Diageo Corporate 2007 Citizenship Report Our values Report highlights

% m // We are passionate about consumers – // Included in the Global 100 most our curiosity and consumer insights drive our sustainable companies % Diageo score in BITC Invested in community projects 88 Corporate Responsibility Index growth.We cherish our brands; we are creative Employees took part in our 92 £20.7 global values survey and courageous in pursuing their full potential. // In top ten in the Good Company We are innovative, constantly searching for Ranking 2007 new ideas. // The growing importance of Asia Pacific // We value each other – we seek and benefit reflected in creation of new Diageo region from diverse people and perspectives.We strive 12,000 99Production sites to create mutually fulfilling relationships // New Scottish facilities planned with In Venezuela, the Guardian Angels projects has and partnerships sustainable features built in reached 12,000 consumers // We give ourselves the freedom to succeed // 1% operating profit invested in – we trust each other, we are open and seek our communities challenge, and we respond quickly to the opportunities this creates. // Responsible drinking projects completed or underway in 45 markets // We are proud of what we do and how we do it – we act responsibly with the highest // Diageo Africa committed to provide water standards of integrity. for one million people 0.003% // We strive to be the best – we are always // Safety and environmental programmes Diageo’s share of global greenhouse gas emissions Diageo included in the Global 100 10most sustainable companies 0 learning, always improving.We set high implemented at large offices standards, we stretch to exceed them and Diageo plc 22,520 we celebrate success. // Most electricity in Ireland and Scotland now Employees worldwide 8 Henrietta Place from zero- or low-carbon sources London W1G 0NB United Kingdom // Three out of five environmental targets Tel +44 (0) 20 7927 5200 bn met; new targets set Fax +44 (0) 20 7927 4600 £5.9 0Zero waste landfilled by Cash value added www.diageo.com our Dublin brewery

Registered in England No. 23307

Profile Society Environment Economy Governance © 2007 Diageo plc. All rights reserved. A decade to celebrate 1 Promoting responsible Conserving our environment 21 Investment and creating value 26 Governance, engagement and All brands mentioned in this Corporate Our business 2 drinking 5 commitments 30 Citizenship Report are trademarks and Getting to know Diageo 3 Our products and consumers 11 UN Global Compact % The meaning of sustainability 4 Investing in our communities 12 communication on progress 35 are registered and/or otherwise protected 526,800 Releasing the potential About this report 36 Corporate Citizenship Report 2007 in accordance with applicable law. People in Africa provided with clean water 87Waste recycled of our people 15 External assurance statement 37 Diageo Corporate 2007 Citizenship Report Our values Report highlights

% m // We are passionate about consumers – // Included in the Global 100 most our curiosity and consumer insights drive our sustainable companies % Diageo score in BITC Invested in community projects 88 Corporate Responsibility Index growth.We cherish our brands; we are creative Employees took part in our 92 £20.7 global values survey and courageous in pursuing their full potential. // In top ten in the Good Company We are innovative, constantly searching for Ranking 2007 new ideas. // The growing importance of Asia Pacific // We value each other – we seek and benefit reflected in creation of new Diageo region from diverse people and perspectives.We strive 12,000 99Production sites to create mutually fulfilling relationships // New Scottish facilities planned with In Venezuela, the Guardian Angels projects has and partnerships sustainable features built in reached 12,000 consumers // We give ourselves the freedom to succeed // 1% operating profit invested in – we trust each other, we are open and seek our communities challenge, and we respond quickly to the opportunities this creates. // Responsible drinking projects completed or underway in 45 markets // We are proud of what we do and how we do it – we act responsibly with the highest // Diageo Africa committed to provide water standards of integrity. for one million people 0.003% // We strive to be the best – we are always // Safety and environmental programmes Diageo’s share of global greenhouse gas emissions Diageo included in the Global 100 10most sustainable companies 0 learning, always improving.We set high implemented at large offices standards, we stretch to exceed them and Diageo plc 22,520 we celebrate success. // Most electricity in Ireland and Scotland now Employees worldwide 8 Henrietta Place from zero- or low-carbon sources London W1G 0NB United Kingdom // Three out of five environmental targets Tel +44 (0) 20 7927 5200 bn met; new targets set Fax +44 (0) 20 7927 4600 £5.9 0Zero waste landfilled by Cash value added www.diageo.com our Dublin brewery

Registered in England No. 23307

Profile Society Environment Economy Governance © 2007 Diageo plc. All rights reserved. A decade to celebrate 1 Promoting responsible Conserving our environment 21 Investment and creating value 26 Governance, engagement and All brands mentioned in this Corporate Our business 2 drinking 5 commitments 30 Citizenship Report are trademarks and Getting to know Diageo 3 Our products and consumers 11 UN Global Compact % The meaning of sustainability 4 Investing in our communities 12 communication on progress 35 are registered and/or otherwise protected 526,800 Releasing the potential About this report 36 Corporate Citizenship Report 2007 in accordance with applicable law. People in Africa provided with clean water 87Waste recycled of our people 15 External assurance statement 37 Priorities and progress Diageo around the world in 2007 External assurance statement

Key impact Priorities Progress Benefit to Benefit to area for action and plans society Diageo

Thirty Diageo wine marketers Summary assurance and commentary improving performance by sharing information, scope to report more fully on impacts in these Society in California, USA helped conserve Diageo has commissioned The Corporate data and best practice across the organisation. areas.There is more work needed to assess a the nearby Fagan Marsh Ecological Responsible drinking In all businesses, deliver a Initiatives continuing, completed or Discourages harmful patterns of Builds relationships with a broad Citizenship Company to provide it with external The roll-out of initiatives such as the Safety greater proportion of Diageo’s supplier base Reserve on the Napa river by responsible drinking initiative and underway in 45 markets behaviour range of stakeholders collecting half a tonne of rubbish, assurance and commentary on its Corporate Culture Maturity Model and high levels of through Sedex and to move Diageo’s Licence evaluate its effectiveness including nine tyres, two vacuum Citizenship Report 2007. Diageo’s management investment in occupational health and safety to Operate for Third Parties beyond pilot phase. cleaners and a car back seat. Led has prepared the report and is responsible for reflect Diageo’s commitment to employee Engage employees in living our Programmes delivered in Australia, Employees as ambassadors reinforce Enhances reputation and employee by a former Diageo Earthwatch its contents. Our objectives were to review its welfare and embedding responsible corporate Despite Diageo’s high levels of employee responsible drinking policy Brazil, Ireland, UK and Venezuela responsibility message engagement champion, the project aimed to promote biodiversity, cleaner water contents and presentation, to conduct selected behaviour. engagement and its stated commitment to Participate in constructive industry Contributed to regional workshops Reduces negative health and social Provides balanced view of the role of and ultimately healthier growing checks to underlying records and other promoting a diverse workplace, we believe consultations with WHO on alcohol on self-regulation in Asia Pacific and impacts of alcohol abuse alcohol in society conditions for vines. evidence, and to provide this statement for The inclusion of the environmental life cycle that Diageo’s reporting of employee profiles, abuse Africa which we have sole responsibility. A full version impact analysis of its Johnnie Walker brand demographics and related concerns should be of our assurance statement is available at is a significant step forward in Diageo’s strengthened to include further diversity issues. Consumer choice Implement our consumer Coverage now 37%. All relevant Facilitates informed consumer Builds brand reputation and loyalty Colleagues partnered with Each year in Ireland we information policy brands to comply by 2010 choices www.diageo.com, including information understanding of its environmental impacts. For an international company like Diageo there Un Techo Para Mi País (‘A roof sponsor more than 1,000 festivals about The Corporate Citizenship Company, It reflects the rigour Diageo is applying to are complexities to this. Nonetheless, we for my country’) to provide and other events, reflecting our Develop ways of measuring and Working on new measures of Enhances consumer choice Builds brand reputation and loyalty accommodation for poor families significant involvement in the our relationship with Diageo and the assurance environmental management. It is also in believe that more information about how reporting quality supplier and production quality in San Miguel Ajusco, 100km south sporting and cultural life of the process we have adopted.This statement keeping with the emerging trend to drive it manages and promotes diversity and the of Mexico City. A grant of £22,000 nation. Guinness was the main summarises our principal findings. corporate citizenship into brands, which is inclusion of targets would better meet the Community investment Invest 1% of operating profit in social Invested £20.7 million, or 1.0% of Addresses pressing community Strengthens relationships with from the business covered the race sponsor at the 2007 how most consumers relate to multi-brand expectations of a number of key stakeholders and community programmes operating profit issues communities materials for 30 houses, ten of Punchestown races, while Diageo corporations like Diageo. and initiatives. which were erected in just one sponsored the Charity Our opinion Focus on developing countries and Significant projects in Africa; strategy Focuses resources on where they can Strengthens relationships with day by 140 Diageo volunteers Sweepstakes for the Punchestown In our opinion, the report provides a fair and disasters, engaging employees with reviewed in other developing be most effective communities and employees from offices across Mexico. Kidney Research Fund. Kate balanced representation of the material aspects Looking ahead LBG assurance statement initiatives countries. Issued guidelines on local Harrington won the race riding of Diageo performance for 2007.We have This report represents a further advance in Diageo is an active member of the community programmes Moscow Flyer. examined the processes Diageo has in place Diageo’s approach to corporate citizenship LBG (London Benchmarking Group). for identifying, understanding and managing and reporting though future reports would The LBG model helps businesses Employee engagement Raise levels of employee Survey showed engagement with all Maximises fulfilling employment Employee engagement drives We’ve changed the way we and development engagement across all business areas values 2-3% up on 2006. Super- opportunities business performance corporate citizenship issues.Where we believe be strengthened if they addressed more fully to improve the management, measurement dispose of waste beer in the UK to material gaps in performance data and those risks, beyond climate change, identified and reporting of their corporate community as measured by values survey engaged employees up 5% to 29% treatment by anaerobic digestion – with a target for 2011 of 50% a switch mediated by the National stakeholder views on significant issues exist, by the company as significant – for example involvement programmes. It moves beyond Industrial Symbiosis Programme. they are identified below. those connected with business expansion in charitable donations to include the full range Embed health, safety and quality Following audits, improvement plans Enhances health and safety of Leads to compliance and greater Burning the methane produced emerging economies where sufficient resource of contributions (in time, in kind and in cash) standards in all parts of the business are being progressed and actions community members productivity makes enough energy to run In forming our opinion and making our will need to be invested to ensure adherence made to community causes, and assesses taken to address gaps the treatment plant.The new comments, we have based our work on the to Diageo’s global standards. the actual results for the community and arrangements save CO2 emissions Environment of 9,000 tonnes and divert 2,600 international assurance standard AA1000 for the business (www.lbg-online.net). As tonnes of waste from going down (www.accountability21.net), notably The ‘Diageo in the world’ chart provides useful managers of the Group, we have worked Climate change Implement our long-term energy Greenhouse gas emissions reduced Reduces emissions of climate change Leads to cost savings and greater the drain. considering materiality, completeness and context to the information presented and we with Diageo to ensure that it understands strategy by 9% in three years. Manager agents sustainability responsiveness.We have also had regard to believe that future reports would be enhanced the LBG model and has applied its principles appointed to drive energy strategy the reporting guidance for content and the by providing more information that is material to the measurement of community involvement Hives Save Lives Africa uses principles for defining quality contained in to understanding Diageo’s operations, notably programmes during the year to 30 June 2007. Water management Minimise water use and emissions to Reduced water use by 11% in three Conserves natural resources Leads to cost savings and protects apiculture to alleviate poverty and water years but BOD emissions have water supplies encourage conservation. In Mpigi, GRI’s G3 sustainability reporting guidelines how the alcohol industry as a whole functions Having conducted an assessment, we are increased. Established water group Uganda, we donated equipment (www.globalreporting.org). and Diageo’s role in it.We continue to satisfied that this has been achieved. Our work to drive further improvements including 40 beehives and trained recommend the inclusion of content on both has not extended to an independent audit 13 farmers as beekeepers. Now in Commentary the culture and demographics of consumption of the data. full production, the farmers are Resources and waste Champion the adoption of Guidelines in use by brand teams Conserves materials and habitats Generates consumer support and This report provides readers with a clear around the world because such information is sustainable packaging cost savings selling honey and propolis – a medicinal resin collected by bees understanding of Diageo’s activities and relevant to Diageo’s reporting of its responsible The Corporate Citizenship Company Economy – in Uganda and the UK to impacts worldwide, reflecting key issues drinking efforts. Information about Diageo’s www.corporate-citizenship.com supplement their income from as identified by Diageo and its stakeholders. principal shareholders and how they influence 29 August 2007 other crops. Financial contribution Build total shareholder return Delivered accelerated financial growth Encourages investment, employment A requirement for business success The introduction highlights both the benefits its policy and decision making would also and returned £2.3bn to shareholders and business opportunity to Diageo and to society of action on these be welcomed. key issues.Targets are referenced throughout Promote high standards of Implemented Sarbanes-Oxley; Supports integrity of business sector Strengthens relationships with all Diageo Australia supported An outbreak of malaria, not Above middle During One issue raised by young governance, compliance and management concluded that as at stakeholders Earth Hour, an environmental seen in Jamaica for over 40 years, Christmas and the New Year, people attending a debate on although we believe consolidation of these Diageo’s work with the Suppliers Ethical transparent reporting 31 June 2007 internal control over awareness event launched by the affected over 200 people this year, Guinness provided 70,000 party- drinking and road safety in Spain would help readers’ understanding of Diageo’s Data Exchange (Sedex) and other initiatives financial reporting was effective city of Sydney, by turning off all mainly around Kingston. Receiving goers in Singapore with a free ride was how to be responsible about progress and plans. has helped to make some progress on its non-essential lighting at our offices a donation of £7,500 from the home. Research afterwards found car use when public transport is commitment to encourage responsibility Supply chain management Promote our standards throughout Ethics and human rights Encourages business sector integrity Improves business relationships and and production plants. More than managing director of our Jamaican that four out of five consumers not available. As joint organisers Diageo has implemented a consistent in its supply chain. Last year we said that Printed on Forest Stewardship Council-certified, two million Sydneysiders joined business, the minister of health agreed that Guinness was a of the debate with the road traffic the supply chain management practices recorded by reputation approach to management across its businesses reporting should include information on the elemental chlorine-free paper. Fully recyclable. our suppliers via Sedex the initiative and power suppliers praised Red Stripe as ‘the only responsible brand and two out of department of the Ministry of the reported a 10.2% drop in energy company to come forward and three said the campaign had Interior, we plan to work with globally. High levels of employee engagement procurement of raw materials, in particular usage across the usually glittering offer help in the fight against changed their attitude towards Consider the social, environmental Suppliers’ practice in human rights, Responsibility encouraged in the Improves business and community Spanish on-trade associations to and empowerment are reported. As systems are regarding Diageo’s relations with small farms Designed and produced by Sydney business district. the disease.’ drink-driving. address this important concern. and economic impacts of major business ethics and environment is value chain relationships embedded and strengthened, Diageo is further that feed into the supply chain.There remains 35 Communications. Printed by CTD. procurement decisions included in all significant sourcing decisions Priorities and progress Diageo around the world in 2007 External assurance statement

Key impact Priorities Progress Benefit to Benefit to area for action and plans society Diageo

Thirty Diageo wine marketers Summary assurance and commentary improving performance by sharing information, scope to report more fully on impacts in these Society in California, USA helped conserve Diageo has commissioned The Corporate data and best practice across the organisation. areas.There is more work needed to assess a the nearby Fagan Marsh Ecological Responsible drinking In all businesses, deliver a Initiatives continuing, completed or Discourages harmful patterns of Builds relationships with a broad Citizenship Company to provide it with external The roll-out of initiatives such as the Safety greater proportion of Diageo’s supplier base Reserve on the Napa river by responsible drinking initiative and underway in 45 markets behaviour range of stakeholders collecting half a tonne of rubbish, assurance and commentary on its Corporate Culture Maturity Model and high levels of through Sedex and to move Diageo’s Licence evaluate its effectiveness including nine tyres, two vacuum Citizenship Report 2007. Diageo’s management investment in occupational health and safety to Operate for Third Parties beyond pilot phase. cleaners and a car back seat. Led has prepared the report and is responsible for reflect Diageo’s commitment to employee Engage employees in living our Programmes delivered in Australia, Employees as ambassadors reinforce Enhances reputation and employee by a former Diageo Earthwatch its contents. Our objectives were to review its welfare and embedding responsible corporate Despite Diageo’s high levels of employee responsible drinking policy Brazil, Ireland, UK and Venezuela responsibility message engagement champion, the project aimed to promote biodiversity, cleaner water contents and presentation, to conduct selected behaviour. engagement and its stated commitment to Participate in constructive industry Contributed to regional workshops Reduces negative health and social Provides balanced view of the role of and ultimately healthier growing checks to underlying records and other promoting a diverse workplace, we believe consultations with WHO on alcohol on self-regulation in Asia Pacific and impacts of alcohol abuse alcohol in society conditions for vines. evidence, and to provide this statement for The inclusion of the environmental life cycle that Diageo’s reporting of employee profiles, abuse Africa which we have sole responsibility. A full version impact analysis of its Johnnie Walker brand demographics and related concerns should be of our assurance statement is available at is a significant step forward in Diageo’s strengthened to include further diversity issues. Consumer choice Implement our consumer Coverage now 37%. All relevant Facilitates informed consumer Builds brand reputation and loyalty Colleagues partnered with Each year in Ireland we information policy brands to comply by 2010 choices www.diageo.com, including information understanding of its environmental impacts. For an international company like Diageo there Un Techo Para Mi País (‘A roof sponsor more than 1,000 festivals about The Corporate Citizenship Company, It reflects the rigour Diageo is applying to are complexities to this. Nonetheless, we for my country’) to provide and other events, reflecting our Develop ways of measuring and Working on new measures of Enhances consumer choice Builds brand reputation and loyalty accommodation for poor families significant involvement in the our relationship with Diageo and the assurance environmental management. It is also in believe that more information about how reporting quality supplier and production quality in San Miguel Ajusco, 100km south sporting and cultural life of the process we have adopted.This statement keeping with the emerging trend to drive it manages and promotes diversity and the of Mexico City. A grant of £22,000 nation. Guinness was the main summarises our principal findings. corporate citizenship into brands, which is inclusion of targets would better meet the Community investment Invest 1% of operating profit in social Invested £20.7 million, or 1.0% of Addresses pressing community Strengthens relationships with from the business covered the race sponsor at the 2007 how most consumers relate to multi-brand expectations of a number of key stakeholders and community programmes operating profit issues communities materials for 30 houses, ten of Punchestown races, while Diageo corporations like Diageo. and initiatives. which were erected in just one sponsored the Charity Our opinion Focus on developing countries and Significant projects in Africa; strategy Focuses resources on where they can Strengthens relationships with day by 140 Diageo volunteers Sweepstakes for the Punchestown In our opinion, the report provides a fair and disasters, engaging employees with reviewed in other developing be most effective communities and employees from offices across Mexico. Kidney Research Fund. Kate balanced representation of the material aspects Looking ahead LBG assurance statement initiatives countries. Issued guidelines on local Harrington won the race riding of Diageo performance for 2007.We have This report represents a further advance in Diageo is an active member of the community programmes Moscow Flyer. examined the processes Diageo has in place Diageo’s approach to corporate citizenship LBG (London Benchmarking Group). for identifying, understanding and managing and reporting though future reports would The LBG model helps businesses Employee engagement Raise levels of employee Survey showed engagement with all Maximises fulfilling employment Employee engagement drives We’ve changed the way we and development engagement across all business areas values 2-3% up on 2006. Super- opportunities business performance corporate citizenship issues.Where we believe be strengthened if they addressed more fully to improve the management, measurement dispose of waste beer in the UK to material gaps in performance data and those risks, beyond climate change, identified and reporting of their corporate community as measured by values survey engaged employees up 5% to 29% treatment by anaerobic digestion – with a target for 2011 of 50% a switch mediated by the National stakeholder views on significant issues exist, by the company as significant – for example involvement programmes. It moves beyond Industrial Symbiosis Programme. they are identified below. those connected with business expansion in charitable donations to include the full range Embed health, safety and quality Following audits, improvement plans Enhances health and safety of Leads to compliance and greater Burning the methane produced emerging economies where sufficient resource of contributions (in time, in kind and in cash) standards in all parts of the business are being progressed and actions community members productivity makes enough energy to run In forming our opinion and making our will need to be invested to ensure adherence made to community causes, and assesses taken to address gaps the treatment plant.The new comments, we have based our work on the to Diageo’s global standards. the actual results for the community and arrangements save CO2 emissions Environment of 9,000 tonnes and divert 2,600 international assurance standard AA1000 for the business (www.lbg-online.net). As tonnes of waste from going down (www.accountability21.net), notably The ‘Diageo in the world’ chart provides useful managers of the Group, we have worked Climate change Implement our long-term energy Greenhouse gas emissions reduced Reduces emissions of climate change Leads to cost savings and greater the drain. considering materiality, completeness and context to the information presented and we with Diageo to ensure that it understands strategy by 9% in three years. Manager agents sustainability responsiveness.We have also had regard to believe that future reports would be enhanced the LBG model and has applied its principles appointed to drive energy strategy the reporting guidance for content and the by providing more information that is material to the measurement of community involvement Hives Save Lives Africa uses principles for defining quality contained in to understanding Diageo’s operations, notably programmes during the year to 30 June 2007. Water management Minimise water use and emissions to Reduced water use by 11% in three Conserves natural resources Leads to cost savings and protects apiculture to alleviate poverty and water years but BOD emissions have water supplies encourage conservation. In Mpigi, GRI’s G3 sustainability reporting guidelines how the alcohol industry as a whole functions Having conducted an assessment, we are increased. Established water group Uganda, we donated equipment (www.globalreporting.org). and Diageo’s role in it.We continue to satisfied that this has been achieved. Our work to drive further improvements including 40 beehives and trained recommend the inclusion of content on both has not extended to an independent audit 13 farmers as beekeepers. Now in Commentary the culture and demographics of consumption of the data. full production, the farmers are Resources and waste Champion the adoption of Guidelines in use by brand teams Conserves materials and habitats Generates consumer support and This report provides readers with a clear around the world because such information is sustainable packaging cost savings selling honey and propolis – a medicinal resin collected by bees understanding of Diageo’s activities and relevant to Diageo’s reporting of its responsible The Corporate Citizenship Company Economy – in Uganda and the UK to impacts worldwide, reflecting key issues drinking efforts. Information about Diageo’s www.corporate-citizenship.com supplement their income from as identified by Diageo and its stakeholders. principal shareholders and how they influence 29 August 2007 other crops. Financial contribution Build total shareholder return Delivered accelerated financial growth Encourages investment, employment A requirement for business success The introduction highlights both the benefits its policy and decision making would also and returned £2.3bn to shareholders and business opportunity to Diageo and to society of action on these be welcomed. key issues.Targets are referenced throughout Promote high standards of Implemented Sarbanes-Oxley; Supports integrity of business sector Strengthens relationships with all Diageo Australia supported An outbreak of malaria, not Above middle During One issue raised by young governance, compliance and management concluded that as at stakeholders Earth Hour, an environmental seen in Jamaica for over 40 years, Christmas and the New Year, people attending a debate on although we believe consolidation of these Diageo’s work with the Suppliers Ethical transparent reporting 31 June 2007 internal control over awareness event launched by the affected over 200 people this year, Guinness provided 70,000 party- drinking and road safety in Spain would help readers’ understanding of Diageo’s Data Exchange (Sedex) and other initiatives financial reporting was effective city of Sydney, by turning off all mainly around Kingston. Receiving goers in Singapore with a free ride was how to be responsible about progress and plans. has helped to make some progress on its non-essential lighting at our offices a donation of £7,500 from the home. Research afterwards found car use when public transport is commitment to encourage responsibility Supply chain management Promote our standards throughout Ethics and human rights Encourages business sector integrity Improves business relationships and and production plants. More than managing director of our Jamaican that four out of five consumers not available. As joint organisers Diageo has implemented a consistent in its supply chain. Last year we said that Printed on Forest Stewardship Council-certified, two million Sydneysiders joined business, the minister of health agreed that Guinness was a of the debate with the road traffic the supply chain management practices recorded by reputation approach to management across its businesses reporting should include information on the elemental chlorine-free paper. Fully recyclable. our suppliers via Sedex the initiative and power suppliers praised Red Stripe as ‘the only responsible brand and two out of department of the Ministry of the reported a 10.2% drop in energy company to come forward and three said the campaign had Interior, we plan to work with globally. High levels of employee engagement procurement of raw materials, in particular usage across the usually glittering offer help in the fight against changed their attitude towards Consider the social, environmental Suppliers’ practice in human rights, Responsibility encouraged in the Improves business and community Spanish on-trade associations to and empowerment are reported. As systems are regarding Diageo’s relations with small farms Designed and produced by Sydney business district. the disease.’ drink-driving. address this important concern. and economic impacts of major business ethics and environment is value chain relationships embedded and strengthened, Diageo is further that feed into the supply chain.There remains 35 Communications. Printed by CTD. procurement decisions included in all significant sourcing decisions Diageo Corporate Citizenship Report 2007 1 A decade to celebrate

We see our tenth anniversary as a time for looking forward, drawing on our decade of achievement as one business to provide the context for tackling the challenges ahead.

After Diageo’s formation, we quickly established threats and opportunities presented by this issue. innovation, relationships, reputation, our role in the structures our young company needed to In our programme to invest £100 million in new and society, our people, culture and values. A revised develop not just as a business dedicated to expanded distilling capacity in Scotland, announced Diageo leadership standard is already being delivering returns for shareholders, but as an this year, we hope to incorporate environmental applied to equip our managers for their role in industry-leading corporate citizen with an holistic features to significantly reduce our impacts there. leading our business through the challenges approach to the long-term aims of sustainability. of achieving our ambitious plans. Within the first six months, we agreed our set of Where we can, we work to support external company values and adopted a code of business initiatives which share or extend our aims. Our We can report progress this year on each of our conduct, responsible marketing code and employee One Million Challenge and HIV/Aids programmes priority areas and against the ten principles of the alcohol policy.The environmental working group in Africa are a significant contribution to achieving UN Global Compact. Our continuing commitment was set up, the Diageo Foundation created and the UN’s Millennium Development Goals. In July, to these principles ensures that we advance on all 1% of operating profit committed to community we signed a high-level business declaration that aspects of sustainability for the continuing benefit investment. Further achievements quickly followed. calls on companies to use their resources to help of everyone with a stake in our business.We achieve the Goals. hope this report, which for the first time we have When we address the range of sustainability prepared by applying the new G3 guidelines of issues, our aim is to achieve the continuing Our approach has earned much recognition. the Global Reporting Initiative, will provide all such success of our business within healthy, prosperous In an assessment of the 120 largest companies stakeholders with a compelling picture of Diageo communities and a stable environment. Our first in Europe, Diageo was placed in the top ten of as a good corporate citizen. priority, which developed strongly over the last the Good Company Ranking 2007 which selects decade, remains to ensure a sustainable place businesses whose employee policies and forward- We welcome your views on our report and its in society for alcohol beverages by taking strong looking approaches to environmental and social coverage of your concerns, our priorities and our and effective action to reduce the harm that issues have had a positive effect on their development as a sustainable business. occurs when alcohol is misused.The largest governance and profitability. section of this report is rightly devoted to the work we have done to build on our notable As befits the start of our second decade, we are track record on this central issue. continually looking to set stretching objectives Lord Blyth of Rowington Paul S Walsh for our employees in the areas of performance, Chairman Chief executive The other aspects of our corporate citizenship agenda are also vital to our continuing success. In this, our tenth anniversary year, we have advanced strongly in two such areas.

First, we have directed attention to community involvement. Diageo has long been celebrated for supporting projects that tackle social issues within our communities.This year our International division made its community programme a central part of business strategy. And within this region, Africa has been a particular focus.There, we have set ourselves the goal of providing access to clean water for one million people.

Second, the environment, too, has moved higher on the corporate citizenship agenda. Increasingly concerned about new estimates of the speed and gravity of human impacts on the climate, during the year we reconstituted our environmental working group to formulate an effective response to the 2 Diageo Corporate Citizenship Report 2007 Our business

Global priority brands by volume millions of equivalent units†

Smirnoff Johnnie Walker Guinness Captain Morgan Baileys J&B José Cuervo Tanqueray 2007: 28.1 2007: 15.6 2007: 11.3 2007: 7.8 2007: 7.4 2007: 5.8 2007: 5.2 2007: 2.1 2006: 26.9 2006: 13.7 2006: 11.1 2006: 7.2 2006: 7.0 2006: 5.9 2006: 5.1 2006: 2.0

†An equivalent unit is that volume of beverage which contains the same number of servings as a nine-litre case of spirits. Includes ready-to-drink beverages.

Sales by North America Europe Sales* % 2007 2006 business region Europe 38.3 39.8 29.6% 38.3% North America 29.6 30.8 Asia Pacific 11.5 10.8 International 20.6 18.6 *Excludes corporate sales of £75m.

Europe Sales £3,765m Costs £3,042m Employees 11,033 Volume (equivalent units) 40.9m 20.6% 11.5 % Top three brands (volume) Smirnoff, International Asia Pacific Guinness, J&B

North America International Asia Pacific Sales £2,915m Sales £2,031m Sales £1,131m Costs £2,065m Costs £1,532m Costs £935m Employees 3,719 Employees 5,300 Employees 2,468 Volume (equivalent units) 50.2m Volume (equivalent units) 37.3m Volume (equivalent units) 12.9m Top three brands (volume) Smirnoff, Captain Top three brands (volume) Johnnie Walker, Top three brands (volume) Johnnie Walker, Morgan, José Cuervo Smirnoff, Guinness Smirnoff, Bundaberg

Key figures Sales £million Volume millions of Employees equivalent units 06 9,704 06 133.8 06 22,619

07 9,917 07 141.3 07 22,520

Operating costs £million Operating profit £million Total assets £million Capitalisation £million Equity Debt 06 7,660 06 2,044 06 13,927 06 29,749

07 7,758 07 2,159 07 13,956 07 32,016 Diageo Corporate Citizenship Report 2007 3 Getting to know Diageo

Our brands have unique consumer appeal, yet all have important features in common: quality ingredients, skill and care in manufacture and Diageo’s reputation as a successful company and responsible corporate citizen.

Overview of our business 19 warehousing and other facilities.The most different trends in the various regions of the The world’s leading premium drinks business, significant of these production centres are world. Over this time, there has been a small Diageo’s aim is to create value by producing, located in Australia, Canada, Cameroon, Ghana, decline in consumption in the Americas and marketing and distributing alcohol beverages. Ireland, Jamaica, Kenya, Nigeria, Uganda, the UK Africa and a larger fall from a higher level in Europe. The company was formed a decade ago through (most importantly Scotland) and the USA.The There have been increases in the Western Pacific the merger of Grand Metropolitan and Guinness. remaining 20% of our brands are produced in and, recently, South-East Asia, with little change Four years later, we acquired additional spirits and many countries either by joint-venture businesses in the area around the Eastern Mediterranean. wine businesses from Seagram and, more recently, in which we have a non-controlling share or have added other brands by acquisition and under contract with commercial partners. Diageo is the world’s leading premium drinks innovation. Many of Diageo’s forerunner businesses, business, accounting for some 55% of the volume and the brands at their heart, have a rich heritage Our strongest drivers of growth are our eight of the world’s top 10 premium spirits brands of inventiveness, entrepreneurship and philanthropy. global priority brands, shown opposite, which (according to Impact), and we are the leader in this While J&B and Guinness can trace their origins to accounted for around 59% of total volume in business in many countries.This context provides the 18th Century, the longest history belongs to 2007 and five of which are world leaders in their us with both challenges and opportunities as we Bushmills Irish whiskey, launched in 1784 under categories. In addition to these is a range of over aspire to lead our industry in setting standards for a royal licence to distil granted to County Antrim 150 further brands, many of them local market responsible marketing and defining a sustainable in 1608. Our collection of brands is not a static category leaders. More information about Diageo place for alcohol beverages in the societies in list.Through an active programme of research brands, and links to some dedicated websites, are which we operate. and development, we continue the tradition of available at www.diageo.com.This year we sold a introducing new products, some of which we hope total of 141.3 million ‘equivalent units’ of product, will become the heritage brands of the future. an equivalent unit being 272 servings of each beverage, the same as the number of measures Measured by market capitalisation in 2006, Diageo of spirits in a nine-litre case. Expressing the total was ranked by the Financial Times among the in more familiar terms, each day around the world 150 largest companies in the world.The company’s consumers enjoyed 80 million measures of Diageo primary share listings are on the London and spirits, 18 million glasses of beer, six million bottles New York stock exchanges. Headquartered in of our ready-to-drink brands and two million 150 London, Diageo trades in some 180 markets. glasses of wine. Measured by market capitalisation Demand functions, comprising marketing and in 2006, Diageo was ranked by sales, are organised into four regions: North America, The alcohol beverage industry the Financial Times among the which in 2007 generated approximately 37% of Most recorded alcohol beverages consumed in 150 largest companies in the world. operating profit, Europe (32%), International (22%) the world fall into the broad categories of spirits, and Asia Pacific (9%). Our supply organisation wine and beer, which account for roughly equal controls the manufacturing, packaging and parts of the total alcohol consumed – an warehousing of our brands. About 80% of these estimated average of 5.1 litres per adult annually are produced directly by Diageo businesses, some across the globe. According to the World Health of them companies which are themselves quoted Organisation, this figure, and the consumption on local stock exchanges.We operate 35 distilleries, of the different beverage categories, have stayed 15 breweries and 10 wineries, supported by more or less constant for the last two decades, 20 blending and packaging plants and though underlying this global stability are 4 Diageo Corporate Citizenship Report 2007 The meaning of sustainability

No. of Units

Enrich Create Conserve the Promote responsible communities value environment drinking

Diageo Stakeholders

Pursue Law, standards Provide quality and integrity fulfilling jobs

Our priorities, policies and codes

It’s not only the right thing to do, but also makes Our priorities good commercial sense to contribute to the Society For a business as large and complex as Diageo, long-term development of the markets and – Responsible drinking the variety of issues which face us dictates that regions in which we operate because sustainable – Consumer choice we must focus our efforts on priority areas – those communities in stable natural environments – Community investment that engagement with stakeholders shows to be – Employee engagement provide the most likely context for the enduring and development of concern, which present significant business success of our business. Such success creates value risks, support our immediate communities or for investors, employees, commercial partners and business partners, and underpin Diageo’s values, others with a stake in Diageo, and – in a virtuous policies or strategy.We also work where we can circle – in turn presents us with greater opportunity Economy Environment use our resources and expertise to make the most to invest in social and environmental projects. positive difference.The result is an emphasis on – Financial contribution – Climate change – Value chain – Water management the following important sustainability issues: All this can be achieved only if our communities management – Resources and are themselves economically sound, societal waste – Society – responsible drinking, consumer problems are addressed and environmental choice, community investment, employee resources are conserved. If issues that could engagement and development compromise the needs of future generations are not effectively dealt with, sooner or later they – Environment – climate change, water will impact our consumers, our industry and our activities and products have on society and the management, resources and waste business. For example, without enterprise and environment. Sometimes – for example, when opportunity, consumers will be less able to afford investing in community enterprise or infrastructure – Economy – financial contribution, value chain our brands; without clean water, our breweries and projects or when responding to disasters – we go management. distilleries will suffer along with the communities beyond this to try to tackle pressing social issues in which they are located; if HIV/Aids goes and make a real difference to people’s lives. Our priorities and progress in each of these areas unchecked, it is our employees, suppliers and during the year is shown in the table on the consumers who are potentially affected; and if Considering issues broadly, not just according to inside front cover of this report.These priorities alcohol beverages are consumed irresponsibly, financial considerations, is a principle that’s built are under continuous review – as actions are families and society are put at risk. into our policies and ways of working, showing completed or incorporated into routine ways of how determined we are to progress apace towards working we take them off the list, adding issues Our approach to such issues is to embrace good sustainable positions in all of our activities.This for attention as they emerge. corporate citizenship, where the rights conferred commitment has been recognised in each of the by society to trade freely and be treated fairly last three years by Diageo’s inclusion in the Global are balanced by our responsibilities towards our 100 list of most sustainable companies, for which stakeholders, communities and the environment. businesses are evaluated according to how We cannot solve all of society’s problems alone, effectively they manage environmental, social but as a good corporate citizen we can make a and governance risks and opportunities, relative meaningful contribution by enthusiastically living to their industry peers (www.global100.org). our values and committing to our comprehensive range of codes and policies.We attempt, as a minimum, to address the impacts that our own Diageo Corporate Citizenship Report 2007 5 Promoting responsible drinking

Neither we nor society benefits when consumers misuse our products, so promoting responsible drinking is the right thing to do and is key to the sustainability of our business. Our priorities

Society Environment Economy

In many parts of the world, alcohol beverages of our brands’ loyal consumers. Our unshakable by our marketing colleagues and external have been a popular source of enjoyment and a commitment to these principles contributes to agencies are enshrined in the Diageo marketing common accompaniment to social interaction for the sustainability of our business by strengthening code.We regularly review the code and update centuries. Often a key ingredient in ceremony and relationships with consumers, governments it as new issues emerge. celebration, drinking is deeply integrated into the and other stakeholders. At the emotional level, values, cultures and economies of many societies. we are proud of our great brands and of working Training in the marketing code forms part of the The industry that produces and distributes spirits, for a company that acts with integrity. Diageo induction programme for relevant new employees; wine and beer delivers additional benefits for employees are themselves members of families and our marketing and innovation teams and society, such as generating substantial tax and we care about the safety of our own loved agencies regularly attend refresher courses on its revenues, providing employment and creating ones and communities.We’re proud of the part interpretation.Marketing code training took place business opportunity.We are proud of the role our products play in celebrating life and sharing in many countries and major sessions were held that Diageo brands play in the lives of so many fantastic times and we want to do what we can in Canada, China, Greece, India, Ireland, Nigeria people.We also acknowledge that – like many to stop people putting themselves at risk by and the UK.Workshops are complemented by other products – when misused, alcohol can misusing alcohol. an online e-learning course, which is available lead to individual and social harm. in French, English and Spanish to both Diageo employees and our agency partners. We believe that this potential for harm is In summary, the three strands of preventable and that a valuable and sustainable our strategy are to: This year we launched a new digital code of place in society can be found for alcohol beverages. practice which sets standards for marketing Defining this is a collective responsibility, involving – set world-class standards for through media such as the internet and mobile not only producers like Diageo but also consumers, responsible marketing and phones, with particular emphasis on limiting retailers, educators, researchers, non-governmental product innovation access and appeal to only those over the legal organisations (NGOs), law enforcers and purchase age for alcohol. Around 450 marketers governments. Our contribution is to maintain – raise consumer awareness of have been trained in the digital code and 50 No. of high standards of responsibility in our own activities, responsible drinking behaviour Units more have been trained as trainers. An e-learning promote such standards strongly in our industry course is to be made available to all employees and, working with others, invest in awareness- – combat alcohol misuse, and marketing partners. raising campaigns and other practical initiatives working with others to reduce that tackle misuse by aiming to change people’s alcohol-related harm. The development of digital media has opened attitudes and behaviour. new avenues for raising awareness of responsible drinking amongst consumers. In Britain, Smirnoff’s Some people ask why a drinks company would Responsible marketing and innovation mobile internet site incorporated ‘proper partying’ put so much effort into responsible drinking We use advertising, promotion and other marketing reminders of how to enjoy a night out and get initiatives. For Diageo the case for doing so is techniques to inform consumers about the choices home safely. In Greece, we used SMS and a mobile both rational and emotional. Rationally, there is available to them and to compete for market share. phone game to randomly designate a driver an irrefutable business reason for promoting the Our aim is to beat our competitors by attracting from groups of friends. Responsible drinking sensible use of our products.We want consumers adult consumers to our products and by encouraging information was built into the online voting to enjoy our brands, which they cannot do if they those who enjoy alcohol beverages to trade process as consumers chose their favourite drink to excess. And it is not in our interests if the up within our collection of premium brands. responsible drinking scenario as part of Australia’s bad behaviour of a few alienates the majority The strict standards of responsibility observed Bundaberg Rum ‘Fine Form’ campaign. 6 Diageo Corporate Citizenship Report 2007 Promoting responsible drinking continued

a

b c d a We use advertising extensively b As responsible drinking c This year over 4,000 employees d At the Canadian F1 Grand Prix, in the USA to raise awareness ambassador for Johnnie Walker’s were taken through our responsible Mika Hakkinen presents a board of of responsible drinking issues. cricket world cup campaign, drinking awareness programme. responsible drinking pledges to the Sir Vivian Richards spread the head of the Montreal traffic police. message widely in the West Indies.

We operate a systematic review process to check Spirits Council of the United States (Discus) and been approved for broadcast by the official that our code is followed at the key stages the Wine Institute.We report complaints about Central Copy Clearance Ireland and was withdrawn. of a brand development or marketing project. Diageo marketing activities upheld by these If a potential breach is identified, action is taken bodies. No such complaints were upheld by In the UK, when the ASA raised concerns about to bring the project into compliance before it MEAS or the Wine Institute. parts of a Smirnoff Ice campaign potentially is allowed to proceed. Should some aspect of having appeal to people under the legal purchase a project which presents a potential violation of Complaints upheld age for alcohol beverages, we had already the code slip through this process, we investigate 2007 2006 2005 2004 2003 withdrawn the campaign. it, take remedial action and seek to ensure that similar issues do not recur. By ABAC, Australia In the USA in 2006, we immediately withdrew All alcohol beverages 3 34 a Baileys TV advertisement following a Discus To improve the efficiency and accountability Diageo brands 0 10 judgment that it created the impression of an of the way we approve advertisements before By ASAI, Ireland excessively large pour of the liqueur, despite an release, we have developed ‘SmartApprove’, All alcohol beverages 1 0 on-screen caption that recommended a 50ml an on-line tool which co-ordinates approval by all Diageo brands 1 0 serving.This year, we removed a Baileys poster the necessary functions within Diageo – marketing, By ASA, non-broadcast*, UK which had been placed by our media contractor legal, intellectual property and corporate relations. All alcohol beverages 5 5779within 500 feet of a school, in violation of the The system is in operation in Britain, America and Diageo brands 1 0010Discus code. And an actress in a TV commercial Iberia and will be implemented in other markets By Portman Group, UK for Smirnoff Ice was judged to appear under in the coming year. All alcohol beverages 2 3 9 10 12 the legal purchase age for alcohol due to Diageo brands 0 0000her orthodontic headgear. Alerted to this Our marketing code applies in addition to external By Distilled Spirits Council, USA interpretation, we had already withdrawn † regulations – for example, the Common Standards All alcohol beverages 15 717 the ad. for Commercial Communications of the European Diageo brands 2 11 Forum for Responsible Drinking (EFRD), designed to *Broadcast advertisements are included from July 2006. The Seychelles Drug & Alcohol Council (DAC) promote responsible spirits marketing among EFRD †All members’ brands plus non-members’ spirits brands. raised a complaint about a promotion that members.The standards, which we helped compile Years are 1 July-30 June. offered prizes in exchange for Guinness bottle with other industry members, were updated this tops, claiming that the number of tops required year with new guidance on sponsorship. In April 2006 in Australia, a complaint that a for some prizes was excessive and might lead to Bundaberg rum commercial was aired during irresponsible consumption.We promptly amended Bodies in many countries assess complaints from daytime sport programmes and might appeal the promotion with DAC’s support.We made the public about alcohol beverage marketing, to an underage audience was upheld by ABAC, changes to our compliance procedures and judging standards against their codes of practice. and we withdrew the commercial immediately. have planned refresher training in our marketing Important examples include: the Alcohol code, to which DAC personnel have been invited. Beverages Advertising Code (ABAC) in Australia, A TV commercial for Budweiser, which we distribute the Advertising Standards Authority for Ireland in Ireland, was found to breach the ASAI’s code Raising consumer awareness (ASAI) and Mature Enjoyment of Alcohol in which states that advertisements ‘should not While the vast majority of people who choose Society (MEAS) in Ireland; the Advertising portray drinking alcohol as a challenge nor should to drink alcohol beverages do so responsibly, Standards Authority (ASA) and the Portman it be suggested that those who drink are brave, others do not. Producers, retailers, the wider Group in the UK; and, in the USA, the Distilled daring or tough’.The commercial had previously hospitality industry and others have a role in Diageo Corporate Citizenship Report 2007 7

14Server training programmes are running in 14 markets 45 Responsible drinking initiatives have been completed or are underway in 45 markets

encouraging responsible attitudes and behaviour for existing employees and this year over Formula One team as a platform from which to in this minority. Our approach is to use our 4,000 colleagues completed this programme. promote responsible drinking to a key audience. communications skills to raise awareness about In this year’s global values survey (see page 19), This year, Mika Hakkinen, twice Formula One the potential for harm from alcohol misuse and 91% of responding employees said they thought champion, became Johnnie Walker’s responsible provide information to help consumers make Diageo was effective in promoting responsible drinking ambassador and has played a key role reasoned decisions about drinking or not drinking. drinking, up from 89% in 2006. in raising awareness of alcohol issues – particularly in relation to driving – and emphasising the The responsible drinking TV ads we ran in the Combating alcohol misuse importance for groups of friends of designating UK were the first nationwide campaign by an We work with others to help combat the misuse a driver before a night out. As a role model for alcohol beverage producer.The message of of alcohol and reduce the harm that can result professionalism, precision and control, Mika is a the two 30-second ads was that ‘social currency’ from it in four important areas: drink-driving; worthy ambassador for promoting these messages among groups of friends is jeopardised by server training; the behaviour of young adults; among motor-racing fans. drinking too much – summarised by the tag lines and underage drinking.The Diageo Responsible ‘Don’t see a great night wasted’ and ‘Make sure Drinking Fund, which had resources this year of During the 2007 racing season, Mika took you like what you see’.Evaluation showed that £800,000 (included in the analysis of community the message ‘Winners always stay in control – viewers considered the ads easy to understand, investment on page 14), provides seed-corn never drink and drive’to a number of Grand Prix 96% saying it was good to see a drinks company funding and expertise to help Diageo businesses meetings. At the Malaysian Grand Prix, he promoting responsible drinking. Of those around the world establish initiatives in these four launched a designated driver programme. And watching the two ads, 59% and 71% respectively areas. In most cases, campaigns are further funded a competition offered motorsport fans in Kuala said they would consider drinking more by the businesses themselves and are often Lumpur the chance to win Mika as their very responsibly as a result. managed in partnership with external bodies own designated driver to drive them home such as government agencies or other groups following the Formula One event. At the Canadian The first pan-Caribbean responsible drinking with specialist knowledge or expertise. Grand Prix, Mika and Vodafone McLaren Mercedes programme,‘Know your boundaries’,was the driver Lewis Hamilton challenged race goers and centerpiece of Johnnie Walker’s sponsorship of Drink-driving We believe governments Montrealers generally to sign a pledge not to drink the ICC Cricket World Cup. During the two-month should set legal limits for drivers’ blood alcohol and drive. For every signature pledged, Diageo campaign, Sir Vivian Richards, one of the game’s concentration, take tough measures to enforce contributed $1 to Educ’alcool, the Quebec-based greatest-ever players, toured the West Indies to the law and impose strict penalties on those social aspects organisation which promotes raise awareness of the importance of responsible guilty of drink-driving.We support such actions responsible drinking. drinking. And Sir Vivian attracted further attention through campaigns to raise awareness of the risks by issuing a challenge: Johnnie Walker would of drink-driving and encourage people to change ‘Responsibility at heart, safety on the road’ was donate US$1 million to charity if any batsman their habits to help reduce the number of drink- the theme of our responsible drinking campaign struck six sixes in an over during the tournament. drivers on the road. Our projects are often run in in Shanghai for the 2006 Chinese Grand Prix. Within days, South African Herschelle Gibbs partnership with organisations such as the police Working with the Shanghai traffic police, the became the first person in international cricket or road safety organisations. campaign encouraged people to sign up to a to achieve this feat, releasing the funds to housing commitment not to drink and drive, whilst raising charity Habitat for Humanity with whom we When Diageo signed the European Road Safety awareness about alternative forms of transport for are working on construction projects for needy Charter in July 2006, we made five commitments: a night out.The campaign was run in conjunction families in the Caribbean and South Africa. to implement responsible drinking activities with with drivers from the Dazhong Taxi Company our 8,000 EU employees; to initiate responsible who themselves took the oath.There are indications Red Stripe, our business in Jamaica, this year drinking activities in all EU member states; to reach that public awareness raised by the Diageo launched a multi-media responsible drinking over one million adult consumers with anti- campaign contributed to a recorded 6% fall in campaign. Dubbed ‘Think responsibly, drink drink-driving messages; to support the European traffic accidents in Shanghai while it was running. responsibly’,the executions covered radio, Transport Safety Council; and to encourage TV and print media and were supported by individual Diageo businesses in Europe to make The campaign was also taken to Europe. For example, public seminars at universities to educate and their own commitments under the charter. In each in Italy, the Guida il tuo Team (Drive your Team) raise awareness.The Jamaican Ministry of Health of the five areas, we are close to achieving our programme was run in partnership with Automobil and National Road Safety Council both endorsed three-year ambition in less than a year. As part Club d’Italia (ACI) as part of our contribution the campaign. of meeting one commitment, a new two-year towards halving road deaths in Europe by 2010. partnership between Diageo and the European A communication campaign through ACI branches As ambassadors for Diageo, it’s important that Transport Safety Council has established Europe’s and outlets was followed up by events in Rimini, our employees support our responsible drinking first dedicated Drink Driving Policy Network to Rome and Turin to encourage the idea of designated activities and themselves show a sensible attitude promote road safety. A research programme drivers among men in their twenties. to drinking both in and out of the workplace. aims to identify best practice for reducing alcohol- Responsible drinking forms part of the induction related accidents among repeat drink-drivers and A ‘Don’t drink and drive’ campaign was an programme for new employees which introduces novice drivers. important part of Diageo’s sponsorship in our employee alcohol policy and the standards Denmark of the Skanderborg Festival, the fourth of behaviour we expect from colleagues.We also Since 2005, we have used Johnnie Walker’s largest in Europe, which attracted 35,000 music run responsible drinking awareness sessions sponsorship of the Vodafone McLaren Mercedes fans.The very visible campaign included posters 8 Diageo Corporate Citizenship Report 2007 Promoting responsible drinking continued

a b c a ‘Once the party is over, take a back b Five well-known celebrities gave c Johnnie Walker’s designated driver seat’ was Johnnie Walker’s free offer their endorsement freely to our campaign ‘Piloto da vez’ received wide in Delhi and Mumbai, India during ‘Guardian angels’ responsible publicity at the Brazilian Formula One the festive season. drinking campaign in Venezuela. Grand Prix.

and signs throughout the venue, articles in has continued to grow. Diageo ‘Guardian angels’ 7,000 individuals over the next year. Our aim is to programmes, badges and strong PR. Of festival- have now reached 12,000 consumers with their improve the quality of service and professionalism goers polled, 86% said they’d seen the advertising. advice to drink responsibly and to designate in the local hospitality industry and set a And 500 alcohol blood tests conducted by a driver after an evening out.The project has benchmark in responsible serving and bartending the police found only one driver over the limit, benefited from partnerships with several local NGOs in Singapore. Similar aims were behind the a record that the officer in charge credited to and government ministries. Consumers polled establishment of the Johnnie Walker Bartending the effectiveness of the Diageo campaign. about their reactions to the campaign welcomed Academy in Mumbai.The first of its kind in India, the friendly approach to a serious issue by our the academy is working to introduce world-class Responsible drinking is also the focus of Crown guardian angels and accepted designating a driver standards of bartending, create a talent pool Royal whisky’s sponsorship of a Nascar motor as a solution. of professionals and promote bartending as racing team in the USA. Supporting the Safe a worthwhile and responsible job. Six-month Rides Home campaign, Nascar driver Jamie In the run-up to the festive season in India we courses are offered for classes of 20 students. McMurray created interest at many race meetings launched a TV campaign in partnership with As well as covering the essentials of running a when he and his team of drivers offered adult broadcaster CNBC to raise awareness of the dangers successful bar and offering exceptional customer consumers a free lift in a taxi.We hope the event’s of drinking and driving. As part of the campaign, service, the curriculum includes modules on message will be reinforced by a series of TV Diageo working with a local taxi company ran a free responsible serving. Alumni of both the Singapore commercials, due to air this coming year, which taxi-ride home offer on Christmas and New Year’s and Mumbai schools are awarded certificates use humour to make the serious point that Eve to consumers who signed up to the campaign. which we hope will become prized as a sign consumers should act responsibly and always The move generated wide publicity and further of professionalism and responsibility. arrange a safe ride home. In support, public public awareness of the important message. service announcements on TV and radio will Young adults In many countries, an irresponsible promote the www.b4udrink.org website which Our joint venture business in South Africa, attitude to alcohol by young adults just over the aims to increase awareness of the effects of brandhouse, ran a series of three hard-hitting legal purchase age is a social and health concern alcohol on the body. radio advertisements in December which which we have helped address with initiatives in attempted to change traditional attitudes towards many markets. In Latin America, our campaign, known as ‘Piloto drink-driving. Across Africa, we have also run da vez’ in Brazil and ‘Conductor designado’in seven seasonal anti-drink-driving campaigns in Ghana, In partnership with the National Union of Spanish-speaking countries, encourages this same Kenya, Nigeria, Seychelles and Uganda. Students, we extended our ‘Know what’s in it’ idea of designating a driver.This year 40 winners initiative to 53 UK universities.The campaign of a web-based responsible drinking quiz received Server training Bar staff are often in a good aimed to remind students of the number of units a trip to the Brazilian Formula One Grand Prix position to influence the attitudes and behaviour of alcohol present in particular drinks and the where they participated in a driving-skills course, of their customers.We run courses in many recommended limits for men and women.To assess with a lucky few being escorted around the course countries to help bartenders acquire new skills, the impact of the initiative, we surveyed students by the Vodafone McLaren Mercedes test driver particularly in responsible serving, to help put and found that all respondents understood the Pedro de la Rosa. this influence to good use.We currently have aims of the campaign, 67% found the messages programmes in 14 countries. easy to understand and 72% learnt something This year, we took the ‘Guardian angels’ project, from it about responsible drinking. Following developed in Venezuela, to Argentina, Costa Rica, In February we opened the Diageo Perfect Serve these positive results, we re-ran the programme Dominican Republic, Mexico, Nicaragua and Centre in Singapore where we plan to deliver in 20 universities in an attempt to achieve a Puerto Rico. In its home country, the campaign a bespoke bartending skills programme to cumulative effect. For the first time, we also Diageo Corporate Citizenship Report 2007 9

a b

a Students of the new Johnnie Walker Bartending Academy in India learn the essentials of managing a responsible and successful bar.

12,000 c d Diageo ‘Guardian angels’ have b Mountaineers show Venezuelan c Our ‘Don’t drink and drive’ d We use Johnnie Walker’s support delivered responsible drinking advice students how responsibility and campaign at Denmark’s for the Vodafone McLaren Mercedes to 12,000 consumers in Latin America. self control were needed to climb Skanderborg Festival was recalled Formula One team to promote Patagonia’s difficult Cerro Torre peak. by 86% of music fans questioned. responsible drinking.

promoted the point-of-sale items in three public Many young people experiment and encounter Tokyo in June of that year, looked at self-regulation bars in Glasgow to assess the message’s resonance problems with alcohol. During the year we in the Asia-Pacific region, under the auspices of outside the student community. Evaluation supported sensitively-designed initiatives in a the International Center for Alcohol Policies (ICAP), showed that in bars where ‘Know what’s in it’ number of countries to help address this issue. in partnership with the Brewers Association of materials were available, non-students’ average Japan and the Japan Spirits and Liquor Makers recall of Department of Health recommended In the UK, Spain and Poland we are working with Association.The second workshop was held in daily limits for alcohol consumption had improved. researchers from Oxford Brookes University and Cape Town in October, with a regional focus on other partners to support European pilots of the Africa. Participants at both workshops included In Venezuela, Diageo is leading the public debate Strengthening Families Programme 10-14 (SFP), industry representatives, policy makers, public on responsible drinking.This year, we sponsored which aims to reduce the problems associated health professionials and NGOs.The meeting the ‘Responsible achievers’ programme which with alcohol misuse in adolescence. Following an reports and conference declarations are available promotes responsibility with alcohol among original investment in SFP by the Home Office, the on the ICAP website (www.icap.org). university students over the legal purchase age. Alcohol Education Research Council and Diageo, In the programme, Venezuelan celebrities from the Department for Education and Skills has During a World Health Assembly debate in the worlds of sport, the arts and entertainment now provided funding for SFP training in local May on evidence-based strategies to reduce share their stories of achievement with students, authorities throughout England.The first peer- the harmful use of alcohol, several member states stressing the importance of responsibility, self reviewed research paper outlining progress in put forward a resolution proposing action. It is control and determination.The first group of this was published during the year. regrettable that the WHA was unable to agree to talents to feature were the ‘Proyecto Cerro Torre’ the resolution.We look forward now to working expedition team, mountaineers who conquered In September 2006, we co-hosted with Mentor UK with the WHO and member states to find a way the summit of Cerro Torre in Patagonia, recognised the first ever Alcohol Misuse Prevention Awards forward.The issue is expected to be discussed by climbers as one of the most difficult in the world. which aimed to recognise and promote excellence next at the forthcoming WHO Executive Board in prevention activities among primary school meeting in January 2008. In 2007, for the first time, we took Diageo Australia’s children.Three winners in the categories of schools, alcohol education programme DrinQ beyond communities and young people’s involvement Around the world, Diageo has helped establish its usual audience of employees and partners each received a cheque for £10,000 and a further many social aspects organisations (SAOs) – by teaming up with the Rugby League Players’ £10,000 worth of mentoring and consultancy industry-funded bodies that work to tackle Association to deliver DrinQ to 20 leading players support. A handbook, using the winners as alcohol misuse and promote responsible drinking. from eight clubs. Historically, rugby league players examples of best practice, has been produced. We often work with SAOs to develop consistent have had a reputation for alcohol misuse.With the voluntary codes of responsible marketing or support of the RLPA, these athletes will act as Working with others raise awareness in areas of alcohol misuse.The ambassadors for responsible drinking and help We welcome open dialogue with public health countries covered by SAOs in which we are deliver the programme to others in their clubs, authorities, the scientific commmunity and others involved accounted for 66% of Diageo’s business eventually hoping to reach everyone in the sport. on responsible drinking and related issues. At a by volume in 2007. consultation with the World Health Organisation Underage drinking We share the concerns of in 2006, representatives of the alcohol beverage In some countries we have the opportunity to many people about underage drinking. A number industry – including Diageo – committed to invest in responsible drinking initiatives as an of factors are known to influence young people’s holding a number of regional workshops on best industry, so marshalling greater resources to attitudes and behaviour towards alcohol, with practice in self-regulation of alcohol beverage make a bigger impression on consumers’ attitudes parents and peers being especially important. marketing practices.The first of these, held in and drinking patterns. In Ireland and the USA, 10 Diageo Corporate Citizenship Report 2007 Promoting responsible 91% In this year’s global values survey, 91% of responding employees said they thought Diageo was effective drinking in promoting responsible drinking, continued up from 89% in 2006.

a b c a With Diageo’s backing, the b Crown Royal whisky’s Safe Rides c Part of Diageo’s responsible drinking US Century Council launched the Home campaign featured Nascar campaign in China was a ceremony hard-hitting ‘We don’t serve teens’ driver Jamie McMurray in humorous in which taxi drivers publicly took point-of-sale campaign. situations to make a serious point. an oath not to drink and drive.

Diageo memberships of social many’ and a guide to responsible drinking for debate, including Alcohol Concern.We were aspects organisations summer music festival goers. leading protagonists in the evolution of the DrinkAware Trust and are proud of the role it DrinkWise, Australia www.drinkwise.com.au In the USA, much of our investment in responsible will play in promoting responsible drinking and Educ’alcool, Canada www.educalcool.qc.ca drinking projects is through social aspects targeting those most at risk. Forum-psr, Czech Republic www.forum-psr.cz organisation the Century Council.Two initiatives, GODA, Denmark www.goda.dk in which the Century Council partnered with At a ceremony hosted by the EU commissioner Entreprise & Prévention, France www.ep.soifdevivre.com others, serve as examples of the work we have for health, Diageo became a founder member MEAS, Ireland www.meas.ie supported. Responding to the finding that 65% of the European Union Alcohol and Health Forum. HAFRAC, Hungary www.hafrac.com of young people obtain alcohol from family or The forum is the world’s first government-backed The Sense Group, Malta www.thesensegroup.org friends,‘We don’t serve teens’ engaged retailers in multi-stakeholder partnership on alcohol and FISAC, Mexico www.alcoholinformate.org.mx a campaign to remind adults at the point of sale builds on the EU’s 2006 strategy to support STIVA, Netherlands www.stiva.nl that providing minors with alcohol is illegal and member states in tackling alcohol-related harm. ARA, South Africa www.ara.co.za irresponsible. More than 250,000 campaign items FAyS, Spain www.alcoholysociedad.org have been distributed in 31 cities and a Spanish Diageo chairs the European Forum for TBAF,Taiwan www.tbaf.org.tw version – ‘No le servimos a menores’ – has been Responsible Drinking (EFRD) which supports The Portman Group, UK www.portman-group.org.uk launched. Although underage drinking has responsible drinking initiatives in the European The Century Council, USA www.centurycouncil.org declined substantially over the past 20 years in spirits industry and promotes understanding of America, this effect has been less pronounced the scientific evidence from which alcohol policy among teenage girls. Partnering with others, the is formulated (www.efrd.org). these initiatives are co-ordinated by the social Century Council launched ‘Girl talk’,a website and aspects organisations in those countries. booklet-based programme designed to educate Diageo was a founding sponsor of the Diageo Ireland is the leading contributor to mothers and their daughters about the health International Centre for Alcohol Policies (ICAP) the social aspects organisation MEAS (Mature risks of alcohol for young girls. and chaired the board until October 2006. Enjoyment of Alcohol in Society). As part of During the year, ICAP launched a book – ‘Drinking in its Sustaining Progress agreement, the Irish Research shows that hazardous drinking patterns context – patterns, interventions and partnerships’– government set out a number of commitments can often be identified and addressed by screening co-sponsored by the International Harm including one to establish a working group on medical patients by means of a structured interview. Reduction Association (www.ihra.net; another alcohol abuse.The working group has been A grant from Diageo is enabling the Medical organisation that Diageo supports), the World formed under the social partnership between Society of the State of New York to develop a Federation for Mental Health, and the Institut de government departments, industry and employers, training programme for 5,000 physicians in the Recherches Scientifiques sur les Boissons (IREB).The trade unions, social inclusion groups and NGOs, use of this technique with patients. book sets out a fresh approach to alcohol policy, which have come together to identify and based on collective responsibility. Diageo was implement actions to reduce alcohol misuse. The Drinkaware Trust was established in the represented on the book’s editorial advisory The alcohol beverage industry turned to MEAS UK last year with the objective of changing group, along with representatives from the to develop a five-year responsible drinking the country’s drinking behaviour and tackling sponsoring organisations and the public programme, providing it with a budget of alcohol-related harm. Industry funded to the health and research communities. £13.5 million. Early initiatives include a website, tune of £12 million over three years, the trust has www.drinkaware.ie, a communications campaign support from the industry, government, doctors with the tag line ‘Know the one that’s one too and independent stakeholders in the alcohol Diageo Corporate Citizenship Report 2007 11 Our products and consumers

We want our products to reach consumers in optimum condition and always tasting their best.

37% Our consumer information Our priorities project is now 37% complete

Society Environment Economy

High quality brands labels and some packaging on thousands of stock A brand with a long history and rich heritage, this This year, we reviewed and updated our quality items, a task which we are spreading over five years year Guinness showed its continuing capacity for policy to reflect the importance of quality for our and which is now 37% complete (against a target innovation by the UK test launch of Guinness Red – brands and include new compliance monitoring of 25% complete by this year).We have also set up which uses lighter roasted barley than the regular processes. Each Diageo supply business has a a website, www.knowyourdiageodrink.com, which stout – and the introduction of the ingenious quality management system which aims to ensure, summarises the information for consumers. Guinness Surger.This device sends an ultrasonic among other things, that responsibilities are clear, pulse through a pint glass of special Guinness, personnel are properly trained, quality is monitored Brand integrity releasing the gas in the beer which settles into and suitable targets are set for improvement.We Counterfeiting is a problem for many businesses the familiar velvety pint with its creamy head. review and continuously improve the way we work. with highly sought-after brands. Illicit practices Our manufacturing sites are regularly monitored affecting our industry range from refilling genuine The new Baileys Flavours – with a hint of caramel under our Licence to Operate programme (see bottles with inferior brands to the commercial- or mint chocolate – have proved very popular page 30) to ensure compliance with legislation scale manufacture of counterfeit products. Such with consumers and we shipped more than a and with Diageo’s quality management standards. practices cause loss of tax revenue for governments million cases during the year.We have extended and, in the worst cases, present a health hazard the reach of the Baileys brand through licensing Issues raised about any of our brands are to consumers. Our business suffers a loss from arrangements with premium dessert and investigated and resolved wherever possible to counterfeiting estimated at £100 million a year. chocolate manufacturers. the satisfaction of the consumer or customer and corrective action is taken to prevent recurrence. We use a range of measures to deter counterfeiters, Smirnoff has extended the ready-to-serve While we continue to monitor overall complaint such as covert pack markings and anti-refill segment in the USA with the launch of two new levels, we now focus on high severity product fitments in bottles.We work to raise awareness cocktails, Smirnoff Mojito and Smirnoff Grand quality complaints from our customers and report among legislators and support law enforcement Cosmo, and in South Africa with Smirnoff Storm these in the table below. High severity complaints agencies by training their officers and helping and Smirnoff Vodka and Citrus. New lagers have are those with potential to cause significant them take action against criminals.We provide been launched in Africa, including Golden Arrow negative impact on Diageo’s reputation, brand trading standards investigators with the Diageo- in Ghana, and the market for super-premium image or continuing customer relationships or developed Authenticator – an instrument for spirits developed with the launch of Johnnie to have significant cost implications. identifying Scotch whiskies – and field testing kits Walker Blue Label King George V in Asia, for other spirits.These tools can help spot a forged Buchanan’s Red Seal in Latin America and Crown Complaints about quality upheld brand quickly, making convictions more likely. And Royal XR whisky and Oronoco rum in the USA. 2007 2006 2005 because counterfeiting is an issue for much of the spirits industry, we share intelligence with other Consumer privacy High severity complaints per companies on enforcement issues. The relationships we develop with consumers million equivalent units 0.45 0.53 0.46 are based on trust.When contacting consumers Innovation by email, text or direct mail, we include a chance Information for consumers A company’s success in transforming ideas into to opt out of future contacts.We take steps to Two years ago we began a project to provide commercial value is essential to its sustainability. At ensure that we only contact people over the consumers with more information about our Diageo we foster a culture of creativity, in which new legal purchase age and we do not sell or trade brands, including nutritional values, allergen brands are introduced and existing ones developed personal data. advice, macro-nutrients and responsible drinking in response to consumers’ changing tastes or to reminders. Implementation has involved changing serve new market segments or new territories. 12 Diageo Corporate Citizenship Report 2007 Investing in our communities

50% Our African businesses have committed half of their community investment to Water of Life projects. We concentrate our skills, experience and financial resources on supporting long-term, sustainable initiatives that bring benefit to the communities in which we operate. Our priorities

Society Environment Economy

Diageo’s businesses, based in many varied This year we established the Saigon Hospitality programme by launching our One Million Challenge locations around the world, are often prominent project in partnership with the Saigon Children’s – a commitment to provide water for another one local employers, a source of economic strength Charity.The project aims to recruit 70 over-18s million people.We have already made substantial and an influential example of good business each year from disadvantaged backgrounds, train progress. Our businesses in West and East Africa practice.The trading environment enjoyed by them in English, health and the skills required have begun a range of water projects. Determined our businesses is further enhanced by the many for a career in the hospitality industry and, after by local need, the projects take a number of ways in which we contribute to the health and graduation, help place them in worthwhile different practical approaches to the challenge welfare of our communities. positions in prestigious hotels and restaurants and include sinking boreholes, harvesting in Vietnam. With funding of £50,000 from the rainwater, and providing filters and pumps. We are proud of our long record of community Diageo Foundation to cover start-up and the first investment. Our approach is not simply to make three years’ running costs, the project recruited So far, an estimated 526,800 people have charitable donations or provide sponsorships, 30 students in its first year and has established benefited from completed One Million Challenge though we and our employees do often give valuable partnerships with a number of hotels projects, shown in detail on the map opposite. to worthy causes.We believe we can usually do in Ho Chi Minh City. Work in development is expected to bring this more good by using our skills and experience, up to a million people by December 2007. Beyond and our focused financial resources, to support At our brewery in Ahinsan, Ghana we have that, we aim to provide continuing support to the long-term sustainable initiatives that bring benefit established a new information technology achievement of Millennium Development Goal 7 to our communities. college, the Institute for Advanced ICT Studies – by 2015. the country’s only such postgraduate institution. Assessed financially, our commitment to With funds, expertise, buildings and staff housing The Nile Miles campaign was established for community investment is 1% of Diageo’s provided by our business in Ghana, the college employees who wanted to support the One Million operating profit. In 2007, the actual proportion will be administered by a board of governors and Challenge. Money raised went towards a project to was 1.0%, totalling £20.7 million.The majority of be open to postgraduate students from next year. provide water for 124,000 people in the Mkuranga this was provided by local Diageo businesses in district of Tanzania.With a target of £10 for each the form of cash contributions, in-kind donations Water of Life – projects that improve access to mile of the Nile, many creative ways were found and volunteer time. It also includes contributions drinking water in developing countries or that to contribute. For example, colleagues in our from the Diageo Foundation and support from aid environmental conservation. Amsterdam office held an African-themed lunch our Responsible Drinking Fund for the community to increase awareness and raised £2,750 from aspects of responsible drinking projects. Of the one billion people in the world estimated collections, an auction of items from Africa and a to have restricted access to safe drinking water, karaoke evening.With many similar contributions, Community focus areas 400 million live in Africa.The urgency of this the £41,184 target was quickly reached and We support projects that fall within the problem in terms of health and economic extended to £100,000. Foundation’s four focus areas because these are progress is recognised by the UN in its Millennium where our efforts can have the greatest positive Development Goal 7 which aims to halve these Local Communities – projects that support our impact on our communities. Below we give some numbers by 2015.Through Water of Life projects employees as community volunteers. examples of projects in each area. going back many years, we have supported this aim by providing needy people with clean Many Diageo employees took time off from Skills for Life – projects that help unemployed water – particularly in Africa – and these Diageo work routines during the year to contribute to or disadvantaged people start new business programmes have benefited over half a million ‘community days’.In the largest-ever such event, ventures or prepare for the world of work. people to date.This year we accelerated the 168 employees from six European countries chose Diageo Corporate Citizenship Report 2007 13 526,800 Diageo’s One Million Challenge: 526,800 people provided with clean water so far.

Ethiopia a Integrated water and sanitation Kenya Boreholes and tanks Uganda Rainwater harvesting Tanzania Burkina Faso Integrated water Integrated water and sanitation and sanitation Ghana Water filters

Nigeria b c Boreholes a The Diageo sales team in Dubai b Employees from six European c On St Patrick’s Day, employees spent a day volunteering at the countries took time out from work hosted 200 elderly local people at the Al Noor training centre for children to help disadvantaged groups on Guinness Storehouse, enabling them with special needs. a single community day. to participate in the day’s events.

different ways to help vulnerable people in their The Diageo Foundation a truckload of water to Louisiana to be distributed communities. In Sweden, they talked and read The Diageo Foundation provides central after the hurricane’s landfall. In the aftermath, to elderly people.The Danish, Norwegian and focus and support for Diageo’s community Diageo was one of the first on the scene in Benelux teams also spent the day with lonely investment programme. Its aim is to create Mississippi where generators were used to power elderly people, working with local organisations. positive, sustainable change in our communities, an emergency operations centre to co-ordinate In Germany, colleagues helped a group of 200 concentrating on projects which make the most search and rescue missions. Just days later, disabled people in their work and daily routine. difference.Targeting areas of humanitarian need Hurricane Rita was heading for Texas.We sent an The Swiss team took mentally and physically in developing countries in Africa, Latin America, advance team to Houston with generators and disabled people on an excursion. In recognition of Asia and Eastern Europe, the Diageo Foundation two more truckloads of water to supply shelters for their outstanding contribution to the community acts as a catalyst for: evacuees from New Orleans.The delivery of 70,000 day, six employees had the chance to visit Diageo bottles of water and much needed power, which community projects in Uganda. – encouraging contributions from Diageo saved many lives, was made possible by generous businesses and external sources contributions from our employees and distributors. With even greater geographical spread, 128 – engaging Diageo employees in fundraising, employees from Diageo’s Global Travel and giving and volunteering The relief effort was supported by fund-raising Middle East sales team took a day out from office – developing partnerships with NGOs and by our brand teams.The Crown Royal whisky duties to join community activities in more than other external bodies team collected £35,000 for victims of Katrina 20 countries. In Miami, USA, employees helped – providing expertise, support and case in New Orleans, while their Captain Morgan rum build and install houses for low-income, single- studies for establishing and managing colleagues raised £60,000 for the New Orleans parent families; in Singapore, our team raised effective projects. Hospitality Workers Disaster Relief Fund, and in money, food and clothes for a centre for women the process helped bring Mardi Gras, a festival vital in crisis; while in Athens, Greece, a small team of In 2007, the Foundation received 619 new to the New Orleans economy, back in February. three prepared a meal for 50 in a charity home. project funding proposals from within Diageo While 23 employees were helping restore habitats and externally and, following assessment Working in partnership in a nature reserve near Heathrow airport in the against its funding criteria, approved 10 new We add value to community initiatives by UK, and their colleagues in Dubai were finishing projects for support. Altogether, it provided implementing them in partnership with other their day at a training centre for children with funds totalling £1.2 million, included in the organisations with local specialist knowledge special needs, employees in Lebanon were analysis of community investment on page 14. and managing them with well-defined objectives: entertaining children at the world-renowned St Jude paediatric cancer centre. UK charity law requires that Foundation funds – understanding our impacts on the community are not used to promote Diageo’s direct – finding and working with partners to ensure Disaster Relief – our response to major commercial interests. Its independence is that projects address local needs and respect disasters, including emergency relief, long-term maintained by trustees, appointed by the cultural sensitivities reparation projects and supporting employees’ Diageo board from our businesses and functions, – balancing our objectives with those of our fundraising efforts. who approve projects selected for support and community partners work with external advisers and not-for-profit – avoiding over-dependence and making the In August 2005, Hurricane Katrina struck the Gulf organisations with specialist expertise.The project’s benefits sustainable Coast of the USA causing devastation in which over Foundation’s four focus areas are widely adopted – raising awareness of projects among opinion 1,800 people lost their lives. Anticipating the need, by Diageo businesses as the basis for their leaders, community audiences and our Diageo sent two large industrial generators and community investment programmes. own employees. 14 Diageo Corporate Citizenship Report 2007 Investing in our communities continued

a

b c d e a By switching to treadle pump b In Ghana we support a project c Colleagues in Lebanon entertained d Colleagues from our New York e Diageo Brazil’s ‘Communidade’ irrigation, Nigerian farmers can grow that creates jobs in making and children for a day at the world- office collected more than 360 programme integrates community, vegetables in the dry season. See distributing affordable ceramic water renowned St Jude paediatric ‘gently used’ coats for those in need responsible drinking and page 27 for the full story and below filters in areas where clean water cancer centre. of warmth in the city last winter. environmental activities. for an impact analysis. is not available.

In Africa, progress in our community investment The Diageo International and Asia Pacific regions, for the community and align with Diageo’s wider agenda depends on many partnerships. Membership which include most developing countries, have strategy.We work closely with our project partners of Business Action for Africa (BAA) and Private made their community programme one of their to assess the changing needs of communities Investors for Africa (PIA) are particularly significant three strategic areas of focus.This recognition of and track project outcomes.We also commission for Diageo. Business Action for Africa is a network of the importance of social and environmental issues independent research to evaluate some of the key businesses and business organisations from Africa to the business in these rapidly-changing parts programmes we support. For quantitative analysis and around the world, created in 2005 to build on of the world will ensure that they receive the of our community investment, we often use the the momentum of the Commission for Africa and continued attention they deserve. Areas covered London Benchmarking Group (LBG) model – G8 summit. BAA works through advocacy, projects include a shared understanding of responsible which we helped pioneer in 1994 – to put a and knowledge sharing. Private Investors for Africa drinking, support for equitable and effective realistic, conservative value on our investment brings together seven international companies regulation and sustainable economic development, (inputs) and to measure not only the ‘outputs’ with interests in Africa. PIA aims to use its experience a commitment to environmental sustainability, or direct benefits of our community involvement and staff in Africa to achieve a dialogue with the and accountability for the impact of our brands but also its ‘impacts’ in terms of the lasting IMF,the World Bank and the European Commission along the value chain. benefits it brings to the community. and so contribute to economic and social development in the continent. Diageo is active Evaluating community investment Community investment £000 in a PIA HIV/Aids working group which advocates It’s important that the money our businesses 2007 2006 a business response to the issue at international invest, and the funds the Diageo Foundation and local level. contributes, produce the best possible results Total 20,697 20,374 Split by category Philanthropy 1,717 1,653 Analysis of the Nigeria treadle pump project using the LBG model Social investment* 9,169 12,558 Commercially-led initiatives 9,811 6,163 Motivation Inputs Outputs Impacts Social Community Business Split by focus area investment Funding Leverage benefits benefits Skills for Life 535 2,351 Water of Life 1,032 738 Since 2005, Guinness £93,000 from A £15,000 grant The pilot showed the Local government, The pumps last for Local Communities* 9,300 9,887 Nigeria has Guinness Nigeria from another pump was practically and communities and six years and deliver Disaster Relief 346 890 distributed low-cost, for the pilot charitable financially feasible. Local the International water seven times Community aspects of responsible locally-produced project. organisation workers were trained to Fund for faster than the drinking projects 9,484 6,508 treadle pumps and allowed the pilot make and market the Agricultural traditional irrigation installed hand-drilled project to be pump.Vegetable farmers’ Development have methods. Split by type wells, enabling extended. standard of living rose. acknowledged the Cash* 20,307 19,720 farmers to better value of the project. 271 pumps are In kind 192 447 irrigate their land, An extension to the project estimated to have Volunteer time 198 207 increasing yields is to introduce the farmers Goodwill generated increased farm Split by region and income. to cultivation of sorghum by the project has income by £398,000 Europe* 12,596 12,154 and maize which could be facilitated market – a 400% return used in brewing, providing penetration of on the initial North America 3,124 4,106 them with another source Malta Guinness in investment. Asia Pacific 2,516 1,696 of income. Northern Nigeria. International 2,461 2,418

*Includes charitable donations of £6.8 million (2006: £6.5 million) to the Thalidomide Trust. Diageo Corporate Citizenship Report 2007 15 Releasing the potential of our people

By increasing the knowledge and capability of our workforce, employment empowers people, creates value and provides opportunities for spreading wealth through the community. Our priorities

Society Environment Economy

Through employment, Diageo exerts one of its Inclusion and diversity Gender diversity by level % women most significant impacts on the communities in We believe strongly in the value of diversity in 2007 2006 2005 which we operate, contributing to their economic the Diageo workforce and appreciate the unique development and prosperity.To achieve these contribution made to the success of the business Board 18 18 10 benefits and our stretching ambitions for Diageo, by each employee. Including individuals with Senior managers 24 23 23 we need to attract, retain and develop the best a variety of character traits, experiences and Other employees 35 35 32 talent available. perspectives contributes to a stimulating workplace. Total workforce 34 34 31 A greater diversity of views also helps us gain The objective of a new Diageo toolkit for managers deeper consumer insights and enhances our In Nigeria the proportion of women in senior who hire new employees and manage internal relationships with all stakeholders. management positions has doubled over the transfers was to ensure that the best people are last two years. A mentoring programme has been attracted to Diageo posts and that we have the Our human resources policies outline how we introduced in Nigeria to encourage women to skills to recruit the right people for our business. strive to treat people fairly, both at recruitment and develop their careers within Diageo and help The toolkit includes guidelines for providing during their careers.They include commitments continue this trend.The programme connects candidates with the best possible experience to advertise vacancies routinely, encourage high performing female managers with role during selection, and for hirers to make the right suitable internal candidates, and assess people models from outside the business – successful choice of candidates. It is supported by a new fairly and objectively. Opportunities for employment women at the top of their industries who are interviewing skills workshop which we plan to and career progression are determined solely on willing to share their experiences.The relationships roll out next year. the basis of ability and performance, irrespective are mutually beneficial, giving both mentor and of gender, ethnic origin, nationality, age, religion, manager opportunities for personal development. Employees sexual orientation or disability.To enhance diversity, For our women managers, mentoring helps 2007 2006 we aim to create opportunities that are attractive prepare them for the challenges they may face in to a wide range of suitably qualified candidates their careers and equips them with the skills and Europe 11,033 10,694 and make working for Diageo as compatible as coping mechanisms to handle issues such as International 5,300 5,658 possible with a variety of lifestyles. Not all roles lend sexism, stereotyping, gender role expectations North America 3,719 3,751 themselves to all flexible working options.Where and family obligations. Asia Pacific 2,468 2,516 they do, in many businesses we offer possibilities Total 22,520 22,619 such as career breaks, flexible locations, school In the USA, the Diageo Diversity Council worked term-time working, compressed-time working, with external organisations this year to better Following effective recruitment, it is our aim, flexible retirement, job sharing, annualised hours understand and improve recruitment to Diageo wherever in the world they are located, to make contracts and flexible compensation. of multicultural employees. Our relationship with Diageo a great place to work for all our employees, the National Black MBA Association (NBMBAA), providing them with a working experience in Over the past four years, the proportion of women which aims to increase intellectual and economic which their full potential can be released.The in senior management – a key diversity indicator wealth in the black community, resulted in the achievement of this aim is demonstrated in a – has risen from 20% in 2003 to 24% in 2007 – co-sponsorship of a national study on employment number of markets where we have been placed though missing our target for this year of 29%. retention. Cementing our relationship, more than in ‘Best company to work for’ rankings and more While we have not seen the increase we wanted 40 Diageo employees attended the NBMBAA’s specifically in Ireland where Diageo won the in female senior manager numbers, many areas annual conference to introduce its members to Graduate Ireland award for Most Popular Graduate of the business have established a pool of female Diageo, our brands and vision and to recruit from Recruiter 2007 in the consumer goods category. successors for senior management roles. the diverse gathering. 16 Diageo Corporate Citizenship Report 2007 Releasing the potential of our people continued

In Ontario, 80 people are injured every day in a fall at work.

a b c a In induction workshops, such as the b The new Step Up on Safety c Healthy eating choices in the one shown here in Korea, new managers campaign in North America Shieldhall restaurant contributed to learn from more experienced colleagues complements improvements made the site’s gold award in the Scotland the skills of leadership, communication in compliance, processes and the Health At Work programme and people development. working environment.

Employment by category % Safety Safety culture Following a pilot at our logistics 2007 2006 2005 2007 2006 2005 facility in Daventry, UK, we’re introducing a methodology for improving the safety culture at Full time 98 97 97 Accidents per million man-hours our Guinness and Baileys sites in Ireland and the Part time 2 33 North America* 19.8 UK and our packaging plant in Italy.The Safety Europe 5.8 Culture Maturity Model, developed by the Kiel Opportunities to work abroad are valued by many International 8.1 Centre in Scotland, assesses the development people and help attract the best candidates to Asia Pacific 2.6 of a site’s safety culture and, where needs are Diageo. However, we also value local experience Total 8.6 10.6 9.2 identified by employee workshops, improvement and perspectives on the needs of consumers Fatalities North America – ––plans are put in place to address them.Workshops and other stakeholders in each of our markets Europe – ––at our sites, involving 290 employees, led to a and so encourage local employees to progress International – 1–number of actions to improve the safety culture – to leadership positions where they are suitably Asia Pacific – ––for example, improved dialogue between qualified.The result is an exciting programme Total – 1–managers and employees about safety; hazard of international assignments – typically of three *Accidents resulting in lost time of at least a day, beginning the and near-miss reporting and investigations to years’ duration – in which 460 assignees were day after the accident, reckoning 1,920 hours worked per year identify the underlying causes of accidents. working away from home at 50 locations this per employee. North America figure includes employees who year – a 22% increase over 2006. Ideally, assignees’ returned to work on restricted or lighter duties following an Capability At our Achimota brewery in Ghana, backgrounds reflect Diageo’s overall diversity.To accident; without these, the figure was 11.4. we have been working to raise the capability of keep the balance, we encourage employees from our safety personnel and improve management outside the UK to take up long-term secondments, At supply sites this year we concentrated systems following the death of a contractor, with a target for this year of 50%. Although we our efforts on establishing common tools reported last year, which was caused by a gas missed this figure, the proportion has grown and processes, embedding a safety culture explosion at the site. A full accident investigation from 33% to 48% over the last four years as and improving the capabilities of key personnel was completed and corrective actions identified. opportunities across the business have increased. to effect organisational change. A safety manager was seconded to the Ghana business and two additional professionals were Safety at work Tools and processes The new Step Up on recruited locally.The focus of the team has been The safety of everyone working at Diageo is a priority Safety campaign in North America complements to upgrade safety management systems and for all managers and employees. Our target is to improvements made in safety compliance, increase local safety capabilities. reduce accidents resulting in lost time by 20% processes and the working environment over the five years to 2010 – to a maximum of by promoting personal prevention. Led by a We have reviewed the implementation of safety 7.4 accidents per million man-hours.The essentials cross-functional team, the campaign employed policy in the Demand side of our business – of achieving this are set out in our occupational leadership, employee awareness and training including office and wine-production sites. In health and safety policy, supported by risk to encourage colleagues to identify and act each market, the programme identified safety management standards that define the minimum on opportunities to ‘step up’ for the safety of champions who undertook a self-assessment requirements for controlling risks and reducing the themselves and others – specifically to help prevent which was followed by an audit by our central likelihood and severity of accidents. Implementation strains and sprains, slips-trips-falls, and cuts. risk team. A site is considered compliant if it: is by means of a documented management system The improved safety awareness and behaviours maintains policies satisfying legislation and specific to each site.We audit our sites to provide engendered by the programme have helped Diageo obligations; has an audit programme, assurance that safety policy and standards are met. improve safety performance across North America. with action plans progressed; tracks and reports Diageo Corporate Citizenship Report 2007 17 P4G The key to developing Diageo people is Partners for Growth (P4G), our performance review and goal-setting process.

safety measures; and can demonstrate the Our workplace HIV/Aids programme, any critical barriers, so that they may achieve their engagement of employees and managers. which is non-discriminatory, voluntary own aspirations and realise their potential.The In the first year of these stretching standards, and confidential, has four elements, all emphasis is on the quality of the conversations of the 158 sites involved, over 70% of locations of which are provided free: employees have with their managers – open, were found to be at least 80% compliant and at honest, continuing discussions that support their all sites improvement action plans were in place. – we promote behavioural change to prevent progress towards achieving business and personal the spread of HIV through educational objectives. Conversations take place informally at Occupational health programmes and by distributing condoms any time, and more formally twice a year.Through The activities involved in people’s jobs at Diageo – we encourage employees and their families the P4G process, employees identified as capable should not harm their health.To monitor any to enroll for routine counselling and HIV of more senior positions or of enhancing their skills impact on employees’ well-being and recommend testing in a different area can be suitably prepared.We corrective action, our Occupational Health (OH) – we urge HIV-positive individuals to nominate successors for senior positions to ensure Services carry out health surveillance programmes, acknowledge their status and seek treatment business continuity, with open posting ensuring which may be required by law or simply best – we provide treatment and care, including that the best candidates are available for selection. practice. For example, these may cover colleagues counselling, clinical management of working in designated noise areas, in laboratories opportunistic infections, palliative care and The specific behaviours, skills, knowledge and or with grain dust in the breweries. Depending access to anti-retroviral drugs for life. expertise that we need to meet our ambitious on the location, OH Services are also there to objectives are set out in three documents.The create health education programmes such as Leadership Standard specifically describes the great healthy heart advice, manual handling techniques, retroviral drugs which can slow down and even leadership we expect in senior Diageo managers, support to travellers and guidance on avoiding reverse the progression of HIV infection, delaying while the Diageo Capabilities apply to all other malaria. Our OH practitioners are qualified doctors the onset of Aids. Due to the prevalence of malaria employees.They both define the way our people or nurses with additional training in occupational and tuberculosis in some areas, many of our should behave to be successful and to live the health.Their expertise is called upon to support businesses also address these diseases in wider Diageo values.We plan to emphasise the importance Diageo’s risk management programme where health programmes. In Cameroon, for example, of the Leadership Standard through a programme health risks are being considered.This could a mosquito net was given to every one of the include input to business continuity plans, such 83% of employees who participated in voluntary counselling and testing. as plans to manage an outbreak of pandemic flu. Our people manager development programme in Europe transforms our Scotland’s Health at Work (Shaw) is a government- In June, our brewery in Nairobi, Kenya held a leaders and ensures they are equipped backed programme which rewards employers Ladies Day for female employees and wives of to release the potential of every Diageo who demonstrate commitment to improving the employees. Sara Lee, a neighbouring business, employee and so achieve sustained occupational health of their workforce. A number and the National Organisation of Peer Educators business success.The programme covers: of Diageo plants in Scotland hold Shaw awards, helped sponsor the event. Over 170 women were including gold for Shieldhall and silver for led by a group of 40 committed peer educators – Learning about ourselves and how we Kilmarnock and Leven.The awards are made in talks on total wellness, health issues, HIV/Aids manage others on the basis of performance in such areas as counselling, demonstrations, aerobics and dancing. – Translating our business strategy into awareness raising, the availability of health checks, Ten attendees volunteered for HIV testing and left our personal objectives promoting healthy eating and drinking, help in knowing their status.The day was completed with – Managing inclusively giving up smoking and encouraging exercise. a quiz and an awards presentation. – Coaching others for high performance – Developing the capability for managing In Africa, HIV/Aids continues to pose a risk for Community outreach programmes extend change our 3,400 colleagues and their families. Our HIV/Aids education into our supply chain. In Kenya, – Building team effectiveness goal is to reduce the impact of the disease on we provide condoms to the barley farmers who – Effective execution of policies and procedures. our employees, their families and our business supply our brewery.We chose ‘Celebrating Life’ as partners through a workplace programme, the theme for our activities on World Aids Day this By the end of the year 60% of people managers community involvement and partnerships. Since year when, across Africa, our businesses held events in Britain had experienced a two-day workshop the programme’s launch in 2003, every Africa-based to increase awareness in their communities and and pilot programmes had been held employee has attended an information session raise funds for Aids charities. throughout Europe.Workshops are just one and received a copy of the Diageo HIV/Aids element of the programme, which offers a varied policy. HIV/Aids is also covered by our induction Capability and development mix of learning opportunities such as training programme for new employees.We have trained The key to developing Diageo people is Partners programmes, e-learning, reading, insight tools, peer educators to encourage people to take for Growth (P4G), our performance review and case studies and tips for managers. For easy prevention measures, support those affected goal-setting process, which is based on the access, the materials are available through our by HIV/Aids, and promote voluntary counselling philosophy that sustainable business performance Diageo Academy intranet site.The plan for the and testing by an external healthcare organisation. comes from developing our people’s capabilities next few years is to implement the programme Palliative care and treatment for opportunistic and contributions.The aim of P4G is to build on across the Diageo world. infections is provided along with access to anti- employees’ strengths and identify and overcome 18 Diageo Corporate Citizenship Report 2007 Releasing the potential of our people % continued 88 This year 88% of our employees took part in our values survey, which monitors employee opinion around the world.

a b c a In America, members of the b In our first year of entering the Best c Our sales conference in Brazil was National Black MBA Association Employers in Singapore competition, enlivened by a group exercise which joined the Diageo Diversity Council Diageo was awarded seventh place showed that, acting in partnership, in a study of employment retention out of nearly 100 local businesses. we can break any barrier to reach trends among people of colour. our goals.

of leadership development.The programme, in The work has strengthened our relationship with Most Diageo businesses have schemes that which all senior managers will participate before our joint venture partner and laid the foundations recognise and reward extraordinary individual December 2008, includes 40 hours of one-to-one for the growth we’re aiming to achieve in China. and team contributions. Such schemes vary in coaching – 25 hours with an external coach and detail and are designed to resonate with local 15 hours with the line manager. Reward and recognition cultures.The scheme in North America covers Remuneration packages are benchmarked against all salaried employees except the executive team. Opportunities to develop these capabilities are those offered by comparable employers to keep The rules are simple. An individual or team is co-ordinated through the Diageo Academy, our businesses competitive in every market. nominated for an award by a manager and an intranet portal that gives access to courses Diageo corporate citizenship reports on individual approved by a senior manager. Awards are and support.The most important opportunities countries often contain more information about reviewed monthly to ensure that they are available to appropriate employees are High local comparability. In most cases an element of consistent and fair. Performance Coaching, People Manager pay is performance-related to reward employees’ Development and Career Development. contributions to the business. For some employees Engaging our employees with specialist responsibilities, remuneration A vital part of valuing our employees is to keep We want to give talented employees the chance to is linked to the achievement of social or them well informed and create opportunities develop their careers within Diageo. Our on-line environmental criteria. for their views to be freely expressed.This close Career Shop allows people to submit their CVs, engagement with the business, which is essential in five languages, to be considered when suitable There are a number of employee schemes to if our people are to give of their best, is fostered roles become vacant. Over 61,000 resumés were promote share ownership.These enable colleagues through a variety of communications beginning submitted during the year, 84% of them from in 16 countries to benefit from the growth of with the induction of new colleagues and external candidates. 3,025 roles were filled during the business by acquiring shares at a discount. continuing through dialogue with line managers, the year, 54% of them by internal candidates. Participation rates vary between countries, the team meetings, newsletters, intranet and posters. highest this year being 90% in Korea and the In many markets there are formal employee The opportunities afforded by large, strongly- lowest 9% in Belgium. In the UK, 43% of employees consultation arrangements. One of the largest growing economies like China require concerted saved through Diageo’s largest plan. At the year representative groups is the Diageo European action from our businesses to hire the new end, 14,714 past and present employees held a Forum which speaks for employees in 19 countries. employees needed and put in place new ways total of 31 million Diageo shares, around 1% of its Employees are free to join trades unions, though of working. Diageo entered into the Chinese issued ordinary share capital. In the coming year membership is not monitored. white spirit business by forming a joint venture we plan to extend share ownership schemes to with Quanxing, the local manufacturer of Brazil, Colombia, India, Singapore and Thailand. Diageo acquired Bushmills Irish whiskey in 2005 Shui Jing Fang, the third largest super premium and we have been working with employees at Chinese white spirit brand. Colleagues had the Employee share ownership the distillery to introduce new ways of working. task of establishing a human resources 2007 2006 2005 This year, after constructive negotiations between infrastructure for the joint venture – recruiting management, employees and trade union talent, defining their training requirements, Countries operating schemes 16 16 16 representatives, an agreement was made by all to establishing management information systems, Employees* holding shares 14,714 16,179 16,486 work together in partnership, with open consultation, communication and language support, defining Employees* holding more new flexible ways of working and the sharing of than 1,000 shares 49% 54% 44% reporting lines and setting performance measures goals.We set up a consultative Partnership Forum Shares held by employees* 31m 34m 33m and rewards that would encourage employees as a platform to debate issues such as training and to achieve our business objectives. *Past and present development, continuous improvement and the Diageo Corporate Citizenship Report 2007 19

91% The highest-scored question supporting our values in our global survey was ‘I am proud to work for Diageo’.

use of resources. Such active engagement, new This year, a further series of questions to assess Living our values for Bushmills employees, is essential to achieving employees’ engagement with Diageo’s objectives Favourable survey responses % our plans for growing this famous whiskey brand. were extended from partial coverage to the whole business.There was some overlap between 90 The existing joint consultation committee (JCC) in the values-related questions and the questions Scotland’s spirits business, where managers work assessing engagement. 85 with employee representatives to identify and 80 resolve issues and through which employees are This year, over 88% of employees took part in the 75 kept up to date with business performance and survey, the highest response to date and up from 70 challenges, was where a new development 85% last year.The results showed improvements 65 60 framework for employee representatives originated on most questions since 2006, support for each 2005 2006 2007 this year.The idea began as a request from the of our values achieving rises of 2-3%. Of particular JCC representatives themselves that they have the note was the increase, from a low base, in the Passionate about Valuing each Freedom to chance to acquire the capabilities and confidence proportion of respondents affirming that Diageo consumers other succeed that will be needed in a time of substantial growth leaders had acted as a result of previous surveys, Proud of what we do Be the best in Scotch whisky production.The framework reflecting the wealth of activity that has taken consists of a set of functional and behavioural place across the business in response to last year’s The results of the survey were communicated capabilities for the representatives to use as a results.There was a 2% increase in the favourable to teams throughout the business and a toolkit standard and to help with their development. response to the question about responsible created to help line managers run ‘results-to-action’ drinking and 3% more respondents stated that they sessions designed to ensure that lessons learnt When alterations are needed in the way we knew how to beat the competition and celebrate from the survey are converted into improvements do business, we aim to treat employees facing success – all key aspects of Diageo culture. for employees in ways of working. change or redundancy with dignity and respect, consulting them as appropriate. For example, The newly-extended questions on overall developments in the business this year required engagement gave a result 2% up on last year. changes in information systems support.These Employees giving the most favourable response inevitably affected IS employees – 130 of whom to all five of these questions were dubbed were located at 27 locations in 16 countries – ‘super-engaged’.The number of super-engaged and a number of posts became redundant. All were employees increased from 24% to 29% this year. consulted on the proposed changes – for example, through collective bodies such as the Diageo Global values survey European Forum, Global Functions Forum and Favourable responses % 2007 the Guinness Staff Union, as well as through 2007 High 2006 Diageo performing Diageo one-to-one discussions with their line managers. Questions with external benchmark score companies score

We have in place grievance procedures for Passionate about consumers 82 79 resolving issues that may arise between employees My team actively seeks to understand consumer needs 83 87 78 and their managers. In the UK and Ireland, an People in my team are encouraged to come up with innovative solutions independently-run, confidential helpline called tlk2 for customers/consumers 74 76 72 provides free counselling, legal and financial advice. Valuing each other 74 72 In recent years, an average of 440 people have used My manager inspires me to give my best 77 72 75 the service annually, seeking advice on issues such Freedom to succeed 81 79 as work-related stress and changes at work. People in my team can challenge existing ways of doing things 85 66 85 My manager generally understands the problems I face in my job 76 70 74 The importance to Diageo of effectively engaging My manager trusts my judgment within my job 87 71 87 our employees makes our annual values survey, Proud of what we do 84 82 which monitors employee opinion around the I am proud to work for Diageo 91 89 89 world, a key performance indicator for our business. Diageo makes a real contribution to the communities in which it operates 80 83 76 Its results are crucial in shaping our strategy and Be the best 74 71 designing ways of working. Each of the survey’s My manager gives me regular feedback on my performance 72 69 70 27 core questions refers to one of our five values, I feel significant actions have been taken as a result of previous surveys 54 52 50 allowing us to assess the extent to which I believe Diageo leadership acts on issues/opportunities identified in the survey 64 68 60 colleagues live the Diageo values in their work. Engagement* 87 85 I believe strongly in the goals and objectives of Diageo 89 88 86 Some questions (shown in the table) are I would recommend Diageo as a good place to work 86 83 84 comparable with an external reference derived I am proud to work for Diageo 91 89 89 from a sample of ‘high performing’ companies I fully support the values for which Diageo stands 91 92 89 whose financial results are typically among the I work beyond what is required in my job to help Diageo succeed 93 91 92 top three in their sectors. *Not all regions answered these questions in 2006. 20 Diageo Corporate Citizenship Report 2007 Diageo around the world in 2007

World Environment Day was marked at many Diageo sites with awareness-raising displays and activities to encourage employees to be more environmentally friendly at home and also to contribute to programmes at work. Colleagues in Belfast, Northern Ireland marked the day by volunteering for maintenance and conservation duties at Colin Glen Forest Park.

A hundred Diageo employees In support of the organisation joined the Business Clean Up Un Techo Para Chile (‘A roof for Chile’), Australia Day in Adelaide, Bundaberg, 26 Diageo colleagues from Santiago Huntingwood, Melbourne and took just two days to assemble two Sydney, collecting tonnes of rubbish new houses for needy people in from streets, rivers, parks and the city. After settling the families roadsides. As well as improving the into their new homes, our employees environment, the project was a great described their experience as hard opportunity to build relationships in to forget, enriching not only the neighbourhoods around our offices community, but also our company. and production sites.

The Guinness Community Spirit is a new initiative which aims to challenge perceptions of volunteering among over 18s and encourage them to get involved in their local community. Early activities included path clearing and beach tidying at the Giant’s Causeway and White Park Bay on Northern Ireland’s Antrim coast.

Endorsed by both the Jamaican Ministry of Health and the National Road Safety Council, Red Stripe’s ‘Think responsibly, drink responsibly’ campaign to raise awareness and enable consumers to make informed choices began this year and will extend across radio,TV and print media for two years, supported by public seminars at the island’s universities.

At English rugby’s Guinness When the UK responsible Above middle:InCentral At this year’s J&B ‘Nightology’ Premiership Final, we sponsored the drinking TV campaign aired Scotland, we partnered with the boat parties in Spain, live bands buses that took supporters to the in Northern Ireland, we raised police and a local radio station on and DJs provided the music while Twickenham stadium. Responsible awareness of the ‘Many me’ a road safety campaign during the a responsible drinking theme, drinking messages on the outside and ‘Mirror’ advertisements by festive season – a first for an alcohol ‘A drink too many, a less fun night’, of the vehicles were reinforced inside showing what can happen when beverage company. Covering the was delivered on T-shirts and fans. by posters with Diageo’s responsible young people lose their ‘social issues of speeding, wearing Half of party-goers questioned drinking hints and tips and currency’ by drinking too much. seatbelts, using mobile phones and recalled the slogan spontaneously thousands of bottles of free water The publicity supported the drinking and driving, the campaign (87% prompted), while 55% said were distributed following the campaign slogans ‘Don’t see contributed to a recorded drop that the event would change match in which Leicester Tigers a great night wasted’ and in the number of accidents their attitude towards alcohol beat Gloucester 44-15. ‘Make sure you like what you see’. and fatalities. in the future. Diageo Corporate Citizenship Report 2007 21 Conserving our environment

We aim to reduce the energy, water and materials we use and the waste we generate by improving efficiency and switching to renewable resources. Our priorities

Society Environment Economy

The environmental sustainability of our business Measurements of our most significant impacts – Energy and climate change is restricted by our planet’s finite resources and the use of energy and water, and the production It’s widely accepted that greenhouse gases – its limited capacity to assimilate waste in land, of solid waste, liquid effluent and greenhouse most importantly CO2 – generated by burning water and air. Our aim is to reduce the energy, gases – are our primary indicators of performance. fossil fuels are a cause of climate change, the water and materials we use and the waste we We collect data from all 99 production sites and likely negative consequences of which could be generate, by improving efficiency and by 36 large offices and aggregate the results both as mitigated if emissions were sufficiently reduced. switching to renewable resources and finding totals and as ratios relative to Diageo’s production Diageo’s share of global CO2 emissions from ways to re-use or recycle by-products and waste. volume – a measure of our level of activity. fuel use is around 0.003%.We are committed to reducing these emissions and can cite actions Environmental management Targets in two areas – reducing our energy consumption The Diageo environmental policy makes clear In 2004, we set ourselves improvement targets and switching to renewable or low-carbon- our commitments to improvement. Its standards for the five relative performance indicators, to be emitting sources of energy. are an integral part of our risk management met this year, and the results are shown in the framework which sets out criteria for their graphs. Increased production volumes, efficiency An example of reducing consumption comes implemention and provides a mechanism for measures and sourcing electricity from renewables from our Port Dundas distillery in Glasgow, monitoring compliance through our Licence to helped us achieve our energy and greenhouse Scotland, where hot wastewater from the boiler, Operate process (see page 30). Our commitments gas targets.We also hit our target for water use which previously flowed to drain, has been do not depend on having full scientific proof of through water-saving measures at many sites. diverted to pre-heat the water feeding the boiler. specific environmental damage, thus supporting We missed our target for reducing the polluting This improvement, the inspiration for which came the precautionary approach introduced with power of wastewater. A significant factor in this has from an employee through Scotland’s ‘Diageo the Rio Principles. been a large increase in Scotch whisky production Ideas’ scheme, has saved 450 tonnes of CO2 which adds to our BOD total, but isn’t counted emissions annually (or 1% of the total from the Our policy requires all production sites to have as production until it is bottled, a minimum of site) and was awarded the Environmental Trophy an environmental management system (EMS) three years later.We also didn’t achieve our target at ideaUK’s ‘Idea of the Year’ awards this year. and 91% were assessed this year as fully or mostly for solid waste landfilled due to large one-off implemented. EMSs at 17 sites are certified to disposals of materials at two sites in Africa where A recent project at St. James’s Gate, Dublin the international standard ISO14001, representing recycling facilities were not available.We are reduced carbon emissions and had other 48% of production by volume, and four more working to improve performance in these areas. environmental benefits.The mains water supply plan to achieve this recognition within two years. to the fermentation plant now flows through a This year is also the start of the next target new heat exchanger.The cooling effect of this Our office sites have smaller environmental period and we have also shown in the graphs incoming water has reduced the requirement impacts, nevertheless they do use energy and the performance we want to be able to for expensive traditional refrigeration and cut water and create waste.This year we adopted a report by 2011.The increasing Scotch whisky the site’s annual demand for electricity by over systematic approach to reducing impacts at each production described in the last paragraph has 1,000 MWh.The water is warmed in the process, of our offices with more than 50 employees. At each been factored into these targets and makes some which saves energy when heating it before use. location, we have established an environmental higher than would be expected from underlying As the water now performs two functions, the leadership team tasked with creating employee improvements in efficiency. Progress towards amount we need to draw from the mains is less, awareness of the policy, planning actions to these targets will be recorded monthly and as is the volume of effluent we send for treatment. reduce the office’s environmental footprint reviewed quarterly by the supply function’s The project has reduced CO2 emissions by over and setting targets for improvement. environmental leadership team. 600 tonnes a year, and saved more than £100,000. 22 Diageo Corporate Citizenship Report 2007 Conserving our environment continued

a b c

✔ 2007 target achieved a In Kilkenny, Ireland, willow saplings b A reed bed breaks down sludge c Diageo Australia’s Bundaberg Bush help filter organic materials from from our Blair Athol malt whisky Fund staged a star-studded rugby waste water and, as wood chips, are distillery in Scotland, reducing its league match against New Zealand, ✘ 2007 target missed used as a renewable energy source. environmental impact. raising £52,000 to restore grounds made unfit by drought.

processes to yield significant savings in energy ✔ ✔ Energy used use, greenhouse gas emissions and cost.This Greenhouse gas emissions Bars show energy used relative to production in MJ/litre year Guinness plants in Ireland as a whole have Bars show emissions relative to production in CO2 g/litre reduced their CO2 emissions by over 8,000 tonnes, with financial savings set to exceed £2 million. 04 1,647 9,929 11,576 3.7 04 193 598 791 255

05 1,714 9,310 11,024 3.7 The regulation of greenhouse gas emissions, 05 186 557 743 247 in particular through structures such as the 06 1,860 8,566 10,426 3.4 Emissions Trading Scheme in Europe (EU-ETS), 06 197 509 706 230 provides an additional financial incentive for 1,887 9,781 11,668 07 179 594 773 231 07 3.5 companies to reduce their climate impacts.The Lines show total energy in TJ 2011 target 2007 target EU-ETS has reinforced our drive to be increasingly Lines show total CO2 in kt 2011 target 2007 target Indirect Direct Total 3.2 3.6 efficient and to find low-carbon energy solutions. Indirect Direct Total 212 247 In 2006, the second year of phase one of the This year in the Republic of Ireland we switched EU-ETS, our total emissions were well within point, our distilleries were found to be 18% more to electricity generated renewably at wind farms. our allocation, though one packaging plant energy efficient than the rest of the industry, This comes on top of similar changes in most of purchased carbon allowances to cover a shortfall. while our maltings were 12% more efficient. our sites in the UK where switching to electricity from a nuclear generator has significantly reduced In Scotland, our distilleries and maltings are With the topic becoming of increasing interest to our indirect greenhouse gas emissions.Together, additionally subject to Climate Change Agreements many Diageo stakeholders, this year we reviewed these locations represent 28% of our total with the government that aim to increase energy the risks and opportunities that human-induced electricity usage and switching to zero- or low- efficiency over the decade to 2010.To date, our climate change could present to our business. carbon supplies has reduced our annual indirect plants have met every two-year target along These may work through physical phenomena CO2 emissions by around 50,000 tonnes. the way. At the latest milestone in 2006, our such as changing temperatures, increased performance above the targets represented a frequency or severity of extreme weather events, We see offsetting as a means of ‘mopping up’ saving of 27,400 tonnes of CO2 emissions. At this water scarcity or rising sea levels, or indirectly greenhouse gas emissions that cannot be through ecosystem changes or shifts in human eliminated by other means – for example, from Sources of energy TJ populations.The risks include impacts on the business travel.Working with travel agents and 2007 2006 agriculture that produces our raw materials, airlines, we have continued to improve reporting disruption of our own activities or those of on business flights and car journeys.With the Direct our commercial partners, and changes to the addition of data from major Asian markets, we Gas 5,596 5,520 distribution or nature of consumer demand.The recorded 25.1kt of greenhouse gas emissions Fuel oil 3,292 2,538 prospect of climate change also presents us with from business travel during the year. Diesel 790 416 opportunities, most particularly a competitive Other 104 92 advantage if we respond to these issues more Our St James’s Gate brewery in Dublin is one Indirect* effectively than others in our industry. of the first businesses to be certificated to the Standard electricity 1,423 1,407 new Irish energy management standard, IS 393. Low-carbon electricity 463 453 These issues are considered in more detail in The standard requires that energy is managed *Includes a small amount of steam. Low-carbon electricity is our response to the Carbon Disclosure Project strategically, and that the site puts in place generated from renewable or low-carbon-emitting sources. questionnaire, available on the website. A manager Diageo Corporate Citizenship Report 2007 23 0.003% Diageo’s total share of global human greenhouse gas emissions from fuel use is around 0.003%, using International Energy Agency estimates.

has been appointed to complete the analysis, 18% last year due to new effluent treatment as well as environmental costs. Since 2005 our survey the many climate-change initiatives plants coming on-stream. About 42% was sent to St James’s Gate brewery in Dublin has reported in progress around our business and draw municipal treatment plants and a further 4% was zero landfill by managing materials efficiently up plans for co-ordinated action. spread on agricultural land. Around 27% flowed and reusing or recycling those that are not untreated to water, mostly to the sea. Such wanted.The task of a new waste reduction team, outflows from our plants are subject to consent established this year, is to exploit this opportunity ✔ Water used by environmental authorities and their impact by cataloguing the various materials landfilled by Bars show water used relative to production in litres/litre on ecosystems is monitored. During the year we our sites, identifying alternative uses for them and commissioned a new £2.7m effluent treatment spreading best practice in waste management plant at our brewery in Kumasi, Ghana and are to all locations. Some sites create much more 04 25.9 8.3 currently working to bring it up to full capacity. waste than others, often because of a lack of local 05 24.6 8.2 A new treatment plant in Jamaica is nearly finished, recycling capacity. One focus of the team is to while we are still at the planning stage with plants seek strategic partnerships in these areas to create 06 22.6 7.4 in Cameroon and Achimota, Ghana. the necessary facilities.This work is an important step towards achieving our new reduction target 07 24.8 7.4 Part of the effluent from our Smithwick’s brewery and eventually eliminating landfill altogether. Line shows total water 2011 target 2007 target in Kilkenny, Ireland, is treated by spreading it on 3 in million m 6.8 8.0 a willow plantation within which soil microbes ✘ extract the nutrients.This provides a rich growing Wastewater polluting power Water management environment for the fast-growing saplings.The Bars show polluting power relative to production in BOD g/litre A good water supply is essential to our business willow crop is harvested as wood chips – around – as an ingredient and for cooling and cleaning 1,300 tonnes this year – which are used as a processes.Water resources are under pressure renewable energy source. 04 24.9 8.0 from development in many parts of the world 05 26.2 8.7 and the threat of climate change may restrict Finding a sustainable way of treating effluent availability still further in the future. Around 10% was behind developments at two Scottish malt 06 25.1 8.2 of Diageo production sites are located in countries distilleries. At our Dufftown site a reed bed is now 07 32.7 9.8 where the UN forecasts water supplies will come used as a final cleaning stage for effluent before under stress in the next 20 years, with a further it’s discharged into the River Dullan.This biological Line shows total 2007 target 2011 target 5% in areas predicted to suffer water scarcity. solution reduces the amount of copper, organic in BOD kt 7.7 9.0 To drive water efficiency improvements in all compounds and suspended solids in the BOD is biological oxygen demand, a measure of the oxygen production sites, a team was established this year, wastewater. A similar system is in place at our used by micro-organisms in wastewater and hence an with its initial focus on sites in water stressed areas Blair Athol distillery. Sludge which was previously indication of its organic content. and high volume users.The challenge for the transported away for spreading on agricultural project team is to develop a way of identifying, land will be broken down by the reeds, Our solid waste landfilled figures include sharing and implementing best practice in water minimising the environmental impact. ‘one-off’ disposals, such as building materials management, covering culture, technology and from redevelopments – which may not yet be ways of working. In support of this work, this year Materials and recycling practicably recyclable in some parts of the world we joined a beverage industry group that is Most of the materials we buy are ingredients – explaining why our waste totals are more erratic seeking to compare levels of water efficiency in from renewable sources, such as grain, grapes, than other impacts. At some sites, we have moved different companies and share best practice in hops and milk. Packaging, process and office from an estimation of outgoing waste to direct water stewardship, such as water management, materials such as glass, cardboard, plastics, paper measurement and have restated the 2006 results conservation and coping with drought conditions. and metals are mostly recyclable, and many in the light of this. materials come from recycled sources. We withdrew a total of 24.8 million cubic metres A secondary environmental impact from waste of water this year – 44% from mains supplies, The largest category of our waste is what’s left occurs when consumers dispose of our bottles, 50% from wells or boreholes and 6% from rivers of beverage ingredients after processing.These cans and other containers. Our marketing teams or lakes. Increasing our water efficiency, by using residues are usually converted into animal feed and agencies work to Diageo guidelines on less and recycling more, is a priority. or composted for use as mulch on farmland. sustainable packaging which aim to balance Most other waste – such as rejected packaging its functionality with a need to minimise its After use, waste water from many of our processes from bottling sites and office wastepaper – is also environmental impact. For example, while refillable has a high organic content, which may pollute recyclable and is reprocessed where local facilities glass bottles may be environmentally the best waterways into which it is discharged.This year, exist. Overall, 87% of solid waste from our sites solution for beer which is consumed near where the total volume of effluent was 16.9 million m3. was reused or recycled this year.The remainder it’s brewed, they may not be economically Our sites took a variety of measures to minimise was sent to landfill. sustainable for spirits shipped between countries any environmental damage by this waste.We or at risk from counterfeiters. In Africa over treated about 27% on site to remove most of the Many byproducts of our processes have a value 90% of our beer bottles are returned for refilling. organic content before discharge, an increase on and disposing of them as waste has economic In the domestic beer market in Jamaica the 24 Diageo Corporate Citizenship Report 2007 Conserving our environment continued

% 90In Africa more than 90% of our beer bottles are returned for refilling.

a b c

a Events were held in our London b Installing a new heat-exchanger at c The new effluent treatment plant office on World Environment Day to St James’s Gate in Dublin has reduced at our brewery in Kumasi, Ghana show what actions employees could annual greenhouse gas emissions by removes organic matter from take at work and at home. over 600 tonnes. wastewater that previously flowed to a river.

same system is used, and bottles have a life When spirits are maturing in barrels, some of the put in place to improve the performance of the of around 20 fillings before recycling. For beer alcohol evaporates – a process essential to create effluent treatment plant.There were 34 incidents exported from the island, it is environmentally the desired flavour.The vapour can, in some with potential environmental consequences – preferable for bottles to be recycled in the circumstances, contribute to air quality impacts, mostly spills of fuel or partially processed product country of use rather than returned long though alcohol is biodegradable and water-soluble, – but none was significant enough to warrant an distances for refilling.We therefore make export so much is removed from the air by rainfall. official notice. Action was taken in each case to bottles with less glass than domestic ones to We estimate that, this year, 32,000t of alcohol check arrangements for containing spillages and minimise the energy required to manufacture, evaporated from the millions of barrels of our minimising future risk. transport and recycle them. brands maturing in Scotland, the USA and Australia. Biodiversity The sustainable packaging guidelines specifically Hazardous substances and spills As a significant user of agricultural raw materials, aim to minimise the amount of material used. Some of our processes employ hazardous our activities have an indirect impact on the When products are developed or redesigned, materials – such as caustic soda used for cleaning biological diversity of the ecosystems in which making their containers just a few grammes – which are disposed of after use by specialist our suppliers grow their crops. Last year we lighter can save tonnes from entering the waste contractors. In the year, we disposed of 854 tonnes, carried out a review of the biodiversity impacts stream. For example, in the last few years, the more than double last year’s figure. of species or habitats known to be affected by Guinness Foreign Extra Stout bottle has been our activities which concluded that, although lightweighted by 113g, the Smirnoff Ice bottle A number of temporary non-compliances with no systematic detrimental effect at global level shaved by 10g and the Piat d’Or wine bottle emission consent levels were recorded and could be identified, further steps should be reduced by 79g.Together, these three redesigns notified to the environmental authorities.Two taken to engage biodiversity issues locally. have saved nearly 3,000 tonnes of glass a year resulted in official notices.The effluent treatment leaving our plants. Most of the materials we use plant at our distillery in the Philippines let through Some of our sites include or are close to rare – glass, aluminium, steel, paper and plastics – are water with more than the permitted level of habitats or conservation areas and particular care recyclable and our guidelines show how materials suspended solids and the plant was fined the is taken not to disrupt species or ecosystems in can be used to enhance this – for example, by not equivalent of £100. Limits were also exceeded at such cases. For example, in Ireland, our brewery at combining materials which waste contractors find our Glen Ord distillery in Scotland and measures Kilkenny is close to the River Nore, a Special Area difficult to separate. of Conservation, designated for its priority alluvial ✘ woodland and petrifying spring habitats, as well Other emissions Solid waste landfilled as for its populations of salmon, lamprey and Over the last two years, we have reduced the Bars show solid waste relative to production in g/litre freshwater pearl mussels. Our Speyside malt amount of ozone-depleting halons present at our distilleries in Scotland also fall within protected manufacturing sites in fire-extinguishing equipment 04 32.3 10.4 areas, noted for similar species to those in Kilkenny by 80% and CFCs, used as refrigerants, by 67%. as well as for otters. In Uganda, our brewing and 05 26.9 8.9 distilling sites are sited on Lake Victoria, close to Through the use of fuels, our activities resulted an area used for recreation and fishing and as a in the emission of 1.2kt of nitrogen oxides, which 06 34.4 11.2 source of water, so our wastewater outfall to the are a precursor to ozone formation, acid rainfall 07 45.1 13.5 lake is closely monitored. and oxygen depletion in water habitats, and 1.3kt Line shows 2011 target 2007 target of sulphur dioxide, a precursor to acid rainfall. total waste in kt 8.6 9.7 Diageo Corporate Citizenship Report 2007 25 Environmental impacts in the value chain

A consumer in Japan relaxes with a glass of An important part of this is to characterise which are fermented and distilled from Scotch whisky – a common enough occurrence, the impacts. So, this year we quantified the predominantly Scottish cereals. After blending, repeated millions of times a day in bars and ‘environmental footprint’ of our most successful the finished product is bottled and cased – homes across the world. It’s part of a chain of Scotch whisky brand, Johnnie Walker, assessing in 2006, output was 13.7 million equivalent events which began in a Scottish barley field its impacts and finding where they occur in the units (equal to a nine-litre case) – and shipped some years before and which, ideally, will end chain ‘from barley field to bottle bank’.Findings to more than 180 countries.The Johnnie Walker when the empty bottle is collected for recycling. such as these on our operations as a whole brand represented around 10% of total Diageo The environment is affected by the activities may be used in future to help us inform our sales by volume in the year under study. that take place at all the stages along this chain – engagement with suppliers and customers all the cereal farms, bottle and box factories, and to prioritise environmental improvements. For simplicity, we split the Johnnie Walker value distilleries, maturation warehouses, bottling chain into four stages.The bar charts quantify and packing plants, ships, trains and trucks, Johnnie Walker is the world’s leading Scotch major environmental impacts at the four stages. and finally bars and stores.We work to reduce whisky and comes in a number of variants – such impacts, by continuously refining our most importantly Red, Black, Green, Gold and own operations and by aiming to influence Blue Label – all of them covered by the study. the activities of other businesses in the chain. Each variant is a blend of matured whiskies

Percentage impact at each stage Energy used 35 34 23 8 Greenhouse gas emissions 35 32 24 9

Water used 21 56 2 21 Wastewater polluting power 26 74 0 0

Solid waste landfilled 7 3 2 88

Suppliers Manufacturing Distribution Use and disposal Produce ingredients, production Malt, ferment, distil, mature, Transport to on-trade and Consumption in bars, other materials and packaging and blend, bottle and package at off-trade customers and retail outlets and at home deliver to Diageo sites Diageo sites to consumers

Producing the ingredients, Our own operations used the Despite the huge task of delivering Consumers were responsible for manufacturing the packaging most water – most importantly, 164 million bottles of whisky to the smallest greenhouse gas impact, and delivering these to our sites as an ingredient, for fermentation, nearly every country of the world which occur when they travel – emerged as the stage with the cooling and cleaning – and had and then to millions of stores and often by car – to the point of greatest demand for energy the greatest emissions of organic bars, this stage was found to be purchase, make ice to add to their and the largest greenhouse material in effluent. Manufacturing responsible for less than a quarter whisky and wash up the glasses gas emissions. was also a significant user of energy of energy use and total greenhouse afterwards.This was the stage at and source of greenhouse gases. gas emissions and a very small which most waste in the value cause of other impacts. chain is created, due to low recycling rates for glass, paper and plastics in some countries. Despite nearly all elements of whisky packaging being recyclable, we estimate that less than half are in fact recycled. 26 Diageo Corporate Citizenship Report 2007 Investment and creating value

Diageo’s primary aim is to create value for investors by providing consumers with our range of great brands.The success of our businesses creates a powerful engine for economic growth. Our priorities Society Environment Economy

In some markets, notably in Africa, Diageo Cash value added statement DTI Value added scoreboard companies are large enterprises by local 2007 2006 European Wealth comparison, with a particularly significant impact £ million £ million alcohol creation on local and national economies. Around the beverage Value added Growth efficiency Cash received from customers 9,917 9,704 world, we provide jobs and develop the skills sector ranking £ million % % Other income 131 892 of our people, create opportunity for other Subtotal – cash received 10,048 10,596 1 Diageo 3,494 10 307 businesses in the value chain, generate revenue Cost of goods and services (4,123) (3,999) 2 InBev 3,349 48 178 for governments and invest in capital projects. It is Cash value added 5,925 6,597 3 Heineken 2,812 5 147 by doing all this in a responsible and accountable 4 SABMiller 2,646 20 222 way that we make our most significant contribution Alcohol taxes 2,436 2,444 5 Carlsberg 1,173 9 127 to the sustainable development of the Other taxes 436 450 6 Pernod Ricard 1,114 21 201 communities in which we operate. Subtotal – paid to governments as tax 2,872 2,894 7 Scottish & Newcastle 1,059 6 148 Paid to investors for providing capital 2,263 2,271 A cash value added statement provides a way of Source: DTI 2007 Value added scoreboard, based on 2006 Paid to employees for their services 999 924 quantifying the value we add to the raw materials accounts. DTI definitions: value added = sales less the cost of (Retained)/Invested for growth (805) 259 bought-in goods and services; wealth creation efficiency = value and services we buy in the course of creating Paid to lenders as return on borrowings 278 211 added as a percentage of the cost of labour and equipment our brands.The statement also shows how this used to create it; growth = increase in value added compared Community investment 21 20 value is distributed to various groups of Diageo with previous year.Website www.innovation.gov.uk. Research and development 17 18 stakeholders in exchange for their contribution Distribution of cash value added 5,925 6,597 to the business. In this section we examine the Revenue for governments three most significant recipients of cash value The largest slice of the added value we generated added – governments, investors and employees. Wealth creation is important since providing went to governments.Taxation accounted for In addition, value flows to banks and other lenders real value that consumers want and will pay for 48.5% of the total, amounting to £2.9 billion. In as well as to the community through sustainable is one of the best ways of competing in a global some countries, the tax Diageo pays represents a projects, many of which aim to tackle economic economy.This year, Diageo remained top of the significant proportion of the government’s income. disadvantage and promote entrepreneurship. alcohol beverage sector. Diageo was also ranked We invest the remaining cash value added for top for wealth creation efficiency (value added In addition to this direct contribution to the the benefit of Diageo’s stakeholders in the future divided by the cost of labour and equipment). public purses of countries around the world, our – either in research and development (a source businesses pay other taxes such as local and of innovation and technological advance) or by This year, Diageo announced a £100m investment property taxes; our consumers pay sales taxes retaining it in our business for growth, including – one of the biggest ever in the industry – to such as VAT; our employees and investors pay the purchase of new companies or brands and expand our whisky operations in Scotland to income taxes; and our suppliers and customers capital spending on plant and buildings. meet anticipated long-term demand for our pay corporate taxes as a result of the business brands in growing overseas markets. Part of the we generate in these companies. In aggregate, Investing for sustained growth investment, which will create up to 200 jobs over these direct and indirect contributions, which In its 2007 Value Added Scoreboard, the UK the next few years, is in the construction of a new we have not quantified, represent the total tax Department of Trade and Industry ranked malt whisky distillery in the north of Scotland, footprint of our business. Europe’s top 700 companies according to the from which the first mature spirit will be available wealth they created, as measured by value added in around 2012. (using a measure slightly different from ours). Diageo Corporate Citizenship Report 2007 27 Distribution of cash value added 2007

Other income Governments Cash received from customers 48.5% % 38.2 Investors

% 16.9 Employees Cash value Diageo added

% Retained £5.9bn 9.0 for growth Total cash value added in 2007 % 4.7 Lenders

Goods & % 0.4 Community services 0.3%

R&D

With responsibilities to many stakeholders, The excellence of Diageo’s relationships with These terms include the timing of payments, the including investors and governments, we strive investors was recognised by a number of awards detail of which is agreed by individual businesses to organise our tax affairs efficiently within the this year. IR magazine, an international publication with each of their suppliers. law. As part of this, we consider the options for investor professionals, declared Diageo available to us for where Diageo’s profits and ‘Best in Sector’,based on votes cast by over In some markets, we work with suppliers to help hence tax liabilities are located geographically. 600 UK equity investors. And Institutional Investor them develop their businesses and thus improve Such decisions are based on a combination magazine made Diageo a double winner in its the sustainability of the supplies we need. For of commercial strategy, cost and the levels of 2007 European investor relations study, which example, since the 1980s when Guinness Nigeria taxation in different countries. However, we have polled the opinions of international analysts and pioneered the use of locally-grown sorghum a strong preference for locating our tax liabilities portfolio managers. Catherine James, Diageo head and maize in brewing to replace more expensive in territories where we also have significant of investor relations, was voted ‘Best IR Professional’ imported grains, we have continued to invest commercial operations. in the beverage sector while Diageo won ‘Best IR’ in locally grown cereals and new technologies in the same category. Diageo has topped the votes in West and East Africa to help local farmers Transactions between Diageo subsidiaries in in both these areas for three years running. increase their output and secure long-term different countries are priced on an arm’s length income. More recently, in Ghana and Sierra Leone basis as if the subsidiaries were unrelated companies, Some Diageo companies offer a proportion we have supported the development of soghum in compliance with the OECD Model Tax of their shares on local stock markets, providing in areas where poverty is high.We also provide Convention. Consequently, the tax administrations access to their equity to local investors, including skills training and access to farming products in the two countries receive a fair allocation of employees.We value the participation of these to help local farmers improve their productivity. tax from the profits involved in the transaction shareholders as they bring local knowledge to and the same profit is not taxed twice. the business and strengthen direct contacts Northern Nigeria has a long tradition of irrigated with the community. agriculture using slow and labour-intensive Returns for investors methods such as the shadoof, a counterbalanced The second largest slice of cash value added Sustaining employment bucket on a rope. During the growing season, by our business goes to our shareholders. Successful economic development depends labour for lifting water is in short supply and most Over 90% of Diageo is owned by institutional on enhancing the skills of a nation’s workforce farmers cannot afford the alternative petrol-powered investors, the remainder being held by private as much as on financial flows. Globally, 16.9% of pumps. Because of these constraints, farmers shareholders including thousands of current and cash value added by Diageo was passed to our cultivate very small plots and earn little. For nearly former employees. As a return on the capital they employees this year, underlining the important two years, in partnership with NGO Enterprise Works, provide, shareholders received £2.3 billion during role our business performs in sustaining jobs in we have been introducing vegetable farmers to the year through dividends and share buybacks, the economies in which we operate. low-cost, high capacity, human-powered treadle representing 38.2% of the total distribution of pumps.These deliver irrigation water seven times cash value added. In 2007, we paid £858 million The value chain faster than a shadoof, allowing farmers to water in the form of dividends and £1.4 billion via Demand for our brands creates business for other more land and double their household income. Diageo’s share buyback programme, the balance companies in the value chain – in agriculture, A full analysis of the project is given on page 14. between the two being determined to make manufacturing, services, distribution, wholesaling returns to investors as efficiently as possible. and retailing. Our aim is that these companies are An important ‘indirect’ effect of such economic A total of £10.5 billion has been returned to able to derive adequate business benefit from activity in our value chain is to sustain jobs. Diageo’s shareholders in buybacks since Diageo was their relationship with us and that the terms overall impact on employment is measured by formed ten years ago. and conditions of our business together are fair. adding these jobs to our own employee numbers, 28 Diageo Corporate Citizenship Report 2007 Investment and creating value continued

a b c

a Promoting treadle pumps as a b Diageo Ireland’s customer contact c Consumers questioned about the more efficient way of irrigating centre was judged first for ‘best responsible drinking campaign we vegetable crops in northern Nigeria customer services delivery’ by the ran with Tesco in the UK welcomed has improved yields and increased Call Centre Management Association. the advice as realistic and practical. farm incomes.

or by applying an appropriate ‘employment Satisfying ourselves that our suppliers consistently Purchases by category multiplier’ to our own workforce total. Employment maintain these standards is a substantial task. £ million multipliers vary with industry and market and tend Last year we joined the independent Suppliers to be higher in developing countries (where there Ethical Data Exchange, or Sedex.Through Sedex, Raw materials 1,692 have been estimates as high as 25 or 30 for the participating suppliers post self-assessments Marketing 1,162 beverage sector) than in industrialised regions on-line, and these can be accessed by any of their Lease payments 65 where they can be in single figures.The Scotch customers signed up to the scheme, eliminating Maintenance 53 Whisky Association publishes an employment the duplication of reporting separately to each. Other 1,151 multiplier of 6.2 for the spirits industry in Scotland Currently, 300 Diageo suppliers are in the process Total 4,123 in 2000. Using figures like these, the people whose of registration or self-assessment.The assessments livelihoods depend on the economic value created are to be independently audited against Ethical by Diageo’s business are likely to number in the Trading Initiative standards of human rights, Customer relationships hundreds of thousands. labour conditions and health and safety and gaps Our customers are the businesses responsible identified for improvement. Forthcoming for distributing and retailing our brands. Although Supplier relationships developments to the Sedex tool will include each market has its own unique structure, our With a long list of supplies needed to make and sections on anti-corruption, bribery and customers typically comprise major retailers which market our brands, procuring them is a complex environmental management. sell direct to consumers through the on trade (bars, process.With international reach, we source restaurants and clubs) or off trade (supermarkets some supplies globally or regionally – for example, Diageo is a member of a group of food and drink and stores), and wholesalers and cash-and-carries grains for fermentation – while we can obtain manufacturers which recognise the importance which supply off-trade retailers of different sizes others more economically from local suppliers. of ensuring that their supply chains operate to and the on trade.We create business for our For example, last year our East African Breweries high standards of responsibility.The group is customers by providing them with our brands business bought 76% of its supplies within working to achieve this by developing a common and by offering commercial skills and resources East Africa. approach to evaluating the corporate citizenship to encourage demand and maximise customers’ performance of suppliers. returns. Our aim is to provide our customers with We aim to develop strong relationships with the best overall service in every market.This means our suppliers to help ensure that the goods and Responding appropriately to any shortcomings working closely with them to maximise mutual services we need are sustainable and that we can revealed by such assessments presents a number commercial advantage from our brands.We continue to obtain the best value in terms of cost, of dilemmas. Simply withdrawing custom from a continually review our products and seek to meet quality, service and innovation. non-compliant supplier could displace the problem consumers’ needs through innovation, investing rather than solving it. If it led to layoffs, our action £17 million in research and development during Strong relationships go beyond commercial could cause hardship to the supplier’s employees the year.We want to see high standards of aspects.They allow us to work with suppliers to as much as to its owners. In a small community, corporate citizenship throughout our value chain encourage them to maintain standards similar the supplier’s loss of business could have wider and look particularly to our strategic relationships to our own in labour standards, health and safety, economic implications. Our aim is to balance these with major customers to co-ordinate our efforts. environmental management and business possible outcomes and, building on strong integrity.We drew up the standards we expect relationships, work with suppliers assessed as non- of suppliers by referring to external codes such compliant to help them improve. In cases where the as the International Labour Organisation core supplier fails to move towards compliance, we retain conventions on human rights. the sanction of seeking alternative sources of supply. Diageo Corporate Citizenship Report 2007 29 Customer relationships

Retailers

Wholesalers Bars, hotels and restaurants Diageo, joint venture Diageo or contracted in-market Major on-trade Consumers and off-trade manufacturer company retailers

Cash and carries Small retailers

Bars, hotels and restaurants

In the UK, we worked with supermarket operator and markets where we saw opportunities to through being a good citizen we promote equal Tesco to develop a responsible drinking grow business, and consequently improvements opportunities and minimise our environmental programme during Christmas and the New Year, in service have resulted in notable improvements impacts, and our community investments in the first example of such an initiative in the in our performance. developing countries often contribute towards grocery sector.The on-shelf notices in Tesco particular MDGs or targets – for example, stores bore a ‘drink responsibly’ message and The Millennium Development Goals by providing access to clean drinking water tips on enjoying alcohol responsibly which were Seven years ago, the member countries of the (see pages 12-13) or working against HIV/Aids reinforced through TV screens in the stores and UN agreed a vision for the world in 2015 in which (see page 17). A summary of the MDGs and on the Tesco website. Research showed that while there would be less poverty, hunger and disease, how our actions have supported them is given consumers polled did not believe the campaign improved survival of mothers and infants, better on our website. would change their drinking behaviour, they did education, equal opportunities for women and welcome the advice as realistic, practical and a healthier environment.They pledged to meet appropriate reinforcement of messages they eight Millennium Development Goals (MDGs) to had seen elsewhere. help achieve these aims.The UN’s 2006 MDG report shows that progress has been made but that the We are working with Wal-Mart retail businesses pace of change will need to pick up if the goals are around the world to develop new responsible to be achieved, particularly in sub-Saharan Africa. drinking campaigns and have launched or expanded initiatives in Brazil and the UK to Companies have an important part to play in raise awareness of the legal purchase age supporting the development goals. Diageo’s for alcohol beverages. This year we also primary contribution comes from the economic began working with Wal-Mart on quantifying value-creating activity of our businesses, which the carbon footprints of our beer and are particularly significant in the economies ready-to-drink brands. of a number of developing countries. Nearly one-fifth of Diageo’s production sites are in We have adopted a standard survey to monitor such countries, accounting for more than half major customer relationships and make the of our global brewery output and providing voice of our customers stronger in our business more than 5,000 jobs. Local sourcing of many decision-making. Used in our top 29 markets – raw materials and services reinforces the positive covering the majority of the business – customers, economic impact of these operations through distributors and our own employees are surveyed the activities of businesses in our value chain. on the important aspects of our work with customers – leadership, expertise, performance Our impact is extended through the production and partnership. of our brands by many licensees and joint ventures. Including these, our brands are The survey provides insights that have enabled manufactured in 22 African countries. A further us to focus on what really matters to our contribution comes through the taxes levied distributors and retail customers and so build on our products and businesses which support our capability to a higher level. We have national governments. In addition to these specifically concentrated on delivery channels benefits from our core business activities, 30 Diageo Corporate Citizenship Report 2007 Governance, engagement and commitments

Engagement gives us early warning of stakeholder concerns and allows us to make better business decisions.

Governance matters as community investment, environmental committee, chaired by the chief executive and The work of the Diageo board and its committees matters, measurement and reporting. Progress in made up of executive managers, is responsible for is described in detail in the annual report. In these areas is reported periodically to the board overseeing the company’s approach to securing summary, the board consists of a non-executive and publicly through this report. effective internal control and risk management, chairman, chief executive, chief financial officer reviewing assurance, and promoting the culture and eight non-executive directors.The non- The alcohol and responsibility executive working and processes that support effective compliance. executive directors, all of whom the board has group complements the work of the corporate determined are independent, are experienced citizenship committee by bringing together key Our approach to internal control and risk and influential individuals from a range of industries executives and functional representatives to management complies with UK and US governance and countries.Their mix of skills and business co-ordinate and realise Diageo’s commitment to requirements.The Diageo executive committee experience is a major contribution to the proper responsible drinking.The Diageo environmental and significant business units are required functioning of the board and its committees. working group shares best practice between to maintain a process to ensure key risks are business units and develops strategies for identified and managed appropriately. Business There is a formal induction programme for new compliance with our environmental policy – with unit risk assessments and the activities planned directors through which they receive orientation a particular focus on the impacts of packaging, to manage identified risks are reviewed by training in relation to the business – for example, transport, other value chain issues and business executives regularly during the year.These its assurance processes, and environmental and travel. It is supported by the supply function’s processes are also applied to major business social responsibility policies and practices.The environmental leadership team, established this initiatives such as systems implementations, board makes decisions and reviews and approves year to develop approaches to environmental organisational change or innovation projects. key policies and decisions of the company, management and performance improvement at including corporate governance; compliance our production sites, where the bulk of our direct Our Licence to Operate (LTO) programme, which with laws, regulations and the company’s code environmental impacts occur.There is an HIV/Aids covers Diageo supply sites across the world, of business conduct; risk management; corporate taskforce in each of our African markets. Other ad aims to reduce risk by assessing compliance citizenship, ethics and the environment.The hoc task groups are brought together as required with legislation and with our own policies and board reviews and approves the corporate to formulate responses to particular issues. standards in the areas of quality, environment citizenship report. and occupational health and safety. Compliance with policy and achievement of The executive committee, appointed and chaired citizenship performance improvement targets are Engaging our stakeholders by the chief executive, consists of the individuals included in the personal objectives of individuals Our stakeholders are those who can significantly responsible for the key components of the business: directly responsible for the underlying issues. affect, or be affected by, our business. Our North America, International, Asia Pacific and corporate relations function identifies stakeholders Europe markets, global supply and the global Managing risk through risk and opportunity analysis – currently functions.The chief executive has established Our aim is to manage risk to avoid or reduce our investors, employees, commercial partners committees with a continuing remit, including occurrences that could cause loss, reputational (including suppliers, customers, distributors and the corporate citizenship committee. Chaired by damage or business failure, and to exploit joint venture partners), government, community, the chief executive, this committee is responsible business opportunities, enhance operational the media and consumers – and co-ordinates for making decisions or, where appropriate, effectiveness and maximise our resilience the implementation of stakeholder engagement recommendations to the board or executive to external events.To achieve this, we have a plans in each business to earn the trust of these committee concerning corporate citizenship common process for identifying, evaluating and stakeholder groups.The top 40 Diageo markets, strategy, policy and issues.This includes such managing the risks we face.The audit and risk representing the vast majority of our business, Diageo Corporate Citizenship Report 2007 31

Diageo Board Audit committee

The chief executive has delegated to these committees responsibility for elements of Diageo’s risk management and control processes

Audit and risk Corporate citizenship Finance Filings assurance committee committee committee committee

Regional risk management Working groups – eg, committees alcohol and responsibility and environment

Business unit risk management

have engagement plans that set out how Diageo representatives; best practice is shared market access, responsible drinking and fair we communicate to stakeholders who we are with other companies, governments and NGOs systems and levels of taxation. Our commitment and what we stand for, how we listen to views, through membership of network organisations; to maintain or create the conditions for our exchange ideas and gather early warning of before finalising a project, pilot schemes provide business to thrive has led to a number of public stakeholder concerns to make better-informed community input to the design. policy successes during the year, generating business decisions.These plans are designed to – Media relations are fostered through briefings, opportunities for the company and our industry. meet the specific needs of each business within meetings and press releases; our chief executive For example, a dispute settlement panel is its market, and include such methods as: and business managing directors maintain currently being established by the World Trade – Investors Directors can be questioned by contacts with senior journalists; key employees Organisation to dismantle tax structures in India shareholders at the annual general meetings are trained in media skills and we have a global which discriminate against imported spirits of Diageo and its quoted subsidiaries; network of media professionals.The media and wines. presentations are given to the investment are regularly surveyed to assess how we meet community; the website has a section for their needs for fair reporting and analysis of Diageo policies investors; and we respond to key questionnaires our business. The understanding we gain from engaging with on our corporate citizenship submitted by, – Consumers are the subject of market research stakeholders is a powerful directing influence or on behalf of, investors. to gain insight into their changing needs; they in the formulation of our policies, priorities and – Employees are kept informed by a variety of are kept informed through brand and corporate actions and many examples of this are given in means about changes that affect them; their websites; we provide product information this report. Policies and codes of conduct support opinions are polled through the annual values on packaging and through our website the Diageo values and form the framework within survey and other means; they are consulted www.knowyourdiageodrink.com; and they can which we act on corporate citizenship issues. through team meetings and employee forums; voice their concerns via consumer carelines. They apply to businesses in which we have a and they have opportunities to learn the context controlling share as well as to some joint ventures, of decisions in management briefings as well as Public policy and operate in addition to compliance with local to challenge them. Around the world, we work with governments law and regulation. Policies are developed and – Commercial partners are encouraged to on issues that influence, protect or promote our revised by reference to external codes and best maintain close relationships which help us business objectives or have an impact on our business practice and after consulting both identify opportunities for mutual commercial stakeholders.This engagement may be direct or outside and within the company. benefit and maintain high standards of through one of the numerous trade associations citizenship in the value chain. in which we participate around the world. The code of business conduct acts as an – Government and other policymakers are These memberships include the Scotch Whisky overarching compliance instrument by including kept informed through briefings and we request Association (SWA), Gin & Vodka Association (GVA), a requirement to comply with the company’s meetings on relevant policy areas.When British Beer & Pub Association (BBPA),Drinks other main policies. All Diageo managers governments seek our views as part of policy Manufacturers of Ireland (DMI), Distilled Spirits throughout the world – around 3,000 people – consultations we aim to respond constructively; Council of the United States (Discus), European are required each year to complete a compliance representations on our behalf are also made Spirits Organisation (CEPS), Distilled Spirits certificate, which signifies adherence to the through trade associations. Industry Council of Australia (DSICA), Association code of business conduct and thus to other – Community representatives are consulted to of Canadian Distillers (ACD) and many others. Diageo policies, not only by themselves but ensure that social investment is targeted where These associations provide us and other members also by people reporting to them.This year, it can do most good; projects are developed with a platform to engage with governments the process brought 143 potential issues in partnership with NGOs and monitored by on industry-wide issues such as barriers to free to light, including possible employee conflicts 32 Diageo Corporate Citizenship Report 2007 Diageo around the world in 2007

In Uruguay’s central province of Durazno, record-breaking floods in May 2007 made 12,000 people homeless. Funded by their colleagues and partnered by the distributor of our brands in the area, Diageo employees travelled from Montevideo to the province to offer support and recreational activities to 500 primary school children affected by the disaster.

In Jamaica, Red Stripe’s employee Nigeria has seen the most involvement body, known as activity in support of Diageo’s Reach, has long been a significant One Million Challenge to change contributor to social improvement the lives of people in Africa by projects in Seaview Gardens, the providing them with access to clean brewery’s neighbouring community water. Boreholes, such as the one in Kingston.The latest evidence of being drilled here in Port Harcourt, this commitment was to build a bring not only health benefits world-class basketball court to help but economic advantage as time bring peace and unity to the area. previously spent collecting water can be used more profitably.

Improving water resources in our communities, particularly in developing countries, has many aspects – providing clean drinking water and sanitation for needy families, improving water efficiency in production and ensuring our own sites’ effluent doesn’t degrade rivers or lakes. Here a Diageo technician in Ghana tests levels of organic matter in brewery wastewater.

The Guinness Scholarship Awards, now in their 18th year, support secondary school pupils in Ireland as they advance to college or university and also, each year, offer assistance to one mature student returning to education. This year the award, which took the form of a laptop computer, was presented to seven local students.

Run with the Institute of Road Floods in Jakarta, Indonesia Above middle: Working in To promote safety during the Safety, our Pit Stop Here exhibition this year left 50 people dead partnership has helped make Songkran celebrations held around aimed to shift attitudes in Greece and 500,000 homeless. Normal Diageo’s Cool Drinker responsibility the Thai new year, we partnered towards making responsible choices education was badly disrupted. programme in Korea a success. with the Care4Friends students’ about drinking and driving.The With £20,000 from the Diageo Partner organisations on particular club, Chiangmai Province and the stand appeared at two events in Foundation, colleagues were able projects have included the Citizen’s SAO, Federation on Alcohol Control Athens and attracted visitors with to help 3,142 students from flooded Coalition for Safety, Bacchus, the in Thailand, on a campaign at Pratu a scaled replica of a F1 racing car, areas get back to school and begin college students’ association of Thaprae, Chiangmai with the leaflets on safe driving and details to rebuild their lives by providing responsible drinking, universities messages ‘Children Don’t Drink’ of a safe-driving competition. them with books, stationery, in Seoul and Kyungki and local and ‘If You Drink Don’t Drive’. uniforms and new school bags. government and health authorities in Seocho-gu. Diageo Corporate Citizenship Report 2007 33

of interest and potential issues concerning our – Occupational health and safety policy – on progress’.In our own communication entertaining and expenses policies.These were standards for occupational health, hazardous on progress (see page 35), we have reported assessed and investigated, and where appropriate materials, first aid, noise, ergonomics, protective examples of actions and outcomes for each of referred to the audit and risk committee equipment, emergency evacuation, work permits, the ten principles of the Compact.We support for resolution. visitors and contractors, and accident reporting principles 1-6 by compliance with our human – Quality policy – a framework for quality rights policy; our environmental policy supports Compliance is further supported by an management systems and commitment to principles 7-9; and our code of business conduct independently-run phoneline, known as the continuous improvement in performance. covers principle 10. SpeakUp Helpline, a confidential service that allows employees to become ‘whistleblowers’ and External codes and charters Diageo’s global context report their concerns anonymously without fear Diageo is a signatory to certain external codes The scale, complexity and geographical reach of of reprisal. Issues that colleagues are encouraged that define corporate citizenship principles and many of the sustainability issues covered in this to report include knowledge or suspicion of standards of conduct: report are a reminder that real progress will only violation of legal, accounting or regulatory – Business Charter for Sustainable be made if businesses, individuals, governments requirements, breaches of our code, or any Development – drawn up by the International and others act in concert to address them. In an other questionable conduct. Chamber of Commerce and supported attempt to assess the size of our potential by Diageo since 1997, the charter sets out contribution, we’ve compared some of our direct Employees – predominantly managers – receive 16 principles of environmental management impacts with independent estimates of global training in the code through workshops or which influenced the drafting of the Diageo totals. Although Diageo is only one company internet-based programmes. For example, Project environmental policy among many, the table below shows that our Integrity is a programme of half-day workshops – Dublin Principles – the principles set out activities do register on a global scale, if only on governance, business conduct and other the basis of ethical co-operation between (in some cases) as thousandths of a percent. Even policies and includes case studies on corruption, the beverage alcohol industry, governments, at his level, if we achieve significant performance money laundering and ‘typical’ compliance scientific researchers and the public health improvements, we are assured that they will make dilemmas. More than 100 workshops were held community a measurable difference at the global level, and across all regions during the year. – UN Global Compact – signed by Diageo in make at least some contribution to advancing 2002, the ten principles of the UNGC provided the cause of sustainability in the world. Diageo policies have been implemented in all valuable input to the formulation of our own parts of the business and are regularly reviewed policies.Through membership of the Global to ensure that they continue to achieve their Compact UK Network of signatory companies, objectives.The main policies, the full texts of we contributed during the year to the which are available on our website, are: development and promotion of the UNGC, – Marketing code – guidance on responsible including a procedure for maintaining advertising, promotion and innovation for the integrity of the Compact through marketing practitioners peer-reviewing members’‘communications – Code of ethics – standards of reporting, disclosure and honest and ethical conduct of specified senior officers of Diageo – Human rights policy – respect for national Diageo in the world The world Diageo Diageo % sovereignty, community, working environment, dignity at work, life balance, employee 1. Sales Sales as a proportion of world gross domestic engagement, releasing potential and rewarding product: £ million 26,270,000 9,917 0.038 and valuing people 2.Tax Tax paid as a proportion of total world budget revenues: £ million 7,507,000 2,872 0.038 – Environmental policy – the policy defines 3. Employees People employed as a proportion of world employed systems of management and standards in labour force 2,100,700,000 22,520 0.001 the main areas of environmental impact 4. Alcohol (recorded) Alcohol sold as a proportion of all recorded alcohol – Supplier standards – encompass Ethical consumed: million litres 20,830 542 2.604 Trading Initiative principles; form the basis 5. Alcohol (all) Alcohol sold as a proportion of all alcohol consumed: for conversations on ethics and human rights million litres 29,334 542 1.849 with suppliers; and are a key element of 6. Energy Energy used as a proportion of world energy used sourcing decisions from all sources:TJ 442,617,000 11,668 0.003 – Employee alcohol policy – guidance 7. Greenhouse gases Greenhouse gas emissions as a proportion of total for employees on alcohol issues and the world emissions from fossil fuel use: kt 25,576,000 773 0.003 8.Water Water used as a proportion of total water withdrawn expectations Diageo has for their behaviour by industry: million m3 765,692 24.8 0.003 – Consumer information policy – information standards concerning our brands: macro References: 1.World Factbook 2006; 2.The World Factbook 2007; 3.World Factbook 2007; 4.World Health Organisation 2005.‘Recorded’ nutrients, allergens and responsible alcohol excludes alcohol that is homemade, smuggled or imported duty-free; 5.World Health Organisation 2005; 6. International drinking reminders Energy Agency 2006; 7. International Energy Agency 2006; 8. Food & Agriculture Organisation of the UN 2005. 34 Diageo Corporate Citizenship Report 2007 Governance, engagement and commitments continued

BITC indices: Diageo scores % Dow Jones Sustainability Index 2006 %

100 100 Social dimension 90

80

70 50

60 1999 2000 2001 2002 2003 2004 2005 2006

Environment Corporate responsibility Community 50 50

100 100 Performance measures This year Diageo was again To track our progress and provide stakeholders included in the FTSE4Good Economic Environmental with a meaningful picture of our performance and Dow Jones sustainability dimension dimension as a corporate citizen, we maintain an extensive indices, listings which help range of indicators and additionally seek investors select companies opportunities, through independent assessments, with good records of Sector average Diageo Sector best to benchmark Diageo’s performance against that corporate responsibility.The corporate sustainability of comparable companies. assessment carried out in 2006 for Dow Jones rated companies in three ‘dimensions’.The graph We consulted widely before determining (above right) shows Diageo scores compared with the measures we use to track and report our the average and best scores in our industry sector. performance. Major inputs to this process were Diageo’s total score was 63%, compared with a the indicators of the Global Reporting Initiative, sector average of 54% and best score of 66%. measures used by socially-responsible investors The full benchmarking report is available on and others, results published by peer companies the Diageo website. and consultations with senior Diageo people responsible for our engagement with particular The Business in stakeholder groups. A list of the resulting the Community performance indicators, and where they are (BITC) corporate addressed in this report, is given in the form responsibility of a GRI content index, available on the website. index ranks companies’ social and environmental management and performance. BITC also publishes We routinely compare our performance as a an environmental index which assesses how corporate citizen with that of our peers.We have organisations integrate environmental responsibility participated in a number of benchmarking projects into their business, and – from this year – – for example, the Global Leadership Network, a community index which compares performance a strategic corporate citizenship research and with sector peers. Our progress over the life of benchmarking initiative of Boston College these indices is shown in the graph (above left). and AccountAbility; and a beverage industry In comparison with our peers, Diageo was placed roundtable on water stewardship which aims in the ‘Gold’ performance band (the second of to share best practice in water management. four) in all three indices. BITC’s feedback report is available on our website. Investors and others send us questionnaires which seek to evaluate our management systems and performance for the benefit of particular audiences, including many of our stakeholders.We aim to complete these and use the results, often in the form of indices or rankings, to keep our strategy in tune with best practice and stakeholder concerns.We prioritise three assessment indices – those organised by FTSE4Good, Dow Jones and Business in the Community. Diageo Corporate Citizenship Report 2007 35 UNGC communication on progress

Principles Examples of practical actions See and outcomes page

Human rights

Businesses should: Safety policy was implemented at offices in the demand side of the business, 70% of offices were found to be compliant and 1. Support and respect the improvement plans were put in place. Every Africa-based employee has attended an HIV/Aids information session; counselling protection of internationally and testing from peer educators is available to all. 16-17 proclaimed human rights

2. Make sure they are not complicit Diageo suppliers are encouraged to join the Sedex data exchange system, to record ethics and human rights management practices in human rights abuses and share the results with customers of their choice. Currently, 300 suppliers are in the process of registration. 28-29

Labour standards

Businesses should uphold: At Bushmills, an agreement was reached with employees on working in partnership, open consultation, flexible ways of working 3.The freedom of association and goal-sharing. In Scotland, a new development framework was implemented to help employee representatives succeed in a time and the effective recognition of of substantial growth. the right to collective bargaining 18-19

4.The elimination of all forms of We make no use of forced or compulsory labour. Labour conditions are included in our Partnering with Suppliers standard which forced and compulsory labour encompasses the nine principles of the Ethical Trading Initiative base code and is a key element in sourcing decisions. Participation in Sedex further supports this principle. 28-29

5.The effective abolition We make no use of child labour. Labour conditions are included in our Partnering with Suppliers standard which encompasses the of child labour nine principles of the Ethical Trading Initiative base code and is a key element in sourcing decisions. Participation in Sedex further supports this principle. 28-29

6.The elimination of This year we launched a new toolkit on recruitment to help candidates and hirers make the right decision. A mentoring programme discrimination in respect for women was begun in Nigeria.The proportion of women in senior management increased from 23% to 24%. 15-16 of employment and occupation

Environment

Businesses should: During the last two years, 98% of supply sites were subject to environmental audit to identify risk and set action plans for improvement. 7. Support a precautionary In Britain and the Republic of Ireland we switched to zero- or low-carbon electricity, saving 50,000t of carbon emissions. At many sites, approach to environmental projects were completed to reduce energy use and greenhouse gas emissions – in Ireland, strategic management of energy has saved challenges 8,000t and in Scotland efficiency measures have saved 27,400t. In Korea, making seasonal adjustments to boiler capacity saved 32,770t and in Kenya, installing new refrigeration equipment saved 278t greenhouse gas emissions. 21-25

8. Undertake initiatives Six supply sites had their environmental management system certified to ISO14001, bringing the total to 17. In Douala, Cameroon, to promote greater following a spill of 60,000 litres of water at the packaging line, an Ecocentre was established to remind employees of the environmental environmental responsibility impacts of their work. Environmental leadership teams were established at all large office sites to raise awareness among employees, plan actions and set targets for improvement. Opportunities to reduce or recycle waste were taken at many sites. At Amhurstberg, Ontario a new recycling centre was established. Alternative means of disposing of used filter sheets by composting were adopted at Shieldhall and Kilmarnock, Scotland, saving 240t waste a year from landfill. At Kilkenny, Ireland, new waste management measures have cut landfill by half, saving 45t. In Australia in 2005 we signed a packaging covenant with government to find ways to reduce packaging and packaging waste. 21-25

9. Encourage the development Developments have been implemented at many sites to reduce the environmental impacts of their operations. At Dorval, Quebec and diffusion of environmentally changes to tank cleaning procedures resulted in a 20% energy saving and 14% less water required by the process. At Leven, Scotland, friendly technologies we changed the way steam is generated, reducing CO2 emissions by 1,330t. At Waterford, Ireland, new production controls were installed, producing a 7% reduction in electricity consumption. At Kumasi, Ghana, a new effluent treatment plant was opened. 21-25

Corruption

Businesses should: The standards of integrity expected of Diageo employees are set our in our code of business conduct, the working of which is tested 10.Work against all forms each year when all managers are required to complete a certificate of compliance.To embed the code into our ways of working, of corruption, including extortion more than 100 training workshops were held across all regions during the year. 32-33 and bribery 36 Diageo Corporate Citizenship Report 2007

Stakeholders’ ratings of the Diageo About this report Corporate Citizenship Report 2006 % 50 40 7 12 Coverage of the issues important to you 61 30 7 2 Diageo’s performance as a corporate citizen 58 25 13 22 The report’s style and presentation

Very good Good OK Poor Very poor

Report scope which may help in understanding the received 130 responses via the website or reply This report on the global operations of Diageo sustainability of Diageo’s business, is given in card.The stakeholder groups with the highest plc, published in September 2007, covers the other documents including the annual report, response rates were shareholders (58%), consumers financial year ended 30 June 2007. Dates refer to annual review and material published on the (28%) and former employees (8%). Respondants financial years unless otherwise stated. Financial website www.diageo.com. may have belonged to more than one group. In and employee information applies to the whole preparing the 2007 report, we have endeavoured of Diageo on the same basis as in Diageo’s annual For a full picture of Diageo’s approach to to respond to the views expressed in the survey. report. Community data cover wholly-owned citizenship it is useful to consider the business Diageo businesses as well as locally-quoted not only from a global perspective but also at To give your comments on this report, email them companies and joint ventures in which Diageo country level. In the last three years we have to [email protected], use the reply has a controlling share; environmental data cover published – or are now preparing – reports on card provided (which can be returned from any production and distribution sites and large office Diageo in Canada, East Africa, Ghana, Greece, country without a stamp) or write to Will Peskett, locations (those at which more than 50 employees Ireland, Jamaica, Korea, Nigeria, Seychelles, Spain Corporate Citizenship, Diageo plc, 8 Henrietta are based) within the same businesses and and Thailand.We have also prepared a report Place, London W1G 0NB, United Kingdom. include the Gleneagles Hotel. supplement on our business in Africa. All reports are available on the website and in print, often in Forward-looking statements The report is intended for all of the company’s a choice of languages. This document contains certain forward-looking stakeholders. Copies are to be sent to all statements within the meaning of Section 27A employees, made available to shareholders and Reporting standards of the US Securities Act of 1933 and Section 21E distributed more selectively to other stakeholder We aspire to best practice in of the US Securities Exchange Act of 1934.These groups. It is available to all through the website. reporting and aim to provide forward-looking statements can be identified by We have published corporate citizenship reports an account of Diageo which the fact that they do not relate only to historical annually since 2003, the last being in September allows stakeholders to track or current facts. In particular, all statements that 2006.While we strive always to improve our our performance over time and express forecasts, expectations and projections coverage and methods of measurement, no make comparisons with other companies.We with respect to future matters, including trends in fundamental changes have been made to the have prepared this report with reference to the results of operations, margins, growth rates, overall business or our reporting this year that would third version of the Global Reporting Initiative market trends, the impact of interest or exchange invalidate comparison with the 2006 report. (GRI) Sustainability Reporting Guidelines, known rates, the availability of financing to Diageo, as G3 (www.globalreporting.org). A GRI content anticipated cost savings or synergies and the Report content index, which locates information within the report completion of Diageo’s strategic transactions, are When compiling the report, our aim was to cover with reference to GRI requirements, is available forward-looking statements. By their nature, all significant topics of common concern to our on www.diageo.com. G3 defines a number of forward-looking statements involve risk and stakeholders. In determining these, we have been application levels for reports.We have assessed uncertainty because they relate to events and guided by the GRI principles of defining report our report as A+. depend on circumstances that will occur in the content – materiality (including what’s important), future.There are a number of factors that could stakeholder inclusiveness (responding to the External assurance cause actual results and developments to differ reasonable interests of all groups), sustainability For a full understanding of Diageo’s performance materially from those expressed or implied by context (presenting performance against a as a corporate citizen, readers need confidence in these forward-looking statements, including background of sustainability) and completeness the quality of reported information, including its factors that are outside Diageo’s control. (including sufficient information).With these proper presentation. In preparing the report, we principles in mind, areas to be included in the have been guided by the GRI quality principles of All oral and written forward-looking statements report were determined by designated senior balance, comparability, accuracy, timeliness, clarity made on or after the date of this document and ‘issue owners’ within Diageo, whose task was to and reliability.We commissioned The Corporate attributable to Diageo are expressly qualified in interpret Diageo’s values, policies and strategy, Citizenship Company to give an external assurance their entirety by the ‘risk factors’ contained in stakeholder views – for example, from the types opinion as to whether these principles have been Diageo’s annual report on Form 20-F for the year of engagement described on page 31 – and followed and thus whether Diageo’s performance ended 30 June 2007 filed with the US Securities broader societal expectations in terms of what and progress during the year have been accurately and Exchange Commission (SEC). Any forward- topics merited inclusion and what emphasis portrayed. In addition, we have asked our assurers looking statements made by or on behalf of they should be given. A small number of errors to comment on what they consider to be the Diageo speak only as of the date they are made. in reporting or calculation have made it necessary strengths and weaknesses of the document in Diageo does not undertake to update forward- to restate some data from previous years. The effect order to improve our reports in the future.This looking statements to reflect any changes in of these changes was minimal. Some numbers assessment is given in summary on page 37 and Diageo’s expectations or any changes in events, on the cover of this report have been rounded in full on the website. conditions or circumstances on which any such for design purposes. statement is based.The reader should, however, We welcome your views consult any additional disclosures that Diageo Reporting programme We welcome stakeholders’ views on our approach may make in documents it files with the SEC. The corporate citizenship report is one element to corporate citizenship and on our reporting. All readers, wherever based, should take note of Diageo’s regular reporting. Further information, Following publication of our 2006 report we of these disclosures. Priorities and progress Diageo around the world in 2007 External assurance statement

Key impact Priorities Progress Benefit to Benefit to area for action and plans society Diageo

Thirty Diageo wine marketers Summary assurance and commentary improving performance by sharing information, scope to report more fully on impacts in these Society in California, USA helped conserve Diageo has commissioned The Corporate data and best practice across the organisation. areas.There is more work needed to assess a the nearby Fagan Marsh Ecological Responsible drinking In all businesses, deliver a Initiatives continuing, completed or Discourages harmful patterns of Builds relationships with a broad Citizenship Company to provide it with external The roll-out of initiatives such as the Safety greater proportion of Diageo’s supplier base Reserve on the Napa river by responsible drinking initiative and underway in 45 markets behaviour range of stakeholders collecting half a tonne of rubbish, assurance and commentary on its Corporate Culture Maturity Model and high levels of through Sedex and to move Diageo’s Licence evaluate its effectiveness including nine tyres, two vacuum Citizenship Report 2007. Diageo’s management investment in occupational health and safety to Operate for Third Parties beyond pilot phase. cleaners and a car back seat. Led has prepared the report and is responsible for reflect Diageo’s commitment to employee Engage employees in living our Programmes delivered in Australia, Employees as ambassadors reinforce Enhances reputation and employee by a former Diageo Earthwatch its contents. Our objectives were to review its welfare and embedding responsible corporate Despite Diageo’s high levels of employee responsible drinking policy Brazil, Ireland, UK and Venezuela responsibility message engagement champion, the project aimed to promote biodiversity, cleaner water contents and presentation, to conduct selected behaviour. engagement and its stated commitment to Participate in constructive industry Contributed to regional workshops Reduces negative health and social Provides balanced view of the role of and ultimately healthier growing checks to underlying records and other promoting a diverse workplace, we believe consultations with WHO on alcohol on self-regulation in Asia Pacific and impacts of alcohol abuse alcohol in society conditions for vines. evidence, and to provide this statement for The inclusion of the environmental life cycle that Diageo’s reporting of employee profiles, abuse Africa which we have sole responsibility. A full version impact analysis of its Johnnie Walker brand demographics and related concerns should be of our assurance statement is available at is a significant step forward in Diageo’s strengthened to include further diversity issues. Consumer choice Implement our consumer Coverage now 37%. All relevant Facilitates informed consumer Builds brand reputation and loyalty Colleagues partnered with Each year in Ireland we information policy brands to comply by 2010 choices www.diageo.com, including information understanding of its environmental impacts. For an international company like Diageo there Un Techo Para Mi País (‘A roof sponsor more than 1,000 festivals about The Corporate Citizenship Company, It reflects the rigour Diageo is applying to are complexities to this. Nonetheless, we for my country’) to provide and other events, reflecting our Develop ways of measuring and Working on new measures of Enhances consumer choice Builds brand reputation and loyalty accommodation for poor families significant involvement in the our relationship with Diageo and the assurance environmental management. It is also in believe that more information about how reporting quality supplier and production quality in San Miguel Ajusco, 100km south sporting and cultural life of the process we have adopted.This statement keeping with the emerging trend to drive it manages and promotes diversity and the of Mexico City. A grant of £22,000 nation. Guinness was the main summarises our principal findings. corporate citizenship into brands, which is inclusion of targets would better meet the Community investment Invest 1% of operating profit in social Invested £20.7 million, or 1.0% of Addresses pressing community Strengthens relationships with from the business covered the race sponsor at the 2007 how most consumers relate to multi-brand expectations of a number of key stakeholders and community programmes operating profit issues communities materials for 30 houses, ten of Punchestown races, while Diageo corporations like Diageo. and initiatives. which were erected in just one sponsored the Charity Our opinion Focus on developing countries and Significant projects in Africa; strategy Focuses resources on where they can Strengthens relationships with day by 140 Diageo volunteers Sweepstakes for the Punchestown In our opinion, the report provides a fair and disasters, engaging employees with reviewed in other developing be most effective communities and employees from offices across Mexico. Kidney Research Fund. Kate balanced representation of the material aspects Looking ahead LBG assurance statement initiatives countries. Issued guidelines on local Harrington won the race riding of Diageo performance for 2007.We have This report represents a further advance in Diageo is an active member of the community programmes Moscow Flyer. examined the processes Diageo has in place Diageo’s approach to corporate citizenship LBG (London Benchmarking Group). for identifying, understanding and managing and reporting though future reports would The LBG model helps businesses Employee engagement Raise levels of employee Survey showed engagement with all Maximises fulfilling employment Employee engagement drives We’ve changed the way we and development engagement across all business areas values 2-3% up on 2006. Super- opportunities business performance corporate citizenship issues.Where we believe be strengthened if they addressed more fully to improve the management, measurement dispose of waste beer in the UK to material gaps in performance data and those risks, beyond climate change, identified and reporting of their corporate community as measured by values survey engaged employees up 5% to 29% treatment by anaerobic digestion – with a target for 2011 of 50% a switch mediated by the National stakeholder views on significant issues exist, by the company as significant – for example involvement programmes. It moves beyond Industrial Symbiosis Programme. they are identified below. those connected with business expansion in charitable donations to include the full range Embed health, safety and quality Following audits, improvement plans Enhances health and safety of Leads to compliance and greater Burning the methane produced emerging economies where sufficient resource of contributions (in time, in kind and in cash) standards in all parts of the business are being progressed and actions community members productivity makes enough energy to run In forming our opinion and making our will need to be invested to ensure adherence made to community causes, and assesses taken to address gaps the treatment plant.The new comments, we have based our work on the to Diageo’s global standards. the actual results for the community and arrangements save CO2 emissions Environment of 9,000 tonnes and divert 2,600 international assurance standard AA1000 for the business (www.lbg-online.net). As tonnes of waste from going down (www.accountability21.net), notably The ‘Diageo in the world’ chart provides useful managers of the Group, we have worked Climate change Implement our long-term energy Greenhouse gas emissions reduced Reduces emissions of climate change Leads to cost savings and greater the drain. considering materiality, completeness and context to the information presented and we with Diageo to ensure that it understands strategy by 9% in three years. Manager agents sustainability responsiveness.We have also had regard to believe that future reports would be enhanced the LBG model and has applied its principles appointed to drive energy strategy the reporting guidance for content and the by providing more information that is material to the measurement of community involvement Hives Save Lives Africa uses principles for defining quality contained in to understanding Diageo’s operations, notably programmes during the year to 30 June 2007. Water management Minimise water use and emissions to Reduced water use by 11% in three Conserves natural resources Leads to cost savings and protects apiculture to alleviate poverty and water years but BOD emissions have water supplies encourage conservation. In Mpigi, GRI’s G3 sustainability reporting guidelines how the alcohol industry as a whole functions Having conducted an assessment, we are increased. Established water group Uganda, we donated equipment (www.globalreporting.org). and Diageo’s role in it.We continue to satisfied that this has been achieved. Our work to drive further improvements including 40 beehives and trained recommend the inclusion of content on both has not extended to an independent audit 13 farmers as beekeepers. Now in Commentary the culture and demographics of consumption of the data. full production, the farmers are Resources and waste Champion the adoption of Guidelines in use by brand teams Conserves materials and habitats Generates consumer support and This report provides readers with a clear around the world because such information is sustainable packaging cost savings selling honey and propolis – a medicinal resin collected by bees understanding of Diageo’s activities and relevant to Diageo’s reporting of its responsible The Corporate Citizenship Company Economy – in Uganda and the UK to impacts worldwide, reflecting key issues drinking efforts. Information about Diageo’s www.corporate-citizenship.com supplement their income from as identified by Diageo and its stakeholders. principal shareholders and how they influence 29 August 2007 other crops. Financial contribution Build total shareholder return Delivered accelerated financial growth Encourages investment, employment A requirement for business success The introduction highlights both the benefits its policy and decision making would also and returned £2.3bn to shareholders and business opportunity to Diageo and to society of action on these be welcomed. key issues.Targets are referenced throughout Promote high standards of Implemented Sarbanes-Oxley; Supports integrity of business sector Strengthens relationships with all Diageo Australia supported An outbreak of malaria, not Above middle During One issue raised by young governance, compliance and management concluded that as at stakeholders Earth Hour, an environmental seen in Jamaica for over 40 years, Christmas and the New Year, people attending a debate on although we believe consolidation of these Diageo’s work with the Suppliers Ethical transparent reporting 31 June 2007 internal control over awareness event launched by the affected over 200 people this year, Guinness provided 70,000 party- drinking and road safety in Spain would help readers’ understanding of Diageo’s Data Exchange (Sedex) and other initiatives financial reporting was effective city of Sydney, by turning off all mainly around Kingston. Receiving goers in Singapore with a free ride was how to be responsible about progress and plans. has helped to make some progress on its non-essential lighting at our offices a donation of £7,500 from the home. Research afterwards found car use when public transport is commitment to encourage responsibility Supply chain management Promote our standards throughout Ethics and human rights Encourages business sector integrity Improves business relationships and and production plants. More than managing director of our Jamaican that four out of five consumers not available. As joint organisers Diageo has implemented a consistent in its supply chain. Last year we said that Printed on Forest Stewardship Council-certified, two million Sydneysiders joined business, the minister of health agreed that Guinness was a of the debate with the road traffic the supply chain management practices recorded by reputation approach to management across its businesses reporting should include information on the elemental chlorine-free paper. Fully recyclable. our suppliers via Sedex the initiative and power suppliers praised Red Stripe as ‘the only responsible brand and two out of department of the Ministry of the reported a 10.2% drop in energy company to come forward and three said the campaign had Interior, we plan to work with globally. High levels of employee engagement procurement of raw materials, in particular usage across the usually glittering offer help in the fight against changed their attitude towards Consider the social, environmental Suppliers’ practice in human rights, Responsibility encouraged in the Improves business and community Spanish on-trade associations to and empowerment are reported. As systems are regarding Diageo’s relations with small farms Designed and produced by Sydney business district. the disease.’ drink-driving. address this important concern. and economic impacts of major business ethics and environment is value chain relationships embedded and strengthened, Diageo is further that feed into the supply chain.There remains 35 Communications. Printed by CTD. procurement decisions included in all significant sourcing decisions Diageo Corporate 2007 Citizenship Report Our values Report highlights

% m // We are passionate about consumers – // Included in the Global 100 most our curiosity and consumer insights drive our sustainable companies % Diageo score in BITC Invested in community projects 88 Corporate Responsibility Index growth.We cherish our brands; we are creative Employees took part in our 92 £20.7 global values survey and courageous in pursuing their full potential. // In top ten in the Good Company We are innovative, constantly searching for Ranking 2007 new ideas. // The growing importance of Asia Pacific // We value each other – we seek and benefit reflected in creation of new Diageo region from diverse people and perspectives.We strive 12,000 99Production sites to create mutually fulfilling relationships // New Scottish facilities planned with In Venezuela, the Guardian Angels projects has and partnerships sustainable features built in reached 12,000 consumers // We give ourselves the freedom to succeed // 1% operating profit invested in – we trust each other, we are open and seek our communities challenge, and we respond quickly to the opportunities this creates. // Responsible drinking projects completed or underway in 45 markets // We are proud of what we do and how we do it – we act responsibly with the highest // Diageo Africa committed to provide water standards of integrity. for one million people 0.003% // We strive to be the best – we are always // Safety and environmental programmes Diageo’s share of global greenhouse gas emissions Diageo included in the Global 100 10most sustainable companies 0 learning, always improving.We set high implemented at large offices standards, we stretch to exceed them and Diageo plc 22,520 we celebrate success. // Most electricity in Ireland and Scotland now Employees worldwide 8 Henrietta Place from zero- or low-carbon sources London W1G 0NB United Kingdom // Three out of five environmental targets Tel +44 (0) 20 7927 5200 bn met; new targets set Fax +44 (0) 20 7927 4600 £5.9 0Zero waste landfilled by Cash value added www.diageo.com our Dublin brewery

Registered in England No. 23307

Profile Society Environment Economy Governance © 2007 Diageo plc. All rights reserved. A decade to celebrate 1 Promoting responsible Conserving our environment 21 Investment and creating value 26 Governance, engagement and All brands mentioned in this Corporate Our business 2 drinking 5 commitments 30 Citizenship Report are trademarks and Getting to know Diageo 3 Our products and consumers 11 UN Global Compact % The meaning of sustainability 4 Investing in our communities 12 communication on progress 35 are registered and/or otherwise protected 526,800 Releasing the potential About this report 36 Corporate Citizenship Report 2007 in accordance with applicable law. People in Africa provided with clean water 87Waste recycled of our people 15 External assurance statement 37