Diageo

Stakeholder engagement
Diageo discloses an overview of the issues raised during its stakeholder engagement activities and the channels it uses to engage with its stakeholder groups. Furthermore, it discloses how its stakeholder engagement activities impact its sustainability strategy.

Sustainability strategy and accountability
Diageo discloses its process for identifying and prioritising its most relevant sustainability impacts as well as the outcome of this process, in relation to its sustainability strategy and reports consistently against all its targets.

Ecosystem conversion and restoration
Diageo is committed to minimizing ecosystem conversion.

GHG emissions
Diageo has a time-bound target to reduce its scope 1,2 and 3 emissions and reports progress against these targets. Additionally, these targets are aligned with a 1.5-degree trajectory and it reduces its scope 1, 2 and 3 greenhouse gas emissions compared to previous year.

Key areas and species
Diageo provides information about the locations that fall within or are adjacent to areas of significant biodiversity in its own operations. Additionally, the company discloses the status of species found in its own locations, as per national and international conservation lists.

Resource exploitation and circularity performance
Diageo adheres to an international standard by disclosing its inputs. Additionally, it discloses its efforts towards improving soil health and promoting agrobiodiversity in its production or sourcing practices.

Solid and air pollution
Diageo reports the proportion of the hazardous waste diverted to and from disposal. It also demonstrates commitment and engages in activities related to plastic use reduction and transitioning towards sustainable packaging. Additionally, it reports regularly on air quality parameters of emissions of harmful air pollutants.

Water
Diageo has a time-bound target to reduce water withdrawal in its own operations and reports progress against the target. Furthermore, the company discloses its withdrawals from water risk sites, reports a decrease in water pollution, and regularly reports on water pollution. It has a commitment to respect the right to water, discloses its processes for implementing preventive and corrective action plans for identified specific risks to the right to water and sanitation in its own operations, and works with its business relationships to improve their practices regarding access to water and sanitation.

Indigenous Peoples’ and land rights
Diageo discloses its processes to identify and recognise the rights of Indigenous Peoples when activities in its own operations may impact their rights, and describes how it obtains Indigenous Peoples’ free, prior and informed consent.

Safe, clean, healthy and sustainable environment
Diageo is committed to zero tolerance for acts of violence, threats, intimidation or judicial harassment committed against land and environmental rights defenders.

Act ethically
Diageo maintains a publicly available global tax strategy that is endorsed by the highest governance body. This strategy ensures that tax payments are made in accordance with all relevant laws and regulations in the countries where the company operates.

In addition to this, the company has a policy in place that strictly prohibits bribery and corruption. Furthermore, the company publicly commits to protecting personal data. The company also has a supplier code, which explicitly prohibits bribery and corruption. It makes it clear that any violation of the code of conduct may lead to the termination of the supplier’s commercial relationship with the company.

Diageo’s Speak Up whistleblowing line and web tool are available to employees, value chain partners, and communities to report concerns related to bribery and corruption. These reporting mechanisms also ensure protection against any form of reprisal.

Provide and promote decent work
Diageo has a publicly available policy statement emphasizing its commitment to the health and safety of workers. It also publicly states its policy of expecting its business relationships to prioritize the health and safety of workers. To ensure compliance, the company uses information provided, online self-assessment questionnaires, and unannounced audits.

The company has disclosed that 47.1% of its total direct operations workforce is covered by collective bargaining agreements. Regarding working hours, the company publicly declares that workers should not be required to work more than 48 hours in a regular work week or 60 hours including overtime. This expectation extends to the company’s business relationships as well. It conducts reviews and audits to ensure its suppliers’ compliance in regards to freedom of association and collective bargaining. Trade unions and feedback received through mechanisms like Speak Up are taken into account during these reviews.

Diageo discloses the gender distribution of its total direct operations workforce, as well as its board of directors and executive committee. Being a signatory of WEP (Women’s Empowerment Principles), the company publicly commits to promoting gender equality and women’s empowerment. It has set a target to achieve 50% representation of women in leadership roles by 2030. Furthermore, the company reports that out of its 12 board members, 7 are female, resulting in a 58.33% representation of women on the board.

Respect human rights
Diageo publicly commits to respecting ILO core labour rights and expects its suppliers to do the same. To ensure compliance with human rights standards, the company has hired external human rights specialists to conduct Human Rights Impact Assessments (HRIAs) throughout its value chain, engaging with various stakeholders. To guide its markets, the company has developed a comprehensive HRIA toolkit that facilitates a systematic review of their businesses to identify and assess potential human rights impacts. The company also discloses the countries in which it has conducted detailed human rights impact assessments to identify the most significant risks for its business and supply chain.

Furthermore, the company provides insight into its global system for addressing and preventing salient human rights issues, extending to its supply chain. It has also taken specific measures to protect child rights, such as implementing a child protection program for smallholder farmers. Additionally, the company has conducted training programs in seven African nations to combat child labor in local sourcing programs. Furthermore, the company has developed initiatives aimed at preventing sexual harassment in the hospitality sector.

Diageo also actively engages with stakeholders whose human rights may be affected by its activities. To ensure transparency and accountability, the company maintains a Speak Up whistleblowing phone line and web reporting tool accessible to all workers. This allows them to raise complaints or concerns related to human rights issues.

Lobbying
Diageo has an opportunity disclose a list of trade associations of which it is a member. Additionally, it has an opportunity to disclose a clear and detailed framework for assessing alignment of its trade associations with its sustainability targets and to report (potential) misalignments.

Sustainability strategy and accountability
Diageo discloses some sustainability objectives/targets including climate, social inclusion and water. However, it has an opportunity to establish group-wide targets for the most material parts of its value chain. Additionally, although the company discloses a remuneration policy related to sustainability, it could link this policy to improvement in nature-related objectives and social issues. Lastly, while Diageo states that the board of directors has expertise in sustainability, it could improve its performance by disclosing whether its highest governance body has expertise with respect to the company’s most material sustainability topics.

Ecosystem conversion and restoration
Diageo provides some evidence of addressing conversion but this does not necessarily mean they follow DCF-aligned practices. They also lack time-bound targets to achieve conversion-free supply chains and do not commit to ensuring zero conversion. Moreover, the company shows no commitment to restoring ecosystems and fails to disclose specific details and outcomes of ecosystem restoration projects in areas impacted by their own operations or by their suppliers.

GHG emissions
Although Diageo reports against its scope 3 target, it shows increase in its scope 3 emissions levels.

Impact and dependencies assessment
Diageo states it tracks its impact on local biodiversity by measuring the proximity of its operational sites to protected areas and high-biodiversity zones. Despite this, it does not disclose the methodology and results for assessing impacts on nature, including biodiversity, within its operations. It has conducted a materiality assessment on deforestation risks in its supply chains using various data sources, and has also carried out a deep-dive impact assessment in Ireland and Northern Ireland following the Science Based Targets for Nature methodology. However, there is no comprehensive disclosure of methodology and results for assessing its impact on nature in its upstream value chain. While the company acknowledges its dependency on agricultural and forest commodities, there is no evidence that it assesses dependencies on nature within its operations or in its upstream business relationships.

Invasive species
Diageo has not identified any activities that could lead to the introduction of invasive alien species in its own operations.

Key areas and species
Diageo has an opportunity to disclose its suppliers’ locations within or adjacent to areas important for biodiversity. It could also disclose existing species populations existing in or adjacent to both its own and its suppliers’ locations.

Resource exploitation and circularity performance
Diageo does not report quantitatively on its group-wide circularity performance. The company has an opportunity to disclose a target to improve soil health in its production or sourcing practices and report progress against it.

Solid and air pollution
Diageo does not disclose relevant information related to pollution in its operations or supply chains.

Water
Diageo has an opportunity to show quantitative reductions in water withdrawal in its own operations. Furthermore, the company has an opportunity to engage with suppliers to improve water withdrawal, and set targets to reduce water pollution.

Indigenous Peoples’ and land rights
Diageo does not show if it is committed to respecting Indigenous Peoples’ rights or land rights of local communities.

Safe, clean, healthy and sustainable environment
Diageo has an opportunity to commit to respecting local communities’ right to a safe, clean, healthy and sustainable environment. Moreover, it should track its actual or potential negative impacts on the health of local communities.

Act ethically
Diageo has a process for identifying bribery and corruption, but it has not disclosed the details of this process. Additionally, the company has the opportunity to create a policy that outlines its approach to lobbying and political engagement.

Currently, Diageo has a publicly available policy statement that states it only allows political contributions with prior approval from the relevant Global Corporate Relations and Legal Function lead. However, there is an opportunity for the company to disclose whether these contributions are made only by exception, and to provide the criteria for making them.

Furthermore, the company could also disclose its expenditures on lobbying activities. In addition, it could highlight that it requires third-party lobbyists to comply with its lobbying and political engagement policy.

Provide and promote decent work
Diageo currently holds official accreditation as a living wage employer in the United Kingdom, but there is a chance for it to extend this commitment to all workers across all its operations. Additionally, the company can provide transparency by explaining how it determines a living wage in the regions where it operates.

While Diageo has already established wage expectations for its suppliers, there is an opportunity to include a requirement for them to also pay a living wage. The company should further disclose its efforts in supporting suppliers with this payment. Moreover, the company can enhance transparency by disclosing the ratio of basic salary and remuneration between women and men in its total direct operations workforce. This information should be provided for each employee category and for significant locations of operation.