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Responsible sourcing

We work with suppliers to make sure the goods, raw materials and services we need are produced responsibly, ethically, and with respect for human rights and the environment.

We are committed to working with our suppliers, industry partners, and trade associations to drive higher standards in business ethics and sustainability. We have clear sets of standards and guidelines as well as a defined process for managing social and ethical risks throughout our supply chain.

Our Partnering with Suppliers standard

Our Partnering with Suppliers standard sets out the minimum social, ethical and environmental compliance standards we require suppliers to follow as part of their contract with us, as well as aspirations for our long-term partners to work towards. It includes the following.

  • Ethical business practices – we emphasise our Code of Business Conduct standards, and require suppliers to comply with legislation, and commit to working against corruption, extortion, and bribery.
  • Human rights – we recognise International Labour Organisation core standards on safe working conditions, fair pay, and reasonable hours as a minimum, and encourage suppliers to endorse the Universal Declaration of Human Rights. Also, our global human rights and anti-discrimination policy applies, as far as is reasonably achievable, to partners, suppliers, and third-party contractors.
  • Health and safety standards – we expect suppliers to maintain a safe working environment, including access to safety equipment and training.
  • Environmental impacts – we set out our commitment to reduce carbon emissions, waste, and water, and ask suppliers to demonstrate a similar commitment by managing, monitoring, and improving their performance.
  • Responsible drinking programmes – we encourage our partners to make use of our information and experience in creating a more positive role for alcohol in society.

Identifying and managing risk

The process by which we manage social and ethical risks has four stages.

  1. Initial screening: a series of key risk-based questions which our procurement team applies to all current and potential suppliers. Criteria for identifying high risks include analysis of country of origin, type of goods or service, potential impact on a global brand, and use of temporary or casual labour.
  2. Pre‑qualification: a questionnaire used as part of our supplier qualification process that asks key questions about social and ethical risks, including human rights.
  3. Qualification: any potentially high-risk suppliers are required to register with the SEDEX (see below), and to complete the SEDEX self-assessment questionnaire.
  4. Audit: suppliers who represent the highest risk are independently audited with the SEDEX Members Ethical Trade Audit (SMETA) ‘4 pillar audit protocol’. We agree ways to address any gaps, and work with suppliers to help raise their ethical standards. In the rare event that a supplier is unable or unwilling to improve standards, we will end our contract with them.

Performance and partnerships

We work through SEDEX, a not-for-profit organisation that enables suppliers to share assessments and audits of ethical and responsible practices with their customers.

To date, 1,095 of our ‘potential high risk’ supplier sites have registered with SEDEX, up from 875 last year. Of these, 998 have completed a SEDEX self-assessment questionnaire. Some 134 of the highest risk companies were independently audited during the last three years; audits were commissioned by Diageo (4), or accessed through SEDEX and AIM‑PROGRESS (130). This is an increase from 105 last year. Suppliers from China and India accounted for 21% of these audits, with issues relating to health, safety, and hygiene being those most frequently raised.

Merchandising materials remain one of our highest risk categories, because they are often made in higher risk countries and we often buy through intermediaries and therefore may lack visibility of the original manufacturing source. We continue to work with our key merchandising suppliers to develop assurance further down the supply chain, with around 80 of our second tier suppliers now audited.

We are also an active member of AIM‑PROGRESS, a forum of 35 leading consumer goods companies including Coca‑Cola, Unilever, and Nestlé, which promotes responsible sourcing practices and sustainable supply chains. In October 2012 we hosted an AIM‑PROGRESS supplier capability event in Lagos, Nigeria, designed to equip suppliers with the knowledge, resources, and tools to uphold responsible sourcing practices.

Suppliers are also encouraged to use our confidential whistleblowing service, SpeakUp. This year we received three calls relating to suppliers and vendors through SpeakUp (only one case was substantiated), and we are working to address concerns raised about discrimination.

Reporting frameworks in this section

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