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Monday, December 7, 2015

Strategic CSR - Diageo

The article in the url below follows-up on Diageo's progress towards a series of eight sustainability goals that the firm set itself back in 2008 (see: http://www.diageo.com/en-row/csr/environment/Pages/default.aspx):
 
"To drive improvement, in 2008 we set ourselves a series of challenging targets to achieve by 2015 in the areas of water, carbon emissions, and waste. In 2009, we added commitments covering our packaging."
 
The company's intention was to achieve each of these targets by 2015. However:
 
"The company's latest annual report, published [in August], reveals that it fell short on seven of its eight main environmental goals. It cut waste water pollution by a mere 3.1% (on a 2007 baseline), for example. Its stated goal was 60%. In other areas, it made progress but not enough. So its carbon emissions and waste water levels were down by 33.3% and 45.3%, respectively, rather than the promised 50%."
 
Given this, should Diageo be criticized for failing to meet goals it voluntarily set itself, or should we welcome the firm's honesty in (presumably) accurately measuring these metrics and reporting its shortfall? Unfortunately, The Guardian kind of misses the point and wades in with widespread criticism:
 
"With results such as Diageo's, it's no wonder consumers and the public are mistrustful of corporate commitments. There have been so many false dawns in the sustainability space, says Marilyn Croser, director of the CORE Coalition, a civil society network pushing to improve corporate accountability. 'The pace of change is slow and the problem is very urgent', she adds. Where the drinks multinational is concerned, environmentalists have understandably called foul, with Friends of the Earth Scotland accusing the company of failing 'miserably'."
 
I am inclined to praise Diageo, rather than criticize. We do not need firms generating meaningless metrics and then proudly reporting their achievements. What we need is firms stretching themselves to the point where they essentially have to reinvent their operations to vastly reduce their impact. The fact that Diageo took this task seriously much sooner than most other firms (the targets were set in 2008), accurately measured their progress, and then honestly reported the results indicates to me that they are probably making greater strides than most other companies:
 
"David Croft, global sustainability director at Diageo, insists that the company's targets are science-based and challenging. 'We could all set targets that are readily achieved but what we've tried to do is look at the science and the wider context, such as where climate change is heading,' he says."
 
Yes, we need better performance; and yes, we need it quickly. But we are only going to get where we need to go if we encourage firms when they are honest enough to admit they have fallen short of their own ambitious goals. Since it is almost impossible for most of us to have any idea how hard the company worked towards the targets, or whether it could have done much better, what would the critics have preferred—that the company lied about its progress? Yes, we should be mistrustful of firms when they lie. But, if we are also going to pan them when they tell the truth, we shouldn't be surprised when they are less forthcoming subsequently.
 
Take care
David
 
David Chandler & Bill Werther
 
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Sobering results for drinks giant Diageo reveal problems of sustainability targets
By Oliver Balch
September 3, 2015
The Guardian