Supporting sustainable agriculture
Agricultural inputs account for about 15% of our overall procurement spend, however they have a disproportionate impact on social and environmental issues. For example, we believe as much as 90% of our impact on water in certain areas could come from our sourcing of raw materials.
Our approach to managing these particular suppliers is set out in our Sustainable Agricultural Sourcing Guidelines. In addition to managing environmental impacts, we also aim to contribute to the social and economic sustainability of local communities by sourcing ingredients from local farmers wherever possible.
Our agricultural supply chain
We source agricultural products such as cereals, sugar, cream and grapes from about 150 first-tier suppliers, with whom we have direct relationships, and thousands of second and third-tier suppliers, with whom we have indirect relationships. These suppliers range from large agri-businesses to smallholder farmers. We believe it is our responsibility to work with every link in these supply chains to bring about more sustainable agricultural practices.
Priority raw materials
We have identified four agricultural ingredients where we can make a significant contribution towards supporting local production. In identifying these materials, we assessed the size and nature of our spend and the risks and opportunities involved.
- Malting barley – one of our largest ingredients by spend, used for a range of Diageo brands including Guinness and Johnnie Walker. We mainly source our barley from Scotland, Ireland and Kenya, where it is processed locally.
- Sorghum – an ingredient in our African beer brands sourced mainly from Nigeria, Ghana and Tanzania. As a drought-tolerant crop, sorghum offers opportunities for supporting the local market while securing a sustainable supply for our products in water stressed regions.
- Sugarcane / spirit – used in a wide range of Diageo brands, including Smirnoff, Baileys and Captain Morgan, and sourced from the main sugarcane growing countries of the world.
- Cream – the single largest ingredient for Baileys, with a very strong supply base in Ireland. Dairy farming is prompting some environmental and social concerns, and we are committed to engaging relevant stakeholders on improving sustainable cream production in Ireland. Read more.
Tackling environmental impacts in our agricultural supply chain is integral to achieving our broader environmental ambitions. We expect our agricultural suppliers to demonstrate their own commitment to the environment, and, in our guidelines, set out what we expect of them in terms of:
- Environmental management systems
- Reducing water use and pollution, and improving efficiency, especially in water stressed areas
- Preventing soil erosion
- Protecting biodiversity
- Reducing energy use and carbon emissions
- Ensuring animal welfare.
Some of our agricultural inputs are sourced from countries where living standards and incomes are low and working conditions variable. Through our suppliers, we can play a positive role in supporting local economies and livelihoods in these countries. Our guidelines set out our minimum requirements in the areas of fair working conditions, health and safety, and child labour as well as our targets for improving performance through our supply chain.