Case study: Diageo

Diageo obtained the second highest score (71%) in the 2020 TCD benchmarking assessment of large companies operating in Ireland. Diageo describes itself as a global leader in beverage alcohol with an outstanding collection of brands (including Johnnie Walker, Crown Royal, J&B, Buchanan’s and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness). Diageo is a global company, and its products are sold in more than 180 countries around the world. The company is listed on both the London Stock Exchange (DGE) and the New York Stock Exchange (DEO).

Diageo kindly provided the following responses to a series of questions on its approach to the UN Guiding Principles on Business and Human Rights:

Please outline Diageo’s commitment to respect Human Rights

"We believe doing business the right way contributes to a fair and just society.

At Diageo, we create an environment where all our people feel they are treated fairly and with respect. We commit to understanding what it means to act with integrity in our roles, to ensure we are doing business in the right way, meeting external expectations and our own standards.

We will ensure no one compromises on their values, and everyone goes home safe and healthy, every day, everywhere.

In 2014, we signed the UN Guiding Principles on Business and Human Rights (UNGP) and committed to embedding respect for human rights into everyone’s working day, in every country throughout our supply chain.

We use our voice to create fair and inclusive societies wherever we do business. We work with peers and trade associations to take collective action to bring about peace and justice and build the strong institutions we all need to thrive.

For more information, please see our Code of Business Conduct, Human Rights Policy, Partnering with Suppliers Standard and Modern Slavery Statement.

Advice for business enterprises starting off: Doing business the right way is not only the right thing to do, it supports sustainable business growth."

What does the governance of human rights look like in Diageo?

"Our Code of Business conduct and Human Rights policy are agreed by our Chief Executive, who reports directly to the Board. Responsibility for delivery is shared between members of Diageo’s Executive Committee, all of whom report to the Chief Executive. Our Executive, senior business leaders and functional specialists lead the agenda, and assess risks, emerging issues, compliance and remediation within our routine business processes. Responsibility for day-to-day delivery of our Code and Human Rights Policy is everybody’s responsibility. We communicate our Code and Human Rights policy throughout our business and, alongside our Partnering with Suppliers standard, to all our suppliers around the world. Also, all of our teams receive routine training in our Code, with a focus on key human rights risk potentially arising in their area of work where appropriate.

How have you embedded your commitment to human rights into Diageo’s DNA?

We are committed to embedding respect for human rights into everyone’s working day, in every country throughout our supply chain.

Lead responsibility for human rights sits jointly with the President, Global Supply and Procurement and the Group Human Resources Director. Both are members of the Diageo Executive Committee and report to the global CEO and CFO (respectively), who are members of, and responsible to, the Board of Directors. Both also sit on our Human Rights Steering Committee, which shapes and determines our strategy on human rights and ensures its operational delivery across Diageo’s activities.

We also operate a cross-functional working group comprising senior managers from across the business who have relevant expertise, knowledge and skills. This working group plays a leadership and advisory role in our human rights agenda.

Our Diageo in Society team coordinates our Human Rights Impact Assessment activity, which is prioritised by country and risk. This team works with our markets around the world to apply the programme, engaging senior management in each location to undertake human rights assessments with the support of expert external advisers.

Responsibility for day-to-day delivery of our Code and Human Rights Policy is everybody’s responsibility. Our Code and Human Rights Global Policy apply to every one of our more than 27,000 employees worldwide regardless of their role or seniority, including those in subsidiary companies and joint ventures where Diageo has a controlling interest. Our policy framework is supported by on-going training programmes.

We also expect all our business partners to adopt clear commitments on ethical business like those in our Code, and any party operating on Diageo’s behalf must ensure that their actions comply with our Code and global policies. We contractually commit our business partners to adhere to our Code and/or our Partnering with Suppliers Standard. We have also included an ‘end-to-end responsibility’ statement in our Partnering with Suppliers Standard, setting out the expectation of our suppliers to promote the principles of the standard throughout their own supply chain, and to have the appropriate processes in place to verify and demonstrate applicable compliance standards."

Has Diageo identified its salient human rights issues (i.e. the most severe human rights issues connected to your company)? What are those issues?

"We have been signatories to the UN Guiding Principles on Business and Human Rights (UNGPs) since 2014. As part of our commitment to act in accordance with the UNGPs, we partnered with Business for Social Responsibility (BSR) in 2016 to formulate and deliver our human rights strategy. We have since conducted a corporate-level risk assessment and mapped our global policies and processes against the UNGPs, while also considering risks in different geographies informed by our own understanding and external reference data. Following the corporate-level assessment, we developed a comprehensive HRIA toolkit to guide our markets through a systematic review of their businesses to identify and assess potential human rights impacts, including modern slavery risks.

Our assessments are robust, and involve detailed examination of our value chain, from raw material sourcing – which includes visits to farming communities and fields where we source our barley, wheat, sorghum, sugarcane, agave and other agricultural products – to the suppliers and manufacturing units where we procure our glass, labels, caps and other items, to our own production operations, and to the retailers and bars selling our products. They involve meetings with employees, union members, workers on factory production lines, manpower providers, contract workers, NGOs we support and other external parties. Where assessments identify human rights concerns, or suggest our approach can be strengthened to better identify and prevent risk, we put in place robust action plans to resolve matters, working with external experts when appropriate. We have made a commitment to carry out an HRIA in all of our markets. In 2020, we carried out HRIAs in China, North America (United States/Canada), the Middle East (first phase) and Australia, bringing our total to 17 HRIAs since we began the programme in 2015. The remaining market assessments will be completed by the end of 2021.

In line with the UNGPs, as a direct result of carrying out the HRIAs to date, we have identified three risks as particularly salient to our business: labour rights, including the risk of child labour, specifically in agricultural supply networks; labour standards for contract workers; sexual harassment in the hospitality sector. These issues are external risk factors in the places where we operate, and we recognise the challenges they pose in our value chain. We are particularly aware of these risks when carrying out HRIAs and in our supply chain."

What actions is Diageo taking to manage these issues?

"Having identified these risks, we have developed a child protection programme for our work with smallholder farmers, where we have trained key functions and business partners on our local sourcing programme in seven countries in Africa to prevent child labour.

We have also developed initiatives aimed at preventing sexual harassment in the hospitality sector and, as part of this, we launched a Global Brand Promoter Standard which establishes principles and guidelines to protect the rights of brand promoters.

We have also created contractor standards guided by the International Labour Organization’s Declaration on Fundamental Principles and Rights to Work, focused on promoting conditions in which people can work in freedom and safety. In addition to the above, each market has produced an action plan to address its specific risks."

Has Diageo engaged any directly affected stakeholders on these issues? If yes, which stakeholders and how?

"In support of our programmes, business, human rights and the delivery of shared value, we are also committed to engaging with communities alongside all our stakeholders, both local and global, on an ongoing basis. At a local level, employees across Diageo's business engage their colleagues, local governments, suppliers, farmers, customers, media, civil society and community groups to respond to their interests and concerns. At a global level, we engage investors, customers, suppliers, and multinational organisations such as United Nations agencies or NGOs. By listening to everyone who engages with Diageo, we can ensure that ours is a business that understands stakeholders' expectations and meets them.

For detailed information on how we engage with our stakeholders please see pages 12-13 and 76-77 of our annual report."

Has Diageo provided any remedy related to human rights impacts by your company? If yes, can you describe the process and outcome?

In 2019-20, five human rights allegations were raised via SpeakUp. Of the five cases, three were substantiated. The three substantiated cases related to: inadequate leave allowances and expense reimbursements of third-party contractors and one case related to discrimination and harassment. We have taken action to address each of these issues.

Through what means can Diageo receive complaints or concerns related to human rights impacts?

"We are committed to working directly with our suppliers and customers to tackle human rights issues where we become aware of them. We have policies and processes in place to identify, prevent and mitigate human rights risks and to provide remedy to any adverse impact we have caused or contributed to by our operations. Our SpeakUp whistleblowing phone line and web reporting tool can be accessed by employees or by those in our value chain. Where matters are brought to us, we are committed to protect the rights of those reporting them, and we do not tolerate reprisal against anyone who raises a matter in good faith or where they have assisted an investigation. We track and routinely review these mechanisms, along with any feedback on them, developing our approach to improve the process where practical. Where appropriate we will also engage with local judicial or non-judicial grievance mechanisms to address matters. We will not impede access to state-based judicial or non-judicial mechanisms; or any other available mechanisms available to people who make allegations of potential human rights impacts. In addition, we will not request that any individuals or communities participating in a process waive their legal rights as a condition of participating in our (or any other judicial, or non-judicial) grievance/mediation process."