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Carbon emissions

Currently, most of our energy comes from fossil fuels. Not only are these a non-renewable energy source, but their use produces greenhouse gases that are the main contributor to climate change. This has far-reaching consequences, not only threatening our supply of raw materials, but affecting the health and economic wellbeing of our communities.

While our business has a smaller carbon footprint than many global consumer products companies, it is still energy intensive. We use energy to brew beer, distil spirits and make wine. Our suppliers use it to make bottles and packaging, transport raw materials to our sites and deliver the finished product to our customers. With this environmental challenge, together with rising energy prices, increasing regulation of carbon emissions and concerns about energy security, we have both a responsibility and a commercial imperative to reduce our carbon emissions.

Performance against targets

Target
by 2015
This year’s performance
2010 – 2011
Cumulative performance
2007 – 2011
Achievement
Reduce carbon dioxide emissions by 50%* Reduction of 7.1% Reduction of 13.9% In progress

Since 2007, we have reduced carbon emissions by 13.9%. This includes a 7.1% reduction in the past year from 744 ktCO2e last year to 691 ktCO2e against a backdrop of increased production during the same period.

This improvement includes reductions both in Scope 1 (direct emissions), which reduced by 3% in the past year, and in Scope 2 (indirect emissions from purchased energy), which reduced by almost 26%. Performance was driven in part by our continuing investment in energy efficiency projects within our operations, including new brewing equipment in Ogba, Nigeria; utility plant optimisation at the Red Stripe brewery in Jamaica; installation of energy efficient compressors at Huntingwood, Australia; and, where available, greater use of low‑carbon energy sources globally.

 

Carbon emissions data

Sources of energy (TJ)^

Diageo_SRR_charts_sourceofengery

Energy efficiency (MJ/litre packaged)^

Diageo_SRR_charts_energyefficiency

Direct and indirect carbon emissions by weight^

Diageo_SRR_charts_carbonemissions

Direct and indirect carbon emission efficiency (CO2e g/litre)^

Diageo_SRR_charts_emissionefficiency

Footnotes

^2009, 2010 and 2011 covered by KPMG's limited assurance scope.

 

Our programme and highlights of the year

We reduce our energy use, and therefore carbon emissions, in three main ways:

  • Improving energy efficiency at our sites
  • Generating renewable energy at our sites
  • Buying electricity from renewable or low-carbon sources.

1. Improving energy efficiency at our sites

Our projects this year to reduce carbon emissions included:

  • Ogba, Nigeria: a new brew-house, which included a number of energy and carbon dioxide reduction initiatives, including heat recovery from the brewhouse
  • Red Stripe, Jamaica: we reduced generation plant running time to save 182,000 litres of fuel
  • Huntingwood, Australia: we replaced an air compressor which delivered a 45% reduction in the energy used compared with old systems. Read more
  • St James Gate, Dublin: Beer Packaging at Dundalk and Kilkenny was consolidated into St James Gate resulting in a more efficient packaging network in Ireland where energy ratios have been maintained while absolute greenhouse gas emissions have been reduced
  • Illinois, USA: we have reduced absolute carbon emissions by 62% between 2007 and 2011, despite an 18% increase in production by installing more efficient boilers, improving the compressed air system and making better use of natural light.
  • Offices: In addition to our production sites, our offices have worked to improve efficiencies. For example this year, Diageo’s Madrid and Chicago offices both received Gold LEED (Leadership in Energy and Environmental Design) certification.

2. Generating renewable energy at our sites

We introduced new sustainable production facilities such as bio-energy plants at our Roseisle distillery in Scotland and at our new St Croix rum distillery in the US Virgin Islands, which generate renewable energy from the by-products of production, and were constructed in accordance with leading energy and environmental design certification principles. Through the investment in renewable energy at St Croix we plan to avoid producing 15,000 tonnes of carbon per year, and at Roseisle, 13,000.

3. Buying electricity from renewable or low-carbon sources

This year we secured new supply arrangements so that now over 50% of all the electricity Diageo uses globally is guaranteed to come from low-carbon sources such as wind, hydro and nuclear. In the UK almost 100% of our electricity is now from low-carbon sources. Overall this will mean a reduction in Diageo’s carbon emissions of 35,000 tonnes each year.

Producing less carbon from transport

Although our carbon emissions target relates to production, we’re also committed to reducing the carbon emissions associated with the distribution of our products. Our distribution footprint includes delivering raw materials and packaging to our sites, and delivering our products to market, by air, land and sea.

It is difficult to apply consistent best practice between regions, since much depends on the local infrastructure – for example good rail systems. So distribution has to be managed regionally, which makes measuring and monitoring our global distribution carbon footprint a challenging task.

We estimate that the carbon emissions from Diageo’s worldwide distribution of finished goods is approximately 400,000 tonnes. The following is a regional breakdown of these estimated emissions.

Estimated CO2 emissions from distribution of finished goods in 2011 by region (tonnes)

Region Emissions tonnes CO2 (estimated)
Europe 21,000
Asia Pacific 27,000
Africa 70,000
Ocean freight from UK and Ireland 155,000
North America 127,000

The two most significant footprints within this total are emissions that result from finished goods distribution within North America and those from ocean freight travelling from the UK and Ireland to other markets around the world.

To date, our focus on reducing carbon emissions from distribution has, been largely in North America where we have:

  • Used rail rather than road where possible
  • Used alternative fuels, such as compressed natural gas
  • Stopped vehicles from ‘idling’ at our sites
  • Encouraged innovation through our Johnnie Walker Green Award, which recognises environmental best practice by our distributors
  • Required distributors to be SmartWay-certified. SmartWay is a scheme that identifies cleaner, more efficient methods of transport. In the three years we have been a member, we have demonstrated leadership in energy-efficient shipping in the US
 

Outlook

Over the course of the next year, we expect to launch or continue around 80 energy efficiency initiatives including projects on insulation on cookers and stills, bio‑fuel mix optimisation and energy optimisations in brew houses in Nigeria.

In the future, we expect capital investments at new sustainable sites such as Roseisle and St Croix to avoid producing up to 28,000 tonnes of carbon dioxide emissions a year, and we will start commissioning our new bioenergy plant at Cameronbridge distillery. But to halve our emissions by 2015 we need to make more rapid progress, and apply the substantial knowledge and best practice insights we have gained to other parts of the business. With the majority of our impact coming from our operations in Europe and in Global Beer, we must pay particular attention to these areas in the coming years.

This cannot be a purely top‑down effort. To make incremental energy‑saving changes in our daily global operations, which together add up to significant carbon reductions, we are also engaging our employees through programmes like GREENiQ.

Currently, most of our energy comes from fossil fuels. Not only are these a non-renewable energy source, but their use produces greenhouse gases that are the main contributor to climate change. This has far-reaching consequences, not only threatening our supply of raw materials, but affecting the health and economic wellbeing of our communities.