Compliance

What is Diageo's Approach?

As a company that is a signatory to the United Nations Global Compact, Diageo is committed to aligning its actions with the United Nations Guiding Principles on Business and Human Rights (UNGPs). It fully embraces and confirms the principles outlined in the Universal Declaration of Human Rights and the International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights.

Diageo implements a strong and well-established policy framework to address human rights and mitigate the risk of modern slavery. This framework outlines its commitment to acting ethically and with integrity in all business activities, along with the requirement to implement and maintain systems and controls to prevent modern slavery within its operations and across the value chain. We are also committed to ensuring transparency in our approach to combating modern slavery, both within our operations and across our value chain.

We expect the same high standards from each of our contractors, suppliers, and other business partners. We require our contractors and suppliers to adhere to our policies and principles to prevent the employment of forced, compulsory, or trafficked labor, as well as the exploitation of individuals subjected to slavery or servitude. We also expect our suppliers to impose the same high standards on their own suppliers.We keep in regular communication with our trading partners and, whenever possible, check to ensure they are also following best practices related with their labor and contractors.

Policies and Training:

Including comprehensive regulations on human rights and the risk of modern slavery, our policy framework is backed by training.

• Code of Business Conduct: Our Code of Business Conduct reflects our purpose and values. This code outlines our commitment, both individually and organizationally, to doing our business in alignment with these values, applicable laws and regulations, industry standards, and the highest ethical and responsibility principles. It also outlines our key expectations regarding human rights, which are detailed in our Global Human Rights Policy.

•  Human Rights Policy: This policy outlines Diageo's stance on key human rights principles:  valuing diversity; preventing harassment, discrimination, child labor, and forced labor; expectations for wages and working hours; and ensuring the freedom of association with trade unions.

• Partnering with Suppliers Standard: It was developed to promote higher standards throughout our supply chain. This standard outlines the minimum requirements we expect from our suppliers, as well as the broader sustainability goals we want them to strive towards, such as water management and emission reductions. The standard involves five key focus areas in our collaboration with suppliers: Business Integrity and Ethical Standards, Human Rights and Working Standards, Health and Safety, Environmental Impact, Sustainable Agricultural Supply Chains.

• Brand Promoter Standard: Our Brand Promoter Standards outline the principles and guidelines for employing Brand Promoter Representatives. These standards are grounded in our values and our commitment to respecting and protecting the rights of all our employees and those we work with. We acknowledge our responsibility to safeguard the rights of our Brand Promotion Agents and expect our third-party suppliers, business partners, and collaborators to adhere to the same standards.

• Sustainable Agriculture Strategy: This strategy outlines our vision to support agricultural supply chains in becoming economically, socially, and environmentally sustainable. It reinforces our commitment to safeguarding human rights and working conditions across our value chain.

How Do We Manage Compliance?

People seek to rely on the company behind the brands they admire. The maintenance of our reputation relies on each of us doing the right thing every day, everywhere.

That's why it's crucial to have the appropriate programs in place to ensure that integrity is embedded in every aspect of Diageo. Central to our business is our Code of Business Conduct. Backed by a corporate governance framework, strong risk management, control systems, and a compliance and ethics program, this code empowers our employees to make the right decisions and demonstrate the highest standards of integrity and ethical conduct.

Business Integrity Program

Our Business Integrity Program safeguards and improves all aspects of our business, distinguishing us from our competitors. We all have a role in reinforcing our culture of integrity and reputation by consistently staying true to our values and integrating the principles of our program into our everyday actions.

Business Integrity and Risk Management is led by our Chief Business Integrity Officer, who is responsible for incorporating Business Integrity across the organization. Our internal control program is overseen by the Group Financial Controller, who reports directly to the Audit Committee.

Our Global Business Integrity Team develops strategies and key materials to support execution of the program across markets and functions, while our Management Committee supervises the program through the Audit Committee. The markets are responsible for executing the Business Integrity Program and consider both local and international laws and regulations.

Our Commitment

Doing business with integrity goes beyond just having a strong corporate governance structure and complying with policies, procedures, and regulations.  It’s about creating a culture that requires integrity, We make a concerted effort to involve our employees in this process. We offer training for our managers and recent hires, and maintain timely, effective communication to foster a culture of integrity throughout our business.

Our Ethical Framework

Our ethical framework provides us with a clear vision and involves the following:

Our leaders and managers ensure that every Diageo employee follows our Code of Conduct and policies, providing them with the guidance they need to make the right decisions. We have developed training programs specifically for our general managers and human resources managers, helping them to share their experiences with colleagues and understand their responsibilities in risk, control, and compliance. This ensures that our leaders set an example by representing our values and purpose.

Our business units regularly report to our Global Business Integrity team, which oversees compliance with our risk and compliance program. Significant matters are reported quarterly to our Management and Audit Committees. Additionally, our internal audit team independently evaluates local compliance with our program, assesses how risks are managed, and reports quarterly to our Management and Audit Committees.

We review our global policies at least once a year to ensure they are up-to-date, relevant, and accessible to all employees. Each policy is supported by an expert responsible for managing policies and standards. These experts ensure the effective implementation of policies by offering guidance and support to our markets. 

Effective risk management helps make better trade decisions and form a resilient, sustainable business model. Our global risk management standards require all market and business units to conduct at least two risk assessments annually.

• General Business Risk Assessment: It addresses the operational, financial and reputation-related risks of the local business.

• Compliance Risk Assessment: It assesses the risks associated with our Code of Business Conduct, policies and standards, along with all relevant laws and regulations. It also aims to ensure that plans to mitigate the most significant compliance risks are developed.

Each market is responsible for reviewing risk assessments and the progress of mitigation plans related to these assessments during local risk management committee meetings.

Our internal control environment is continually improved to adapt to ever-changing conditions. CARM (Control Assurance and Risk Management) is the internal control program we employ to assess, test, and report on the effectiveness of internal controls across the company. This system enables us to act in accordance with Sarbanes-Oxley regulations and 2013 COSO Internal Control-Integrated Framework.

CARM risk and control framework integrates all risk areas, including financial reporting, cybersecurity, operational risks, and reputation-related risks. All markets and business units must understand their risks, reflect them in their control activities, rapidly resolve any weaknesses, and verify annually whether the controls are functioning effectively.

A global framework, which is tailored to meet the specific needs of each market in the best manner possible, is in place for compliance training. New hires at Diageo must complete the Code of Conduct e-Learning program within 30 days of their start date. Each market implements a training plan that involves key policies and consists of locally organized, risk-based trainings. We strive to enhance the effectiveness of training through workshops, special training sessions and communications. 

We are committed to fostering good working relationships with our business partners and ensuring that they act in alignment with our principles. We implement comprehensive programs to manage various potential risks from our business partners. These programs include:

• Money laundering controls

• "Know Your Business Partner", the due diligence program for anti-corruption

• Credit risk assessment

• Partnering With Suppliers program

Our SpeakUp Service

SpeakUp is a confidential service that enables you to raise concerns about laws, our Code of Business Conduct, global policies, standards, or any compliance and ethics issues.

This service is available 24/7, year-round, to all interested parties, including employees, subcontractors, suppliers, and customers. SpeakUp is run by an independent external company, with staff trained to handle reports. Furthermore, translation services are offered to individuals whose primary language is not English. All reports are sent to our Global Business Integrity team to establish the appropriate actions. Summarized statistics and key issues are reported to our Management and Audit Committees quarterly.

Reprisals against anyone who reports a concern or helps with an investigation in good faith are not tolerated. Anyone found to be involved in retaliation against an individual who has raised a concern will be subject to disciplinary action.