Our compliance and ethics programme
Our global programme aims to create an exemplary compliance environment and a culture of integrity that will ensure Diageo always does business the right way.
We are committed to conducting our business responsibly and in accordance with all laws and regulations wherever we operate. Our audit committee and audit and risk committee together oversee the operation of our compliance and ethics programme to help us live up to this commitment. The programme is managed by our global compliance and ethics director who reports directly to the chief financial officer and the audit committee on all compliance and ethics matters.
We have a confidential independent whistleblowing service, ‘SpeakUp’, and we expect anyone who comes across a breach of our Code to report it immediately either through SpeakUp, or to their line manager, or to a member of the compliance and ethics, human resources or legal teams. We have extended our SpeakUp helpline to suppliers so that they can raise any concerns with us, thereby helping ensure we are acting by our Code. More information about how we manage social and ethical risk in our supply chain can be found in the our suppliers section of this report.
Our programme focuses on seven areas, each of which has a plan of work for the year. How the programme is implemented, however, is determined by each of our markets, based on their greatest areas of risk, what matters most in any particular area, and what will work best for those employees.
Organisational leadership and culture
Embedding the right culture across the business requires inspirational leadership. It requires managers throughout the company to own the agenda, taking responsibility for implementing it in their area, and to lead by example. Read more about how we are encouraging this culture by empowering our leaders.
Standards and procedures
We need to have the right standards and procedures in place, and they must be clear, simple, and relevant. This year we completed the simplification of our global policies, and redrafted our Code of Business Conduct to reflect this. We also introduced a new anti-corruption policy and refreshed our breach management guidelines. Read more about how we are embedding our codes, policies and standards in the embedding our Code, policies and standards.
Training and communications
Employees must be given clear guidance on what is expected of them, and the messages must be reinforced and refreshed frequently. In terms of training this year, we provided face-to-face training for all compliance and ethics managers across the world, trained all new employees on our Code of Business Conduct and gave refresher training in several markets. We also ran tailored training for employees on specific policies depending on the risks associated with their location and role, delivered through regional events around the compliance and ethics agenda. Read more about how we are embedding our Code, policies and standards.
Enforcement and incentives
We take a positive approach to encouraging people to do business with integrity, balanced by making it clear that unethical behaviour is unacceptable and will be treated with the same severity wherever it occurs. During the course of the last year we continued to embed our breach disciplinary framework across the company to ensure that consequences are consistent everywhere. Our annual performance appraisals have a 70/30 weighting, with 70% based on performance and the other 30% based on how people behave throughout the year, including their commitment to the compliance agenda.
Our aim is to help employees improve, through individual coaching and training, but we will take formal disciplinary action when necessary. This year 105 people exited the business as a result of breaches of our Code or policies. Read more about how we are working to improve our performance.
Due care in delegating authority
Doing business with integrity also requires us to consider the behaviour of those we do business with outside Diageo, such as our suppliers and other third parties, and we encourage them to adopt our standards as far as we can. The importance of this was heightened recently with the change in the UK Bribery Act making companies directly accountable for the actions of those doing business on their behalf. Read more about how we work with our suppliers in the our suppliers section of this report.
When looking at growth opportunities, we always consider how to help ensure our values and commitment can be aligned with these potential partners. Following our work last year to integrate compliance into our mergers and acquisitions process, we now have a new and far more rigorous approach that puts compliance right at the heart of our growth plans. This has been particularly important given the number of mergers and acquisitions we completed this year.
All new transactions – including businesses in China, Vietnam, Turkey, Tanzania and Ethiopia – were thoroughly assessed from a compliance and ethics point of view before deals were agreed. A great example is our purchase of Meta Abo Brewery in Ethiopia which you can read more about in our case study.
Monitoring, auditing and reporting
To ensure our programme delivers its objectives, the programme and its performance are frequently reviewed during the year by the audit and risk committee. As part of this, each of our markets must conduct a risk assessment and also report compliance against a consistent set of key performance indicators.
This year we agreed settlement of the previously disclosed US Securities and Exchange Commission (SEC) investigation into potential violations of the US Foreign Corrupt Practices Act. For more information, please see our monitoring and improving performance section.
Response and continuous improvement
Ensuring we do business with integrity as our environment changes and we move into new markets requires constant vigilance and re-assessment of risk. Business leaders receive regular information from the controls, compliance and ethics team on breaches in their area to help them respond and improve performance. We also include compliance and ethics issues in all internal audits. Read more in our monitoring and improving performance section.