Celebrating life, today Sustainability & and tomorrow Responsibility Report 2012 Diageo plc is incorporated as a public limited Go online! company in England and Wales. Diageo was incorporated as Arthur Guinness Son & Visit our 2012 Sustainability GO ONLINE Company Limited on 21 October 1886. & Responsibility Report and The group was formed by the merger of Annual Report at: QUICK Grand Metropolitan Public Limited Company www.diageoreports.com EFFICIENT (GrandMet) and Guinness PLC (the Guinness Group) in December 1997. Diageo plc’s GREEN principal executive office is located at Lakeside Drive, Park Royal, London NW10 7HQ and its telephone number is +44 (0) 20 8978 6000. 1 2 1 – Sustainability & Responsibility Report 2 – Annual Report About our business Contents 2 Chief executive’s introduction About our business 6 Diageo at a glance 8 Strategic focus by region 10 Our brands 12 Our history 14 Our values Approach and performance 16 Sustainability & Responsibility Strategy 19 The business case for sustainability and responsibility 19 Value chain 21 How we manage sustainability and responsibility 22 Engaging stakeholders 24 Performance and key metrics Alcohol in society 28 Performance and outlook performance and Approach 29 Communicating about alcohol responsibly 32 Tackling alcohol misuse effectively 35 Getting policy right Water and the environment 40 Performance and outlook 42 Water 45 Carbon 47 Waste 48 Sustainable packaging 48 The wider environment Socio-economic development 52 Performance and outlook 53 Local wealth creation 55 Community investment 59 Advocacy Impacts Our people 62 Performance and outlook 64 Who we are 66 Safety 67 Health and wellbeing 67 Our talent Governance and ethics 74 Performance and outlook 75 Regulatory environment and public policy 76 Corporate governance 78 Compliance and ethics programme Our suppliers 85 Performance and outlook 86 Our supply chain 87 Our standards and guidelines 87 Managing social and ethical risks report this About 88 Environmental supply chain management 88 Sustainable agricultural partnerships Our customers and consumers 92 Performance and outlook 93 Who we serve 94 Engaging consumers 95 Working with customers 96 Food safety and quality About this report and GRI 100 Scope and boundaries 102 Principles of management and reporting 103 Reporting methodologies 107 Assurance 110 GRI Index 119 UN Global Compact Communication on Progress About our business 1 Chief executive’s introduction Diageo is a strong business, That commitment is important for of tens of thousands that supply our growing stronger. In what remain many reasons. It is closely aligned business. I have seen first-hand how most challenging economic to our company values and it creates our partnerships – which combine conditions, I am proud that we long term value for the business. commercial contracts and financial have delivered excellent growth. It helps build our reputation with support and training – have improved We have built a business which is stakeholders and protects our livelihoods and secured the resources increasingly recognised for the licence to operate. It delivers business we need for our business to grow. strength of its brands, its growing efficiencies and security of supply. In Nottingham, England I saw focus on high-growth markets and It helps us engage suppliers, the success of a programme that we its agility in managing resources. customers, consumers and support to create a responsible night- As detailed throughout this report employees. Very significantly, it drives time economy. Today, the number we are also known for our strong competitive advantage with key of programmes that we support to commitment to sustainability stakeholders in the emerging markets tackle alcohol misuse totals more than and responsibility. which are increasingly important for 300 in 49 countries. our business. I’ve visited many of our operations Our purpose is ‘celebrating where we drive our environmental life, every day, everywhere’. We are targets – which are among the proud that our brands are a part most challenging in the consumer of celebrations around the world, goods sector. This year we recorded but our purpose goes broader. progress on all our operational targets. It is underpinned by respect for In particular, our work to reduce all those our business touches. greenhouse gas emissions by nearly Much of my time is spent in our 10% while increasing production year businesses in market. I have the chance on year is a significant achievement. to see first-hand the beneficial impact Other highlights include our our work has had on our stakeholders Water of Life programme in Africa, around the world. For example, where we aim to bring water to eight I have talked to small-scale farmers million people by 2015; our Learning in Africa who are part of the network for Life programme in Latin America, 2 Diageo Sustainability & Responsibility Report 2012 About our business Paul S Walsh, Chief executive “Driving strong performance in sustainability and responsibility is in the long term interests of our company. It helps ensure that we can both deliver returns to shareholders and benefit the communities whose lives we touch. It is my firm belief that the most genuinely strategic and forward-looking performance and Approach businesses treat sustainability as a core component of business delivery.” where we have trained more than our focus on a local approach to Impacts 63,000 people to enter the job sustainability and responsibility. Our market; and the Diageo Bar Academy global strategy remains the same – in Asia Pacific, where we have trained along with our commitments to almost 20,000 bartenders how to important international frameworks serve alcohol responsibly. such as the UN Global Compact and Of course, we have also had some CEO Water Mandate. We are disappointments. For example, while increasingly geared to ensure greater we have made progress in promoting responsiveness and flexibility, a Zero Harm culture, I am saddened prioritising those issues that are most to report that one of our employees important to our local businesses and died following a road traffic accident their diverse stakeholders. in Nigeria. One death is one too many. I am proud of what we have Our sympathies go to his family and accomplished to build a responsible our efforts to stop any recurrence are and sustainable company, though redoubled. We will place even more I recognise that there are many report this About emphasis on preventing accidents in opportunities and challenges ahead the workplace: our people’s safety is of us. We will continue to drive these our number one priority. efforts and look for solutions that As our business grows, making benefit both Diageo and the many a positive contribution to local communities in which we work and communities demands a clear live around the world. understanding of the differing needs of each of those communities. This year we completed the reorganisation of our business, devolving operational decision- making and responsibility to 21 Paul S Walsh, business units. We will now sharpen Chief executive About our business 3 About our business In this section: Below are the list of icons that we are creating. 6 Diageo at a glance They both need to be created on a 60 x 60 px canvas and a 29 x 29 px canvas. 8 Strategic focus by region They should not fill this area. The ones in bold need to be created. 10 Our brands The entire set needs to be finalised for style consistency. 12 Our history Awards (Rosette) Breweries (Beer glass) 14 Our values Distilleries (Big distiller) Below are the list of icons that we are creating. Full-time employees (People) Wineries (Wine glass) They both need to be created on a 60 x 60 px canvas and a 29 x 29 px canvas. Below are the list of icons that we are creating. Packaging and blending sites (cardboard box) They should not fill this area. The ones in bold need to be created. They both need to be created on a 60 x 60 px canvas and a 29 x 29 px canvas. Warehouse (fork-lift) The entire set needs to be finalised for style consistency. They should not fill this area. The ones in bold need to be created. Other sites (sign post) The entire set needs to be finalised for style consistency. HIV (Ribbon) Awards (Rosette) Awards Breweries Distilleries Full-time Wineries Packaging and Warehouse Other sites HIV Water usuage Renewable Trained Code of Suppliers Global Raw 1 in five drinks Nutritional value Dairy Landfill Water usuage (water droplets) employees blending sites energy barmen conduct network materials Breweries (Beer glass) Renewable energy (Wind turbines) Awards (Rosette) Distilleries (Big distiller) Cocktail shaker (trained barmen) Breweries (Beer glass) Full-time employees (People) Code of conduct (folder) Distilleries (Big distiller) Wineries (Wine glass) Suppliers (Boxes on wheely lift thingy) 29 Globe (global network) 25,000 Full-time employees (People) Packaging and blending sites (cardboard box) Below Raware the materials list of (Tree)icons that we are creating. Wineries (Wine glass) Warehouse (fork-lift) Our brand range includes 29 of We employ over 25,000 people They both1 in fiveneed drinks to be (re-use created beer on glass a 60 stacked x 60 px up canvas only one and full) a 29 x 29 px canvas. Other sites (sign post) Packaging and blending sites (cardboard box) the world’s top 100 premium They shouldNutritional not valuefill this (might area. be The tricky) ones in bold need to be created. around the world HIV (Ribbon) Warehouse (fork-lift) Awards