Alcohol is one of the most regulated industries in the world, with all aspects of the value chain subject to varying degrees of legislation or oversight by government authorities. Our ability to create a more valuable role for alcohol in society depends to a great extent on a balanced regulatory framework that provides a strong foundation for our programmes.
Virtually every aspect of our operations is regulated: production, product liability, distribution, importation, marketing, promotion, sales, pricing, labelling, packaging, advertising, labour, pensions, compliance and control systems and environmental issues. In some markets, such as the United States, much of this regulation is layered at multiple levels of government.
An opportunity for ethical companies
A highly regulated environment can be an advantage for companies with good corporate governance and the right approach to business ethics. This regulation must be balanced to promote economic growth, and in the case of alcohol, allow the industry to play a positive role in society. It is towards these goals that we pursue our work with governments around the world to develop proportionate, effective regulation.
We believe that the most effective policies to reduce alcohol misuse are those based on the best evidence that account for drinking patterns, that target specific at-risk populations, that treat all forms of alcohol equitably, and that involve all stakeholders working toward a common goal. Therefore, Diageo actively supports effective and targeted alcohol policies at both global and local level.
Policymaking is a dynamic process which engages a wide range of stakeholders and interests. To be effective, policies should be based on evidence and be proportionate to their objective. Alcohol is a highly regulated sector, and at any one time there is always a wide range of issues to do with alcohol consumption and misuse being debated around the world.
Diageo engages fully with policy makers and other stakeholders, either directly or through industry trade associations, on all these issues. We are committed to evidence-based, balanced policymaking and our engagement with governments and regulatory bodies is always professional, expert and ethical – and governed by our Code of Business Conduct. As well as our own experts, we retain external specialists as consultants or advisors to advise us on appropriate responses to and positions on policy issues. We are consistent in our views and positions wherever we operate around the world.
- You can read more about our work with different stakeholders on alcohol policy and regulation in the alcohol in society section
- See the corporate governance section for information on the more general regulatory environment of a UK-listed company.
Every year, our tax contribution accounts for a significant proportion of the value we contribute to economies around the world. Our approach to tax is based on three key principles:
- We are committed to paying tax in accordance with all relevant laws and regulations in the territories in which we operate.
- We are committed to the effective, sustainable and active management of our tax affairs in support of outstanding business performance in the territories in which we operate and, as with all other aspects of our business, to maximise shareholder value.
- We endeavour to develop and sustain good and honest working relationships with tax authorities and to encourage the representation of our views on the formulation of tax laws either directly or through trade associations or similar bodies.
Our tax footprint is made up of direct and indirect tax payments. Direct taxes include corporation tax, local business taxes and excise duties on our sales, as well as other sales taxes such as VAT. Indirect taxes include, for example, the payment of income and corporate taxes by our employees and suppliers.
We make decisions on where to locate our operations based on a combination of market factors, commercial strategy, business implications, environmental impacts and taxation. Transactions between Diageo subsidiaries are priced on an arm’s-length basis in accordance with the OECD Model Tax Convention.
Looking ahead to emerging markets
Diageo’s focus is increasingly shifting towards emerging markets, which represent the biggest growth opportunities for us in the future. Our challenge in new markets will be to develop the kind of relationships we have spent years building with governments and other industry stakeholders in our traditional markets. By doing so we will help to create a fair and competitive business environment in which value can be created for all stakeholders.