COP28: Hear from Ewan Andrew, Chief Sustainability Officer | Diageo

I think it starts from well before I started with the company. If you go to the archives with Christine McCaffery or talk to people that understand how the value chains have worked for decades, almost centuries now, they've actually been pretty sustainable. Things went around the world on sailboats. Johnnie Walker originally designed his square bottle to be able to ship more on the same food space, to be more sustainable and more profitable. In my time in the company, I've seen from day one this responsibility to do things in the right way and not be wasteful. For a business that's high margin, premium luxury in big parts of our portfolio, I think it's part of our core being and essence of the culture that we don't want to be wasteful. The big transition I've seen in the last 18 months, in particular as we've really got into the momentum and spirit of progress, is that I no longer feel like my role and my teams is to go around and ask the company's permission to do stuff to hit our goals. I feel like we've moved to the phase now where the culture and the organization is really understanding and starting to realize that this is my job, this is what I need to do, and I need to lead. Therefore, the pressure is coming back the other way: can I move fast enough, can I find the solutions that the brand teams are demanding or the markets are looking for, and can the supply chain help enable that again. I got a lot of confidence from the types of people that are really passionate about this agenda, whether they've moved into sustainability roles or are in core roles in brand or in market or in a function, but they care about this deeply and they're trying to make a big difference.

A couple of examples. I'm always most impressed by things that aren't just decisions in our control but change the way that the world works a bit. One of my favorite ones is the aluminum can example. We're into the terms of number of cans that we buy every year; it's quite an energy-intensive process with a lot of mining to get the bauxite out of the ground. But what was discovered by the teams was that in the UK market, cans get exported out of the UK for recycling, but then when we buy aluminum sheets to print and make cans for Guinness or for our ready-to-drink like Captain Morgan or Tanqueray, we pay virgin prices. So there's no advantage in the recycling or in the commercial realities. The teams in Diageo put together a consortium of interested stakeholders across a broad range of areas in the industry and came up with a business case and proposal and organizational model that would see us be a founding investor. It will take those cans, recycle them with a new local carbon smelter in the UK, and then we'll pay recycled aluminum prices, reducing our carbon, preventing circularity from leaving the country, creating jobs, and fundamentally making a massive improvement to our margin so we can keep investing in those brands. That's the definition of sustainability: it lifts up society, creates jobs, has less of an impact on the planet, and we can be more profitable and more successful at the same time. It's one of the examples I love to talk about, James.

Where I think the real breakthroughs will come is when you actually get a group of what I call actors or actresses, but lots of different actors and actresses have to come together. You've got to have governments, financial institutions, businesses, private small businesses that are willing to take on new business activities, and you've got to find a way to put all that investment and decision-making together to create something different than we have today. Another one would be the EcoTotes: rather than shipping bottles all around the world, which is difficult to make circular within a smaller marketplace, the EcoTotes are 4.5-liter spirits kegs. We're not making as many bottles, which can be high on carbon and energy intensity, but you've got to get our competitors to come on the same journey because all the bars and outlets don't want a lot of different types of kegs. The beer industry has that model today that works, so we can copy it and accelerate. I think these examples are coming up all the time, James, and starting to go from initial pilots and interest into companies putting their money where their mouth is to really test them at scale. Some will work, some will nose-dive and never be seen again. We just have to be willing to take a level of risk; there's no innovation without a level of risk.

This is probably the most interesting question we could explore, James. I think it's the reality for a lot of companies at our stage or coming up on our stage of delivering their goals. The first two or three years were full of gusto and ambition, driving these roadmaps. Now we're hitting the road a little bit where we understand just how hard it really is, how much time some of these things might take to change, and some of it might cost us money, be a bit more expensive than what we do today. The way I talk to my teams about it today is definitely like 'triple wins': if we find the right solutions will save us money, save carbon or water, and help preserve cash because it makes the supply chain simpler and easier to run. I still have big confidence that these triple wins exist, but I'm acutely aware that if we take something like glass, the climate risk industry predicts glass will become more expensive. So we have to figure out over the next two or three years the sequencing of our investments and what choices we make on hydrogen or electricity or offsetting the need for glass by lightweighting bottles or using circularity. It's a whole recipe of things. I know it is one of our biggest challenges. The world will make its adaptations, the energy market will become more competitive to move this way, so it's the right thing for us to continue, but we can't do it irresponsibly. I can't just make an investment and say it'll figure itself out. If I go into the mountains and I'm going on a crazy new route, I have to have an exit path. I need to know certain points where it gets risky that I can step back and take a slightly longer, less risky route. I think of the company in exactly the same way: if we go in on this and make bold decisions, I need to keep agility so that in the uncertainties of the future, if it's getting too expensive, we can pull back and take different choices, but equally if the world moves fast and carbon taxes come in or consumers shift to demanding lower carbon, we better be ready. We fundamentally believe there's a commercial advantage to being ahead.

The big word in my mind is acceleration. Acceleration will come because we'll collaborate more externally and scale and do bigger things. It's now pervasive across the business and it's everyday language in business, but it's front and centered. You've got to be a successful business, make money for the company so you can keep investing, but if you do it in a sustainable way, you'll make more and do better. I think we all now fundamentally believe that. It won't always be easy, and there will be difficult decisions, but we're not all here to have an easy job. We're going to have to make difficult decisions, so let's get together and make them quickly.

You know, Diageo is a far bigger business now than when we started this journey in 2020. I think our financial results showed that we were about 35% bigger as a company. That means when we invest or take risk, we can do it with bigger numbers, but we have to do it responsibly, make very intelligent decision-making when we take risk. Just be bold and be open to taking some level of risk, and trust that if other people around you are willing to take the risk with you, then it's worth that risk. If you're the only person in the corner saying it's not a risk and everyone else is having an allergic reaction, widen your scope of people you talk to and ask yourself, 'Is this really as risky as everyone's telling me, or do I need to stay as a maverick and be the person that drives this change?' Risk-taking is part of our future, and we need to do a little bit more of it.