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Determining our material impacts^

In deciding where to focus across our markets, we look both at what’s important to our own success, and at what our stakeholders need. By doing so, we can have confidence that our development as a business will be truly sustainable.

Over the years, helped by strong relationships with our stakeholders in our various markets, we have built up a good knowledge of our main sustainability and responsibility impacts and risks. In the past, we based our strategy on that knowledge.

In certain markets, we are testing our knowledge through a more analytical process to evolve our priorities and plans for sustainable development. Core to this is ensuring that all our programmes clearly deliver shared value. Of course, this will vary from market to market – what matters most in water-stressed parts of East Africa, for example, will be different from what matters most in the United Kingdom. Revisiting our local strategies is all the more important as our operating model, and accordingly our social and environmental impacts, change.

Local strategy assessments

To address this, in February 2012 we launched strategy workshops in China, Kenya and the United Kingdom, some of our largest markets within their region. These workshops aimed to determine or confirm what constitutes shared value for Diageo and our local stakeholders by analysing and cross-referencing stakeholders’ interests and concerns with our own.

As far as possible, the workshops included representatives from across Diageo so that every part of the value chain was represented. From each workshop we created a materiality matrix for that market which we aim to validate by engaging directly with stakeholders. The process we have followed thus far has been independently assured as part of the materiality principle of the Global Reporting Initiative.

Results so far – what is material?

With only three workshops completed to date, it is still very early days. However we can conclude that, as expected, what it means to be a responsible company differs from market to market, according to the unique dynamics in each.

In all workshops, addressing alcohol abuse and promoting responsible drinking was consistently the most important issue for stakeholders as well to us as a company. Our tax contribution as well as general governance and ethics also commonly ranked highly in all assessments. After these, priorities varied by market. Among the remaining high-ranking issues were: wealth creation, water, carbon, local hiring and local sourcing.

The next steps are two-fold. In the markets themselves, we aim to validate the results with key local stakeholders and then use the results to help plan and resource local programmes. At the global level, the results will roll up to be considered as part of our global strategy and programmes. Since we are still piloting the process, global and local teams are working together on an approach that will deliver the best outcome.

Over the coming year, we will expand the criteria for choosing which markets should go through the next stages of this process. We will consider growth opportunities as well as size, and we will include newly acquired companies.

^ The information contained in the section 'Determining our material impacts' has been assured by KPMG to a limited level in accordance to ISE3000 standard. Click here to access KPMG's Assurance Opinion.

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