Building relationships with our suppliers occupies a vital role in our broader CSR strategy as it represents one channel through which we create value for the communities and economies in which we operate.

Diageo sources materials, ingredients, energy and services from approximately 30,000 businesses worldwide through a mix of global, regional and local supplier relationships. We seek to build mutually rewarding relationships with our suppliers through our ‘Supplier Standards Policy: Partnering with Suppliers’ which holds our business partners to our approach to ethical and environmental management. To the extent possible, we aim to work with local suppliers in the regions in which we operate to help optimise the social and environmental impact of our supply chain.

Our programme consists of three main parts:

Managing ‘responsible’ procurement

We have developed a 4-stage process for managing the social and ethical risks in our supply chain. As part of this process, we conduct an initial screening of all our suppliers, a ‘pre-qualification process’ that covers a series of key questions on social and ethical risks, a self-assessment questionnaire for potentially high risk suppliers on the Suppliers Ethical Data Exchange (SEDEX), and audits for the potentially highest risk suppliers.

Diageo is also a member of ‘AIM-Progress’, a collaboration between major consumer goods companies that is working towards harmonising supply chain activities in this area and minimising the impact on suppliers as a result.

Sustainable procurement

We believe the highest-profile risks associated with our supply chain are those surrounding non-compliance with social and ethical standards. Because of this, we have focused initially on establishing a structure to monitor these risks and work with suppliers to mitigate them.

However, we recognise that we need to make improvements across the whole scope of ‘sustainable procurement’, so we are extending our focus to the environmental risks associated with our supply chain as well. We aim to identify and commence working with the main suppliers who are responsible for the majority of our supply chain’s environmental impact, in order to improve their performance.

Sustainable agriculture

Following an assessment of our approach to raw material sourcing, we identified the need for a global framework. The result is the creation of group-wide sustainable agricultural sourcing guidelines which outline our approach to managing these particular supply chains more effectively. Diageo also aims to contribute to the economic sustainability of local communities and has a policy of sourcing ingredients from local farmers where possible, helping to develop local commercial capabilities.

We have identified four priority sourcing materials on which to focus our sustainable agriculture strategy: Malting Barley, Sorghum, Sugarcane and Cream.

For more information, see our online Corporate Citizenship Report.