageo discloses minimum standards for labelling (such as alcohol content and nutritional information per serving), it has an opportunity to make nutritional information more visible to consumers through the adoption of front-of-pack labels and/or any other consumer-facing nutrition label.

Responsible marketing
Diageo has a responsible marketing policy that applies to all media and includes children and teens. It has also developed responsible drinking initiatives, such as the DrinkIQ.com site. However, the company can improve by disclosing the proportion of its marketing budget that is spent on promoting healthy products.

Food safety
While Diageo discloses compliance with the Food Safety System Certification 22000, it has an opportunity to strengthen its commitment by disclosing the percentage of its own operations that are certified to a food safety scheme/certification programme recognised by the Global Food Safety Initiative.

Child labour
While Diageo commits to prohibiting child labour in its own operations and requires its suppliers to adhere to the same standard, it has an opportunity to disclose a policy requiring its suppliers to have an age-verification system in place.

Forced labour
While Diageo commits to prohibiting forced labour in its own operations and supply chain, it has an opportunity to disclose a requirement that prohibits its suppliers from retaining workers’ personal documents and/or restricting workers’ freedom of movement.

Living wage
Diageo has been accredited as a Living Wage employer in the United Kingdom, and has committed to pay its UK-based staff a voluntary living wage. However, Diageo does not disclose that it pays all of its workers a living wage or that it requires its suppliers to do the same.

Farmer and fisher productivity and resilience
Diageo has a few smallholder support programmes and has set a target to source 80% of commodities locally in Africa. It is unclear what the outcome and impact of its activities are.

Through its publicly available policies and commitments across all key topics, Diageo demonstrates leading performance on respect for human rights. The company has a commitment to respect human and ILO core labour rights. It displays a human rights due diligence process which includes the identification and assessment of and action plan for the salient human rights risks in its operations and supply chain. As part of this process, the company has a complaints mechanism which is accessible to employees and external stakeholders, such as affected communities.

Diageo discloses information on collective bargaining agreements in its own operations and how it works to support freedom of association and collective bargaining in its supply chain. The company also commits to respecting the health and safety of workers and expects its supply chain partners to commit to the same. Diageo discloses the percentage of employees for certain indicators of diversity and commits to gender equality and women’s empowerment.

Diageo publicly commits to protecting personal data and has a global approach to data privacy. It also prohibits bribery and corruption and takes steps to identify and address its risks and related incidents. However, while the company has an approach to global tax, as well as to lobbying and political engagement, it should improve disclosure around both public commitments.