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Performance and outlook

There are many ways in which we can measure progress in our sustainable procurement programme and our approach continues to evolve. This year we report on development in the areas where we historically had specific targets. In all categories, we have moved the agenda forward.

Progress with our suppliers

Topic Progress in 2012
High-risk suppliers This year 875 of our ‘potential high risk’ supplier sites registered with the Supplier Ethical Data Exchange (SEDEX), up from 734 last year. Of these, 588 filled in SEDEX’s self-assessment questionnaire and 105 of the highest risk companies were independently audited during the past three years. Read more about managing social and ethical risk.
Sustainable agriculture partnerships

Last year, the starting point for Diageo to test our new sustainable agriculture guidelines was a partnership with Baileys’ primary cream supplier, Glanbia, in Ireland. Progress is well under way; an audit programme focused on improving the sustainability of 4,300 farms has been developed and began in July 2012. Read more in our case study.

This year, we continued to run a number of sustainable agriculture programmes across Africa. These aim to develop partnerships with farming communities, government and NGOs to fuel growth through sustainable cultivation of crops such as barley and sorghum. We are currently investigating an opportunity around cassava. Read more about our sustainable agriculture programmes.

Carbon reduction This year we sourced approximately 52% of our electricity from low-carbon sources, such as nuclear, wind and hydro. We also joined the Carbon Disclosure Project (CDP) Supply Chain programme, further developing our six-year relationship with this independent not-for-profit organisation and allowing us to engage our key suppliers on measuring and reducing their carbon emissions. Read more about how we manage environmental issues in our supply chain
Sustainable packaging

We continued to work with our suppliers on sustainable packaging improvements. For example, this year, two of our European suppliers changed their packaging to enable us to send it back to be re-used, thereby reducing waste.

We removed 340 tonnes of packaging by ‘down-gauging’ (thinning metal in our cans and can-ends). In North America, our key polyethylene (PET) bottle supplier installed a PET production facility at our Plainfield plant to supply PET bottles on site. The relocation improved both quality and inventory levels, while reducing emissions by eliminating those that would have been produced in delivering the bottles to the site. Read more about how we manage environmental issues in our supply chain.

Local sourcing As part of our commitment to local sourcing in Africa, we raised our target to source 70% of raw materials from the region by 2015 to help stimulate economic growth while simplifying our supply chain. This year we are proud to have sourced an estimated 56% from African suppliers. Read more about our approach to local sourcing in our supply chain.

Outlook

Our vision is to generate long-term business value for Diageo with locally and sustainably sourced raw materials. These should meet high quality standards and have a positive impact on the communities and environment in which we operate. We recognise that we are on a journey and aim to do this properly and thoroughly, in the categories and regions where we can have the most impact.

Building on our progress of improving the sustainability of our Irish cream supply chain, we will next turn our attention to Africa. There we will focus on barley and sorghum, two of our key local raw materials. On ethical sourcing, we will continue to focus on working with our highest risk suppliers to improve standards, increasing audits and building supplier capability through the collaborative platforms of SEDEX and AIM-PROGRESS. On carbon, we will continue to engage with our suppliers through the CDP Supply Chain programme in order to identify opportunities and improve performance.

At a policy level, we will continue to work with governments as they seek to stimulate economic growth further through the development of their agricultural economies. We are talking with agricultural development ministries and a series of NGOs – including the Southern Agricultural Growth Corridor of Tanzania (SAGCOT), the Agricultural Transformation Agency (ATA) and the European Cooperative for Rural Development (EUCORD) – about the introduction and registration of high-yielding grain varieties. Our goal is to unlock the potential of suitable land that is currently idle to provide local communities with genuine opportunities to improve their livelihoods.

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