Climate Change Data

Environmental Metrics

ESG Focus Areas

• Water Stewardship
• Environmental Conservation
• Positive Drinking
• Diversity and Inclusion
• Grain-to-Glass Sustainability

Environmental Achievements

• Surpassed 2020 water replenishment target in Kenya (176,438 cubic meters vs 171,000 cubic meters target)
• Tanzania hit its water replenishment target of 102,000 cubic meters
• Uganda launched Running Out of Trees (ROOT) campaign
• Environmental investment in three key East African markets to reduce carbon emissions by 42,000 tonnes a year (halted due to Covid-19)

Social Achievements

• 1.2 million East Africans pledged to never drink and drive through Join the Pact programme
• Nearly 400 students graduated from the Heshima programme targeting women and youth at risk of illicit alcohol
• Partnership with Sight Savers for inclusion of people with disabilities
• Spirited Women programme and mentorship for female STEM students
• Favourable maternity and paternity leave policy

Governance Achievements

• Annual assessment of Director’s independence
• Annual Board evaluation conducted by an external consultant
• Exemption from Governance Audit for the year ended 30 June 2020

Climate Goals & Targets

Environmental Challenges

• Covid-19 pandemic impacting business performance, leading to a 9% decline in net sales and a 39% decline in profit
• Closure of on-trade distribution channels in Kenya and Uganda
• Volatile regulatory and tax environment in Kenya and Uganda
• Economic slowdown across East Africa due to Covid-19 restrictions

Mitigation Strategies

• Prudent cost management and cash preservation
• Shifting to off-trade and e-commerce channels
• Resetting discretionary spend (advertising and promotions)
• Reallocating resources to new channels
• Kshs 500 million committed to ‘Raising the Bar’ initiative to support bars and eateries after restrictions are lifted

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Local sourcing where viable

Climate-Related Risks & Opportunities

Physical Risks

• Adverse weather conditions

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Development of energy-efficient products and processes

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Employer of the Year Awards (Learning and Development, Corporate Performance, 2nd overall winner)
• Diageo’s Brewery of the Year Award
• Diageo’s HR Heroes Award

Environmental Metrics

ESG Focus Areas

• Carbon
• Water
• Regenerative Agriculture
• Circular Economy
• Inclusive Communities
• Positive Drinking
• Inclusion and Diversity

Environmental Achievements

• 20.6% reduction in Scope 1 and 2 emissions between 2019 and 2021
• Zero waste to landfill throughout the supply chain
• 198,000 m3 of water used on sites replenished and reused between 2020-2021
• 1,006,138 m3 of water replenished from 2016 to date (30.6% of target)
• Planted over 1.5 million trees with an 85% success rate
• Restored over 2,150 hectares of forest cover

Social Achievements

• Improved water availability and access for over 30,000 people
• Provided over 60,000 farmers with agricultural skills and resources
• Over 500 youth trained in business and hospitality skills
• Over 5,000 bartenders trained in Diageo Bar Academy
• US$5 million raised to support bars and restaurants negatively impacted by COVID-19
• Over 1,400 women and youth received vocational and entrepreneurial training through Heshima project

Governance Achievements

• 100% of eligible employees completed mandatory policy training in 2020
• 65% decline in reported breaches of code of conduct
• 36% reduction in total safety incidents and 100% pass rate in safety audits

Climate Goals & Targets

Environmental Challenges

• Climate change impacts (droughts, floods, unpredictable rainfall)
• Water scarcity
• COVID-19 pandemic disruptions
• Supply chain disruptions and constraints
• Unexpected changes in legislation and government directives
• Illicit alcohol consumption

Mitigation Strategies

• Integrating social and environmental standards into the supply chain
• Developing drought-resistant seed varieties
• Investing in water recovery plants and treatment infrastructure
• Activating Crisis Management Teams and Business Continuity Teams
• Utilizing e-commerce sales opportunities
• Engaging with government stakeholders to lobby for favorable tax regimes
• Implementing robust safety strategy with a zero-harm goal
• Developing more detailed and robust planning processes throughout the supply chain
• Adapting grain varieties to secure grain supplies amidst unpredictable rainfall

Supply Chain Management

Responsible Procurement

• Local sourcing of raw materials (barley, sorghum)
• Providing agricultural skills and resources to farmers

Climate-Related Risks & Opportunities

Physical Risks

• Increased droughts and floods

Reporting Standards

Frameworks Used: GRI Standards Core Option

UN Sustainable Development Goals

• Goal 6 (Clean Water and Sanitation)
• Goal 7 (Affordable and Clean Energy)
• Goal 8 (Decent Work and Economic Growth)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)
• Goal 15 (Life on Land)
• Goal 17 (Partnerships for the Goals)

Initiatives contribute to these goals through water stewardship, renewable energy, job creation, sustainable farming, emissions reduction, forest restoration, and partnerships

Awards & Recognition

• 2020 SDGs Kenya Awards (Private Sector Winner)
• Shortlisted for World Sustainability Awards 2021 (Business Transformation Award)
• Shortlisted for 9th Gender Mainstreaming Awards
• Shortlisted for Reuters Events: Responsible Business Awards

Environmental Metrics

ESG Focus Areas

• Positive Drinking
• Inclusion and Diversity
• Water Stewardship
• Low-carbon World
• Sustainable Sourcing

Environmental Achievements

• Replenished close to 200,000 cubic metres of water
• Improved access to clean water for over six million people
• Saved more than 1.2 billion litres of water annually through investment in water recovery facilities
• Sourced raw materials from over 63,000 farmers

Social Achievements

• Reached more than 13 million people through positive drinking campaigns
• Continued STEM program in manufacturing sites
• Introduced all-female packaging lines in Tanzania and Uganda
• Launched a pilot project with Sight Savers enlisting 39 farmers with disabilities into sorghum contract farming

Governance Achievements

• Annual Board evaluation conducted
• Governance Audit conducted (ongoing at report date)

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic disrupting operations and impacting sales in bars and restaurants
• Cost inflation, adverse foreign exchange, and tax charges impacting profit growth
• High alcohol excise tax rates in East Africa
• Economic restrictions impacting sales and grain demand

Mitigation Strategies

• Executed strategy with determination, consistency, and clarity
• Leveraged wide portfolio of brands and route to market diversity
• Maintained focus on cost efficiency and discretionary spending
• Developed e-commerce channel and partnerships with online platforms
• Reshaped packaging, delivery, and sales of products
• Honored all contracts with farmers, purchasing barley and sorghum

Supply Chain Management

Responsible Procurement

• Sourcing locally where viable
• Partnering with over 63,000 farmers

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Council’s Integrated Reporting Framework, International Financial Reporting Standards (IFRS)

Third-party Assurance: PricewaterhouseCoopers

Environmental Metrics

ESG Focus Areas

• Climate Change
• Water Stewardship
• Inclusion & Diversity
• Responsible Drinking
• Sustainable Supply Chain
• Business Integrity

Environmental Achievements

• Commissioned biomass plants in Kenya (Kisumu and Nairobi) and nearing completion in Uganda, aiming for 95% carbon emission reduction in Kenya and 90% in Uganda.
• Maintained zero waste to landfill from direct operations.
• Achieved 100% widely recyclable plastics in packaging.

Social Achievements

• Reached over 100,000 individuals through DRINKiQ responsible drinking platform (317% above target).
• Reached 48,690 people through SMASHED underage drinking prevention program (137% above target).
• 63% of community program beneficiaries were women (above the 50% target).

Governance Achievements

• Only 5 confirmed breaches of the Code of Business Conduct.

Climate Goals & Targets

Environmental Challenges

• Falling short of targets for reducing GHG emissions (Scope 1 & 2), water replenishment, and reaching people with moderation messages.
• Challenges in tracking Scope 3 emissions and indirect water use in the supply chain.
• Online access issues impacting the Wrong Side of the Road program.

Mitigation Strategies

• Streamlining reporting methodologies and improving data validation.
• Investing in training across departments to align sustainability strategy.
• Developing systems for reliable Scope 3 emissions and indirect water use tracking.
• Shifting Wrong Side of the Road program delivery to face-to-face interactions.

Supply Chain Management

Responsible Procurement

• Partnering with Suppliers Standard, ESG criteria for suppliers, supplier questionnaires on climate change and water security.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events, water scarcity

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Development of energy-efficient products, new value chains from biomass.

Reporting Standards

Frameworks Used: GRI Standards: Comprehensive Option

Certifications: ISO 9001:2015, ISO 140001:2015, ISO 450001:2018, ISO 22000:2018/(HACCP)

Third-party Assurance: PwC

UN Sustainable Development Goals

• SDG 2, 3, 5, 6, 7, 8, 9, 12, 13, 15

Initiatives contribute to various SDGs through water stewardship, climate action, inclusion and diversity, responsible drinking, sustainable supply chain, and community development.

Sustainable Products & Innovation

• Biomass energy, water recovery plants, reusable packaging.

Awards & Recognition

• Numerous awards across KBL, UBL, and SBL for sustainability, diversity, and inclusion initiatives.

Environmental Metrics

ESG Focus Areas

• Responsible drinking
• Inclusion and diversity
• Grain-to-glass sustainability (water preservation, sustainable design, low-carbon operations)
• Business integrity

Environmental Achievements

• Reduced carbon emissions by 56% to 28,134 tonnes
• Increased renewable energy use to 65%
• Recycled and reused 398,624 m³ of water (14% of total withdrawals)
• Total waste to landfill from direct operations: 2.12 tonnes (within zero waste threshold)

Social Achievements

• SMASHED underage drinking awareness campaign reached 338,550 students
• Wrong Side of the Road campaign continued to promote responsible drinking and road safety
• Learning4Life programme trained 8,932 people in business and hospitality skills
• Diageo Bar Academy delivered 17,278 training sessions
• 47% of senior leadership roles held by women
• 50% of community programme beneficiaries were women
• Various water and sanitation projects improved water access and sanitation in communities

Governance Achievements

• High level of compliance with employment-related laws, regulations, and national standards
• Sound governance framework complying with legal and regulatory frameworks and global best practices
• 82% leadership rating in Capital Markets Authority assessment of CMA Code implementation

Climate Goals & Targets

Environmental Challenges

• Slowed economic growth and macroeconomic volatility
• Inflationary pressures increasing cost of inputs
• Reduced consumer purchasing power
• Resurgence in illicit trade
• Supply chain disruptions due to geopolitical tensions and climate change
• Water availability

Mitigation Strategies

• Cost rationalisation and cash management
• Price increases and cost management initiatives
• Innovation to provide safe and accessible alternatives to consumers
• Partnerships with governments to address illicit alcohol
• Robust supply chain planning, alternative sourcing strategies, and adaptation of grain varieties
• Water stewardship projects and 100% water replenishment in water-stressed areas by 2026

Supply Chain Management

Supplier Audits: All suppliers comply with Know Your Business Partner (KYBP) and Partnering with Suppliers (PwS) programmes

Responsible Procurement

• Sustainable sourcing of 80% of sorghum and barley from 62,000 farmers
• Partnering with suppliers on circular design and sustainable farming
• Supplier performance measurement and reviews
• Training on sustainable farming practices

Climate-Related Risks & Opportunities

Physical Risks

• Increased droughts and floods
• Decreased food production
• Water scarcity

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, GRI, UN Sustainable Development Goals (SDGs)

Certifications: Null

Third-party Assurance: PricewaterhouseCoopers LLP

UN Sustainable Development Goals

• Goal 3 (Good Health and Well-being)
• Goal 5 (Gender Equality)
• Goal 6 (Clean Water and Sanitation)
• Goal 7 (Affordable and Clean Energy)
• Goal 8 (Decent Work and Economic Growth)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)
• Goal 15 (Life on Land)
• Goal 17 (Partnerships for the Goals)

Society 2030 targets are aligned with these SDGs

Sustainable Products & Innovation

• Low-alcohol and no-sugar brands
• Recyclable packaging

Awards & Recognition

• Monde Selection Awards (5 golds, 2 silvers)
• Energy Management Awards (EMA)
• Kenya E-commerce Awards (Best On-Demand Delivery Platform for THE-BAR)

Environmental Metrics

ESG Focus Areas

• Positive Drinking
• Inclusion and Diversity
• Grain to Glass Sustainability

Environmental Achievements

• Investments in Biomass Steam Plants and water efficiency projects reduced carbon footprint and enhanced resilience against resource scarcity.
• Collected over 17 million spirit bottles, underscoring dedication to reducing carbon footprint and supporting the circular economy.

Social Achievements

• Deepened partnerships with 60,000 local farmers, promoting responsible sourcing and supporting livelihoods across the supply chain.

Governance Achievements

• Continued to implement a robust corporate governance framework, ensuring operation with integrity, transparency, and accountability.
• Welcomed Mr. Paul D. Makanza to the Board.

Climate Goals & Targets

Environmental Challenges

• High interest rates, fluctuations in exchange rates, social and climate disruptions in Kenya.
• Rising taxes impacting consumer disposable income in Kenya.
• Consumer downtrading due to macroeconomic challenges in Uganda.
• Regulatory challenges and economic uncertainty, including currency fluctuations and inflation, impacting consumer spending in Tanzania.

Mitigation Strategies

• Accelerated innovations to meet evolving consumer preferences in Kenya.
• Careful financial management and pricing strategies in Uganda.
• Strategic pricing and productivity initiatives to mitigate the adverse impact of currency fluctuations and rising interest rates.

Supply Chain Management

Responsible Procurement

• Deepened partnerships with 60,000 local farmers, promoting responsible sourcing.

Climate-Related Risks & Opportunities

Physical Risks

• El Niño rains