To date we have measured performance in terms of how confident employees feel about implementing the Code of Business Conduct (the Code) and reporting breaches; the number of employees trained on the Code; and the levels of breach of the Code and how they are reported.
Values survey - confidence in the Code
In our values survey we ask employees two questions about the Code. This year the results were:
- 85% of employees answer positively to "I would feel comfortable raising any concerns about compliance or ethics with my line manager, or through SpeakUp", from 81% in the previous year.
- 79% of employees answer positively to "My manager helps me understand how the Diageo Code of Business Conduct applies to my role", from 74% in the previous year.
Our Code of Business Conduct training is designed to reinforce the commitments within our Code and help employees apply its contents to their day-to-day activities. The training covers the key areas of the Code and brings these to life through the use of scenarios. In addition to outlining what is expected of all employees, the training covers details of how to report breaches of the Code and how to access help and advice on a particular subject.
Since the launch of the revised Code in 2009, we have provided face-to-face training for all management-level employees globally and e-learning or face-to-face training sessions for all other employees. Those using our e-learning course are required to discuss the content and its specific application to their role with their line manager.
This year we created a single induction programme on compliance and ethics for all new employees regardless of geography, role or grade. All new recruits must have a conversation with their line manager about the Code and the expectations of them within the first two weeks of joining the company. They must also complete the Code e-learning programme or have face-to-face training within 30 days.
Breaches of the Code and legal proceedings
We look into every breach reported to us that requires investigation. This year we refreshed our breach disciplinary framework, ensuring that it is clear and is operated consistently throughout the world, and raised awareness among employees of the importance of reporting breaches.
This year we report on a number of pending legal proceedings in the Annual Report. Our most material matter this year was finalised on 27 July when we agreed settlement of the previously disclosed U.S. Securities and Exchange Commission (SEC) investigation into potential alleged violations of the US Foreign Corrupt Practices Act (FCPA). The investigation related to payments involving Diageo's subsidiaries in India, South Korea and Thailand. Under the settlement we agreed, without admitting or denying the SEC's allegations, to pay $13,373,820 to the SEC in disgorgement of profits and pre-judgment interest, to pay a $3 million penalty to the SEC, and to cease and desist from committing any further violations of the books and records and internal controls provisions of the FCPA. We regret this matter and take the SEC's findings seriously. Systems and controls have been enhanced in an effort to prevent the future occurrence of such issues and to reinforce, everywhere the Company operates, a culture of compliance and commitment to the principles embodied in Diageo's Code of Business Conduct.
Reporting breaches: use of SpeakUp facilities
Making sure that everyone feels confident about reporting breaches is essential if we are to ensure that unethical behaviour does not go unchallenged and unpunished at Diageo. One part of that lies in people’s confidence in speaking to their managers, as reported in the Values survey results above; the other is the use that is made of our whistleblowing service, SpeakUp. This year, 23% of breaches were reported through SpeakUp, down slightly from 26% in the previous year.
Looking ahead: more rigorous reporting of performance
This year we have developed a set of key performance indicators for particular areas of our programme:
- Organisational leadership and culture
- Training and communications
- Enforcement and incentives
- Monitoring, auditing and reporting
Overall, our key indicator remains the number of significant breaches of the Code that are reported and proven; our target is to reduce this number each year.