MODERN SLAVERY ACT STATEMENT for the Financial Year ended 30 June 2019 This statement describes the activities is undertaking to Contents prevent slavery and human trafficking in our business operations Introduction 02 and supply chain. It covers all Diageo group companies worldwide What is modern slavery? 02 and has been published in accordance with the Modern Slavery Act 2015, the California Transparency in Supply Chains Act 2010 Our ambition 02 and all modern slavery-related legislation in other countries. Our 2020 Sustainability and Responsibility Targets 03 Our approach 03 Our Policies and Training 04 Our policies 04 Who these policies apply to 04 Training on these policies 05 Dedicated Modern Slavery training 05 Whistleblowing and breaches 05

Governance 06

Our supply network and assessment process 07

Human Rights Programme 08 Addressing risks 08

Responsible Sourcing Programme 10

Plans for the future 12 Modern Slavery Act Statement for the Financial Year ended 30 June 2019 02 Introduction

INTRODUCTION

What is modern slavery? Our ambition We produce our brands from over 150 sites Modern slavery is a crime and a violation of Diageo is a global leader in beverage alcohol across 26 countries. We directly employ over fundamental human rights. Modern slavery with an outstanding collection of brands 28,000 people. Our partners employ many It is our ambition to be one takes various forms, including slavery, servitude, across spirits and beer. Our products are sold more, supporting our global manufacturing, of the best performing, most forced and compulsory labour and human in more than 180 countries around the world. distribution, sales and marketing operations. trusted and respected trafficking, all of which have in common the Our brands include , Crown We have interdependent relationships companies in the world. deprivation of a person’s liberty by another in Royal, JεB, Buchanan’s and Windsor whiskies, throughout our value chain, from the farmers order to exploit them for personal or , Cîroc and vodkas, Captain who grow our ingredients, to our employees commercial gain. Morgan, Baileys, , and and contractors, to the consumers who buy . our brands. Through our full value chain, from We know that modern slavery is a global issue grain to glass, we are connected to many and is linked in part to the rapid rise in global It is our ambition to be one of the best communities. We want to make sure that migration. It exists in every region in the world performing, most trusted and respected throughout that chain – wherever we live, and in most types of economy, whether companies in the world. We know we will only work, source and sell – we are making a industrialised, developing or in transition. No achieve this ambition if we do business positive contribution. sector or industry can be considered immune sustainably and responsibly, and can or be complacent. demonstrate that this is the case.

Diageo has a zero-tolerance approach to modern slavery. This statement describes what we are doing to prevent modern slavery in our business operations and our value chain. Modern Slavery Act Statement for the Financial Year ended 30 June 2019 03 Introduction

Our 2020 sustainability Two specific commitments within our 2020 and specifically the risk of modern slavery. This and responsibility targets targets relate directly to modern slavery: framework details our commitment to acting Defining and delivering our sustainability goals ethically and with integrity in all our business Diageo has a well-developed is an integral part of our long-term business • act in accordance with the UN Guiding dealings, and to implementing and enforcing and embedded policy strategy and our commitment to making a real Principles on Business and Human Rights. systems and controls to prevent modern framework that addresses difference to the world in which we operate. slavery in our business and in our value chain. • deliver our responsible sourcing human rights, and specifically We are also committed to ensuring there is commitments with suppliers to improve Our sustainability and responsibility targets for transparency in our approach to tackling the risk of modern slavery. labour standards and human rights in our 2020 focus on the areas that are most material modern slavery in our own business and supply chains. to our business and that will contribute to throughout our value chain. long-term impact and success, delivering For additional information on our 2020 targets, value for Diageo, our stakeholders and please see our website. We expect the same high standards from all communities. Our 2020 targets draw on our our contractors, suppliers and other business achievements to date and our ambitions for Our approach partners, and we require our contractors and the future, are aligned with the UN Sustainable We are a signatory to the United Nations suppliers to comply with our policies and Development Goals (SDGs) and have been Global Compact and committed to acting in codes to combat the use of forced, compulsory developed by a diverse group of internal and accordance with the United Nations Guiding or trafficked labour, or anyone held in slavery external experts. We have mapped our Principles on Business and Human Rights or servitude, whether adults or children. We sustainable development strategy against the (UNGPs). We fully endorse and support the expect our suppliers in turn to hold their SDGs and, through our targets and ongoing principles enshrined in the International Bill of own suppliers to the same high standards. programmes, are supporting their delivery. Human Rights and the International Labour We recognise the need to work in partnership Organization’s (ILO) Declaration on We have regular contact with our trading with others in order to meet our ambitions Fundamental Principles and Rights at Work. partners to check, as far as possible, that they and the wider goals of the SDGs. are similarly committed to good practices in Diageo has a well-developed and embedded relation to their workforce and contractors. policy framework that addresses human rights, Modern Slavery Act Statement for the Financial Year ended 30 June 2019 04 Our Policies and Training

OUR POLICIES AND TRAINING

Our policy framework addresses human rights, and specifically the risk of modern slavery, and is supported by training.

Our policies

1 2 3 Who these policies apply to Our Code and Human Rights Global Policy Our Code of Business Conduct (our Our Human Rights Policy details Our Partnering with Suppliers Standard apply to every one of our employees worldwide Code) is intended to embody our purpose Diageo’s position on our core human – our code for suppliers – has been regardless of their role or seniority, including and values. It sets out our collective and rights principles: valuing diversity; developed to help drive higher standards those in subsidiary companies and joint ventures individual commitment to conducting preventing harassment, discrimination, in our supply chain. It sets out the where Diageo has a controlling interest. business in accordance with them, and child labour and forced labour; expectations minimum standards we require of our with all relevant laws, regulations and on wages and working hours; and enabling suppliers, along with the wider We also expect all our business partners to industry requirements, as well as with a freedom of association to trade unions. sustainability aspirations we expect our adopt clear commitments on ethical business high standard of ethics and responsibility. You can read about our Human Rights suppliers to be working towards in areas like those in our Code, and any party operating Our Code (available in 20 languages) also Global Policy here. such as water management and emissions on Diageo’s behalf must ensure that their sets out the headline expectations on reductions. The standard is structured actions comply with our Code and global human rights, which are further detailed in around the following five focus areas of policies. Wherever possible, we contractually our Human Rights Global Policy. engagement with our suppliers: Business commit our business partners to adhere to our Integrity and Ethical Standards; Human Code and/or our Partnering with Suppliers We have reviewed our Code to ensure it Rights and Labour Standards; Health and Standard. We have also included an ‘end-to- remains in line with our policies (which are Safety; Environmental Impact; and end responsibility’ statement in our Partnering updated annually) and our business Sustainable Agricultural Supply Chains. with Suppliers Standard, setting out the practices. We have taken the opportunity You can read more about our Partnering expectation of our suppliers to promote the to ensure the language is as simple as with Suppliers Standard here. principles of the standard throughout their possible for our employees to understand. own supply chain, and to have the appropriate We launched the refreshed Code globally in processes in place to verify and demonstrate September 2019 and in all 20 Code languages applicable compliance standards Modern Slavery Act Statement for the Financial Year ended 30 June 2019 05 Our Policies and Training

Training on these policies delivery, to ensure they remain relevant to the The training was rolled out to both procurement This includes breaches raised through our Diageo understands the importance of building risks our employees face in their roles. staff and a selection of key stakeholder and confidential whistleblowing line, SpeakUp, compliance capability across the business and influencing functions within the company, with which is available for all Diageo employees or we are working hard to engage our employees. Our Annual Certification of Compliance certifies recordings also made available upon request. business partners to use in order to raise that all employees at manager level and above concerns about a breach of our Code, global Our Code training – our way of assuring that all fully understand what is expected of them. In More broadly, through our Human Rights policies or standards, or when something employees fully understand what is expected of 2018 the ACC was completed by 100% of programme, we are building awareness among doesn’t feel right or live up to our Diageo values. them – is delivered predominantly by eligible employees, a total of 9,770 people. our employees of human rights risks in our value Complete anonymity is assured. SpeakUp is e-Learning, with an integrated Annual chain and engaging them on the issues through managed by a company independent of Diageo Certification of Compliance (ACC) requirement Our Code training will be refreshed in 2020, the human rights assessment process, which and is available to employees and business for managers and above. The e-Learning is replacing our existing training materials, in line considers business activities from sourcing raw partners in their language of choice. mandatory and assigned to every employee in with our refreshed Code. materials to operations, right the way through to every market annually and covers all areas of our sales. Where appropriate, we share anonymous case Code, with specific emphasis on key topics Dedicated modern slavery training studies of breaches of different areas of our reinforced by scenario-based videos. Employees In 2016 we reported that key employees in We also provide training for our Procurement Code with employees so that they can learn are able to complete it in their chosen language Procurement and Sustainability who have direct teams on our Responsible Sourcing programme from them. on their desktop, laptop, tablet or smartphone, responsibility for our Human Rights, Responsible and our Partnering with Suppliers Standard, with a face-to-face classroom training option Sourcing or Supply Governance programmes which includes guidance on how we manage In 2019, thirteen human rights allegations were delivered at sites where employees do not use were trained on human trafficking and slavery, human rights and labour standard risks within raised via SpeakUp. Of the thirteen cases, eight computers. All new joiners are required to with external input to build awareness of our supply chain. were unsubstantiated. The five substantiated complete the training within 30 days. possible risks in key geographies and supply cases related to: lack of designated lavatory and networks. In 2019, we refreshed this training, For our supply sites specifically, we provide changing facilities for women at a supply site; an Each market has its own training plan for our working with an external partner to create a Security Standards and Awareness training to individual not being paid on time for work they Code and key global policies, which they deliver series of interactive webinars and workshop ensure the integrity of our supply chain, which did; lack of guidelines on intern reimbursement through locally organised, risk-based training. sessions designed to educate attendees on reduces the risk of human trafficking. and working hours; and two connected cases We have strengthened our communication on human rights and modern slavery. This training relating to the deployment of adolescent labour. good practice through annual engagement was designed both to educate employees on Whistleblowing and breaches We have taken action to address each of these events in regions, such as the Pathway of Pride the principles of human rights – with a specific We have a global standard for managing issues. Four of the cases were closed within our programme in Africa, Ethics Day in Asia Pacific emphasis on modern slavery – and also to breaches that provides guidance to those 60-day timeframe, the one exception took and Compliance Awareness Day in Latin empower staff to recognise the potential signs involved in the process to ensure it is managed slightly longer due to the complex nature of the America. We regularly review our training and of forced labour occurring and the mechanisms effectively. allegations and related investigation communications material, and methods for they could utilise to challenge and intervene. Modern Slavery Act Statement for the Financial Year ended 30 June 2019 06 Governance

GOVERNANCE

Lead responsibility for human rights sits We also operate a cross-functional working jointly with the President, Global Supply group comprising senior managers from and Procurement and the Group Human across the business who have relevant Resources Director. Both are members of expertise, knowledge and skills. This working the Diageo Executive Committee and group plays a leadership and advisory role in report to the global CEO and CFO our human rights agenda. The working group (respectively), who are members of, and also includes external expertise from Business responsible to, the Board of Directors. for Social Responsibility (BSR), a leading global Both also sit on our Human Rights Steering non-profit consultancy in the areas of human Committee, which shapes and determines rights, sustainability and the environment. our strategy on human rights and ensures its operational delivery across the Our Diageo in Society team coordinates our business’ activities. This steering programme activity, which is prioritised by committee includes the following senior country and risk. This team works with our management positions: Global Diageo in markets around the world to apply the Society Director, Global Risk and programme, engaging senior management in Compliance Director and Global each location to undertake human rights Organisation Effectiveness Director. assessments with the support of expert external advisers. Modern Slavery Act Statement for the Financial Year ended 30 June 2019 07 Our Supply Network and Assessment Process

OUR SUPPLY NETWORK AND ASSESSMENT PROCESS

Around 33,000 direct suppliers from more accordingly, working with major international Our approach to assessing risk, monitoring than 100 countries provide us with the raw suppliers and, in some cases, directly with standards and developing actions to address materials, expertise and other resources smallholder farmers. issues within this wide, varied and complex that help us make great brands. All the supply network has two areas of activity: products we make rely on high-quality More details of the key crops we use, and their agricultural raw materials and the people various origins, are contained in our • Our Human Rights programme, who grow them. Just a few key raw Sustainable Agriculture strategy. including Human Rights Impact materials go into many of our well-known Assessments (HRIAs) which are based on brands – from barley in Johnnie Walker The other goods and services we routinely our geographic markets around the world and wheat in Smirnoff to molasses in source include packaging materials, especially and consider all aspects of our value chain, and cream in Baileys. glass, corrugated board and cartons; from farming activity, through our own marketing materials; capital equipment; and operations, to our consumer markets in These agricultural raw materials are drawn business services. These are typically from the hospitality sector. from farms all over the world, ranging from larger, established suppliers operating • Our Responsible Sourcing programme, large, highly mechanised farms over well-developed systems and processes in working with suppliers all over the world. thousands of hectares in Europe and the USA, order to meet the scale of our needs as a large to family-owned smallholdings in Africa which business. We recognise, however, that this may be less than two hectares in size. does not automatically prevent risks to labour standards or in terms of modern slavery, We recognise that different farm types and irrespective of the nature and location of locations, involving a wide variety of types of suppliers, and we monitor and assess suppliers employee (permanent, temporary, contract against international standards and our own and seasonal), pose different risks in terms of Partnering with Suppliers Standard. modern slavery. We adapt our approach to assessing standards and managing issues Modern Slavery Act Statement for the Financial Year ended 30 June 2019 08 Human Rights Programme

HUMAN RIGHTS PROGRAMME

We have been signatories to the UN source our barley, wheat, sorghum, sugarcane, Guiding Principles on Business and Human agave and other agricultural products – to the Rights (UNGPs) since 2014. As part of our suppliers and manufacturing units where we commitment to act in accordance with the procure our glass, labels, caps and other items, UNGPs, we partnered with Business for to our own production operations, and to the Social Responsibility (BSR) in 2016 to retailers and bars selling our products. They formulate and deliver our human rights involve meetings with employees, union strategy. We have since conducted a members, workers on factory production lines, corporate-level risk assessment and manpower providers, contract workers, NGOs mapped our global policies and processes we support and other external parties. against the UNGPs, while also considering risks in different geographies informed Where assessments identify human rights by our own understanding and external concerns, or suggest our approach can be reference data. strengthened to better identify and prevent risk, we put in place robust action plans to Following the corporate-level assessment, we resolve matters, working with external experts developed a comprehensive HRIA toolkit to when appropriate. guide our markets through a systematic review of their businesses to identify and We aim to conduct HRIAs in all markets by the assess potential human rights impacts, end of 2020. After an initial pilot in Kenya in including modern slavery risks. Our 2016, we subsequently carried out HRIAs in assessments are robust, and involve detailed Uganda, Mexico, Brazil, Turkey, Thailand, Ghana, examination of our value chain, from raw Tanzania, Guatemala, the UK, India and Colombia. material sourcing – which includes visits to In 2019, we finalised HRIAs in South Africa and farming communities and fields where we Nigeria, bringing our total since 2015 to 14 Modern Slavery Act Statement for the Financial Year ended 30 June 2019 09 Human Rights Programme

Addressing risks We have also created contractor standards changes to our assessment data-collection Because human rights issues are often In line with the UNGPs, we have identified guided by the International Labour Organization’s methodologies which will further promote the systemic, we also work with others to address three risks as particularly salient to our business: Declaration on Fundamental Principles and inclusion of women’s voices and opinion them at scale. This includes further work with Rights to Work, focused on promoting within the assessment process. By applying a CARE International UK, with whom we have • labour rights, including the risk of conditions in which people can work in gender lens to our overall HRIA approach, we been collaborating to combat sexual child labour, specifically in agricultural freedom and safety. are increasing our ability to identify and harassment of women in the hospitality sector, supply networks. resolve human rights issues that impact after initial work in Southeast Asia. In addition to the above, each market has women throughout our total value chain • labour standards for contract workers. produced an action plan to address its from grain to glass. • sexual harassment in the hospitality sector. specific risks.

These issues are external risk factors in the We also recognise specific risks for women, as places where we operate, and we recognise well as opportunities for their empowerment, the challenges they pose in our value chain. in agriculture and smallholder farming in We are particularly aware of these risks when Africa. In 2018 we conducted research with carrying out HRIAs (see our progress against CARE International UK, a global NGO, to better our target, below), and in our supply chain. understand these issues and identify ways of working and policies that improve farm work Having identified these risks, we have and better protect the rights of women on developed a child protection programme for these farms. We are now integrating their our work with smallholder farmers, where we recommendations in our local sourcing have trained key functions and business programme. In addition, we also recognise partners on our local sourcing programme in that women are potentially impacted seven countries in Africa to prevent child disproportionately by business-related human labour. We have also developed initiatives rights abuses and that they may face aimed at preventing sexual harassment in the additional barriers accessing effective hospitality sector and, as part of this, we remedies. With this in mind, we are in the launched a Global Brand Promoter Standard process of adopting/integrating a gender lens which establishes principles and guidelines to to the implementation of our HRIA protect the rights of brand promoters. You can programme. This will include, as a minimum, read about our standard here. additional consideration of gender indicators within our review of country context and Modern Slavery Act Statement for the Financial Year ended 30 June 2019 10 Responsible Sourcing Programme

RESPONSIBLE SOURCING PROGRAMME

We manage social and ethical risks in our Our Responsible Sourcing programme follows 89% (367) have been independently audited supply chain through our Responsible a risk-based approach to assessing adherence during the past three years against the SMETA Sourcing programme, which is embedded to our supplier code. Suppliers are risk four-pillar audit protocol or equivalent. This is across our procurement function. Our assessed against the following three criteria: an increase from 76% in the previous year. Of programme starts with our Partnering location of supplier site; type of product or these, 224 audits were commissioned by with Suppliers Standard, which sets out service; and spend. Suppliers assessed as a Diageo and 143 were accessed through SEDEX our commitment to acting in accordance potential risk are required to register with or AIM-PROGRESS. with the UN Guiding Principles on Business SEDEX, the Supplier Ethical Data Exchange, and Human Rights and the international and complete a SEDEX Self-Assessment As a result of the audits we commissioned, a standards set out by the eight core Questionnaire (SAQ). Suppliers who are assessed number of issues of non-compliance were International Labour Organization (ILO) as a potential high risk are required to register raised. Around 50% of these were in relation to conventions and recommendations. The with SEDEX and also undertake an independent health, safety and hygiene issues, around 10% Partnering with Suppliers Standard states: third-party SEDEX Members Ethical Trade related to wages and benefits, around 10% Audit (SMETA) four-pillar ethical audit. related to management systems, around 10% related to working hours, and the remaining we expect our suppliers strictly to We continue to expand the scale of our 20% to other categories. As part of our Responsible Sourcing programme and Responsible Sourcing programme, we have prohibit the use of forced labour, increase the number of independent ethical followed up with the relevant suppliers with whether in the form of slave labour, audits of suppliers, a key part of our due corrective action plans and are working together indentured labour, bonded labour, diligence process to identify and manage to resolve them. Where required, we are coercion of any employee through ethical risks in our supply chain, including arranging follow-up audits to verify the issues any means, or any other form. modern slavery. As at 30 June 2019 (the end of have been resolved and the matters closed. the 2019 financial year), 1,260 of our suppliers’ sites had completed a SEDEX SAQ. Of the 413 supplier sites assessed as a potential high risk, Modern Slavery Act Statement for the Financial Year ended 30 June 2019 11 Responsible Sourcing Programme

The audits we commissioned also identifed 27 of their corrective action plans to ensure the We are also members of AIM-PROGRESS, a In 2018 we worked with our peers under the non-compliances under the category of ‘freely other issues are resolved as well. forum of over 40 leading consumer goods umbrella of AIM-PROGRESS to develop a chosen employment’, a specific concern companies that promote responsible sourcing supplier business toolkit (https://www.diageo. within the context of modern slavery. Twenty Following publication of our refreshed practices and sustainable supply chains. The com/PR1346/aws/media/4626/business- of these non-compliances related to the lack Sustainable Agriculture Guidelines in 2018 goal of AIM-PROGRESS is to positively affect toolkit-full-final-15th-march-2018.pdf ) to share of a formal policy at the supplier’s facility, three which set out additional guidance for suppliers people’s lives through combined leadership of best practice and provide practical guidance to suppliers withholding documents, two to of raw materials and ingredients robust responsible sourcing practices on how to improve productivity, quality and voluntary overtime, one to charges for supplementary to our Partnering with throughout members’ supply chains. workforce management, by ensuring good personal protective equipment, and one to Suppliers Standard, as a supplier to ourselves working conditions and ethical standards – excessive probation periods. Sixteen of these of agave from our farming operations in Through AIM-PROGRESS, we are involved in part of which includes sections on forced non-compliances have now been verified as Mexico, we worked throughout 2019 to programmes such as building supply chain labour and child labour. More information can resolved and closed, and we have followed up implement SAI Platform’s Farm Sustainability capability so that member organisations and be found at www.aim-progress.com. with the relevant suppliers to determine Assessment (FSA) across our Don Julio ranch their suppliers are competent in executing corrective action plans. Work is ongoing to and leased land. The FSA addresses on-farm robust responsible sourcing programmes, As first reported in 2017, we continue to be resolve the remaining eleven cases. human rights risks and the scope extends to developing common evaluation methodologies officially accredited as a Living Wage employer both direct agricultural farm workers and to and tools, and sharing supplier audits, which in the United Kingdom, a first for a major We recognise that the risk of child labour is not third-party contracted labour. This assessment reduces audit fatigue for our suppliers. drinks company in the UK. With treatment of restricted to agriculture, but prevalent in many identified a number of opportunities to contracted labour being a potential risk, this sectors, and we consider it as part of our improve working conditions, specifically provides a further safeguard. supplier assessment programme. Through the related to worker health and pay, which audits we commissioned, we identified 32 resulted in changes being made to contracts issues of non-compliance under the category with our third-party labour providers. of children and young workers. Eighteen issues Following our initial self-assessment against related to the lack of a formal policy at the the FSA, we subsequently commissioned a supplier’s facility in relation to child labour, third-party verification of the results, which nine related to missing documentation to resulted in Don Julio Agavera receiving an verify age, three to no written remediation attestation of 100% Gold, an achievement that programme, and two to the working hours of demonstrates our commitment to the highest employees. Nineteen issues of non-compliance level of human rights for both direct and have been verified as resolved and closed and indirect agricultural workers within our we are following up with the suppliers as part farming operations. Modern Slavery Act Statement for the Financial Year ended 30 June 2019 12 Plans for the Future

PLANS FOR THE FUTURE

Our programmes provide a solid platform Agricultural supply chains remain a focus, Review and approval to continue progress in reducing the risk through the implementation of our refreshed This statement was approved by the Board of of modern slavery in our business and Sustainable Agriculture Guidelines, which in Diageo plc and will be reviewed by the Board value chain. Our HRIAs and Responsible conjunction with our Human Rights of Directors at least annually. Sourcing programme have helped us programme is enabling us to gain a better identify and focus on higher-risk areas understanding of the risks within our within our value chain, and to instigate agricultural supply network. remedial and improvement action. We will continue these programmes in 2020, We recognise there can be a heightened risk expanding our Human Rights programme of modern slavery in some emerging markets Ivan Menezes to more countries and value chains, and where we make acquisitions. We will continue Chief Executive assessing more suppliers through our to apply our programmes across all markets, Responsible Sourcing programme. The key implementing them for acquisitions and their risks we have identified will be the focus of associated supply chains. Any new acquisition further work, as we strengthen child becomes part of our global drive to ensure all protection and contract labour standards, our companies and their suppliers meet while also building awareness and capability Diageo’s high standards in all areas of within our supplier network through governance and compliance, including in the training and engagement programmes. fields of human rights and modern slavery. Diageo Plc © 2019 Diageo plc. Lakeside Drive All rights reserved. Park Royal All brands mentioned in this London document are trademarks and are NW10 7HQ registered and/or otherwise United Kingdom protected in accordance with applicable law. T: +44 (0) 20 8978 6000 www.diageo.com

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