Responsibility

When we are faced with a challenging business climate, this is not the time for panic measures. Rather, it is an opportunity to reaffirm our commitment to our values. These fundamental principles guide us in setting policy, our ways of working and our dealings with others - in good times and in bad.

The sustainability of a business is rightly a matter of concern to its stakeholders. Employees put a high price on job satisfaction, investors look for dependable returns, while communities and governments value a stable and supportive business presence in their economies. Such stakeholders often ask whether the work we do in support of sustainability - for example, encouraging responsible drinking, making environmental improvements or supporting our communities – will be cut back in times of financial uncertainty.

The answer is that all business decisions - including those that involve investing in these areas - must be made in the light of available resources, and these are inevitably more stretched when economic growth falters. Nevertheless, such pressures will not deafen us to stakeholders' concerns, compromise our values, divert us from our policies or commitments or undermine our principles of responsible business. At the core of this report is an account of these values and the actions we have taken, and continue to take, to support the sustainability of our business through whatever economic conditions we encounter.

Dr Franz B Humer
Chairman

Paul S Walsh
Chief executive

We're working hard to help create the right conditions for an enduring, successful business - employees who reach their full potential, communities that are fulfilled and prosperous, and a stable environment.

Playing a full role in society As a leading drinks producer, we want to make a real contribution to creating a more positive role for alcohol in society. We aim to set world-class standards for responsible marketing and in 2008 we refreshed the Diageo Marketing Code. Working directly or in partnership with others, we are running over 130 responsible drinking initiatives in over 40 countries. These include anti-drink-drive campaigns and support for programmes that combat underage drinking. In 2008 we launched DRINKiQ.com, a website that aims to encourage sharing of best practice tools, information and initiatives to promote responsible drinking. The website is available in a global version and in 16 dedicated country sites.

We have a long-standing record of community investment. Diageo has committed one per cent of its operating profit to social investment and community projects. In Africa, we focus on providing clean water to one million people per year – the total number of beneficiaries to date is 3.2 million. In Latin America, we have launched a Learning for Life programme to assist disadvantaged people in gaining the skills they need to compete in society. We aim to have improved the lives of 50,000 people by 2011. And in Asia, we have launched our first regional corporate citizenship report, which has case studies of responsible drinking and social development programmes.

Managing environmental impacts We depend on a healthy and stable environment for the water and natural ingredients we need to make our brands.

We launched a new environmental policy this year that makes clear our commitment to working toward increased sustainability throughout the value chain, and we take every opportunity to involve our employees in this area. To mark the United Nations World Environment Day in June 2009, teams of Diageo volunteers led numerous activities such as tree planting, and beach and river cleanups.

Contributing to economic growth Because our business thrives in prosperous, well-governed markets, we do all we can to develop and support such economies. Our businesses and their supply chains are a source of economic opportunity and development, providing jobs and developing the skills of our people, and generating tax revenue for governments. We also invest in capital projects that contribute to economic development. Diageo was hailed as the best global business in Africa at this year’s Africa Business Awards. The success of our operations on the continent provides a clear example of the economic impact that business can have. We brew or distil in 22 sub-Saharan countries and Diageo employees represent a fifth of our global workforce.

Sustainable development – Water of life

Access to water is essential for sustainable development. It improves health and school attendance and creates economic opportunity, yet an estimated 400 million people in Africa lack this basic amenity. In response to a UN challenge to companies to ‘adopt a Millennium Development Goal (MDG)’, three years ago our businesses in Africa committed to set aside half of their community investment budget to provide one million people with access to water every year until 2015.

The Diageo 1 Million Challenge will make a significant contribution to MDG 7, which is to halve the proportion of people without sustainable access to safe drinking water by 2015. In Nigeria alone, we completed seven projects during the year to provide water to 450,000 people. Each project amounted to a mini water works comprising a deep borehole, storage tank, treatment plant and distribution network.

This year, our projects provided water for 1.56 million people in Africa, bringing the total number of beneficiaries from the 1 Million Challenge to date to 3.2 million. We plan a full independent study of the social impacts of the programme in the coming months.

Sustainable development – Learning for Life

We support projects that help unemployed or disadvantaged people start new businesses or prepare for the world of work. Such projects contribute to economic development in the communities from which our employees, consumers and business partners come and so ultimately contribute to the sustainability of our business.

In Latin America we consulted widely before deciding how we could effectively tackle some of the most pressing needs in our communities. Alerted to the high levels of illiteracy and the proportion of school drop-outs in the region, our response was to devise the Learning for Life programme which we launched this year.

Learning for Life is a three-year scheme through which we aim to improve the lives of 50,000 disadvantaged people by providing them with the skills they need to participate and compete in society.

The programme has been partly funded by Buchanan’s Forever concerts, which this year featured performances by Sir Elton John and James Blunt – an example of cause-related marketing by the popular Scotch whisky brand.

Promoting responsible drinking – DRINKiQ

Views about alcohol vary widely around the world and there is no single universal definition of responsible drinking. However, people generally have a sense of what it means to them, and know that misuse of alcohol can lead to harm. We support programmes that aim to increase awareness of the issues and aspire to change people’s attitudes and behaviour.

Last year we launched the website DRINKiQ.com to contribute to the public debate around responsible drinking and help inform the public. Consisting of a global site and 16 dedicated country sites, DRINKiQ aims to bring together the best programmes – not only our own – for anyone with an interest in promoting responsible drinking and minimising the misuse of alcohol. On the site are experts’ views, facts about alcohol, responsible drinking tips and an outline of Diageo’s approach to this important subject. This year, DRINKiQ.com was awarded ‘best in class&rsquo for corporate community partnership by PR News and was judged the best health and wellness website by the International Academy of Visual Arts.

The DRINKiQ.com website is complemented by a separate programme of interactive awareness-raising sessions with the same name. The programme has now been delivered to more than half of Diageo employees in all parts of the world. As well as keeping them informed for their own benefit, we also want to equip our people with the information and confidence to be effective ambassadors for responsible drinking and for Diageo’s role in tackling misuse.

See for yourself at DRINKiQ.com

Promoting responsible drinking – Anti drink-driving campaigns

Views about alcohol vary widely around the world and there is no single universal definition of responsible drinking. However, people generally have a sense of what it means to them, and know that misuse of alcohol can lead to harm. We support programmes that aim to increase awareness of the issues and aspire to change people’s attitudes and behaviour.

Johnnie Walker’s sponsorship of F1 Team Vodafone McLaren Mercedes has continued to provide energetic focus to our efforts to discourage drink-driving around the world. In many markets we have included in our events the opportunity to sign up to a pact never to drink and drive, endorsed by motor-racing celebrities who have served as Diageo responsible drinking champions during the year.

As part of the campaign, Formula 1 World Champion Lewis Hamilton and Johnnie Walker’s Responsible Drinking Ambassador, and twice World Champion Mika Hakkinen visited London on 11th December 2008 to promote the ‘Never Drink and Drive’ message and to encourage people to use public transport or a designated driver as an alternative way of getting home during the busy festive season.

The main theme of the day was the World Champions celebrating the everyday ‘Real Champion Drivers’ that get the general public home safely – by taxi, tube, bus or general designated drivers. In order to do so, Lewis and Mika took to the wheel of two iconic London cabs and drove across Tower Bridge, around the Tower of London, over London Bridge to City Hall to join forces with professional drivers from Transport for London.

The pair also took part in a full day of media interviews and were joined by London Mayor Boris Johnson and Diageo’s European President Andrew Morgan for a press conference. The results were impressive with the coverage and anti–drink drive message viewed by over 8 million people worldwide, resulting in coverage worth well over £2 million in advertising terms.