Good morning, and welcome to the Diageo Society 2030 Spirit of Progress Q and A Call. Your call today will be hosted by Diageo's CEO, Ivan
Menezes.
We are now ready to start the call. Mr. Menendez, please go ahead.
Thank you, Katie. Hello, everyone. Welcome and thank you for joining us On our Society 2,030 Spirit of Progress Q and A call today. I hope you've had an opportunity to view the webcast this morning, Which provides a deeper dive into our 10 year ESG action plan, Society 2,030 Spirit of Progress, And lays out how these ambitious goals we've set for ourselves are fundamental to the delivery of our performance ambition. Today, I'm delighted to be joined on the call by Javier Serran, our Chairman Ewan Andrew, who heads our Global Supply Chain and is our Chief Sustainability Officer Mairead Najar, our Chief Human Resources Officer Kate Gibson, Global Director of Diageo and Society and Dan Mobley, our Global Head of Corporate Relations.
We all look forward to taking your questions. I'm now going to hand over to Dan Mobley, who will moderate our call today. Dan?
Thanks very much, Ivan. And let's get straight to the questions. So Katie, do we have a question waiting?
Thank you. Our first question will come from Oliver Nikolay with Goldman Sachs.
Good afternoon, everyone. Thank you very much for the presentation. I've got two questions please. First, Eva, in your presentation, you mentioned that consumer care about the sustainability My question is how do you include your sustainability credentials into your brand building activities? And Does tools like Catalyst, for instance, help you understand how essentially what resonates with consumers from a sustainability perspective?
And then second question. On your LTPI, 20% of the LTPI For senior executives is now linked to sustainability goals. Is that also being cascade through the organization with other senior leaders and middle management Also having the incentives linked to these calls. Thank you very much.
Thank you for that question. I'm actually going to build your second one first and come to Mairead to discuss the LTIP. I'll then ask Kate Gibson to cover off the brand building points and then any further reflection Ivan would like to add at the end. So, Mairead, over to you first on the L chip.
Great. Thanks for your question. On the L chip, The 20% of the performance share part of Alta is put in place for the top 100. That's how I would describe around the business and we see that as very important as we strive to deliver against our 2,030 ambition. Beyond that, we Use our AIP scheme to incentivize individuals, so we set goals at an individual level.
And on the basis that our top 100 are incentivized in our long term incentive plan, we very much expect that individual goals will be set against Arbroil's 2030 ambition. Hope that answers your question.
Thanks, Kate. Could you say a little bit around brands and how we view them within our sustainability agenda? And then
if there's anything Ivan wishes to help, he can do?
Absolutely. Thanks very much. And that's a great question. And I think it's certainly something that we've seen during the pandemic, a real increase in consumer interest in Authentic action in this space. And I think the approach that we take with it is really to look overall across our portfolio and there certainly are many Corporate commitments that cut across everywhere we operate and also really to use our brand building and insight generation capability to develop Strategies that are very aligned with what the consumers want to see, and we do a lot of cross functional collaboration across the supply chain organization, The CR and Diageo and Society agenda and then obviously the brand process.
Now you may have seen a couple of recent examples. Certainly one Quite recent was the Johnnie Walker Next Steps initiative, which has resonated really well and that's a great example of Our commitment in terms of net zero operations translating into that brand lands around net zero across our distilleries, for example, And then also many other actions on the ground in terms of restoring landscapes, for example, through tree planting. And I guess one other example, Certainly that we know really resonated was the launch last of the paper bottle, which is obviously coming to life later on this year. And certainly, in this space, we've really seen a thirst and hunger for innovation I think the response to the innovations that we're bringing through really generates sort of excitement Sklar Brands and NextGen's, I think confidence to do even more.
Thank you very much.
I would just add beyond climate and sustainability. On inclusion and diversity, our brands I have a big voice. Smadar, for a long time, has really pioneered on Pride and with the gay community. Guinness right now is doing some pretty pioneering stuff on women in rugby. And then on positive drinking, All our brands do take this very seriously and our messaging on positive drinking and messages of moderation.
Actually some of our Best creative work around the world happens here, and this is what inspires our marketeers on sustainability, inclusion and positive drinking to really integrate it into their brands. And what I would say all the time, we believe this is going to become more and more important. And we believe it will be a competitive edge for Diageo.
Thanks, Ivan.
I would simply add as well that all our marketing around around positive drinking. We apply the same metrics to measure its impact and effectiveness as any other marketing campaign. And what we're beginning to see more and more is the work we do on positive drinking, on sustainability, the scores are as high or higher than any conventional We do. So if you take an example like the Guinness Clear campaign that ran a moderation campaign that ran around 6 nations in recent years Has phenomenal impacts on all the metrics that we would assess any marketing campaign against. Katie, could we take another question, please?
Thank you. Our next question comes from Mitch Collett with Deutsche Bank.
Thank you. I also have two questions, Please. I guess the first one is, given that you make products often with higher alcohol content Some of the products you compete against. Can you talk about responsible drinking, particularly in markets where your Recruitment of consumers relies heavily on affordability and perhaps the benefits of your Brands against some other forms of alcohol such as beer and illicit alcohol and I'm conscious obviously that in some markets beer is a big part of your And then secondly, can I ask about given your breadth of products, can you talk about how the carbon footprint of your products And in particular, I'd be really interested to hear how it varies when thinking about both the Scope 1 And the Scope 3 emissions of your range of products?
Thanks very much for my first questions. I'm going to turn to Ewan first on the carbon footprint question to give you some examples there and Kate may also wants to chip in and then I'll come back to you on the points around strength of different product range. Ewan? Yes.
So let me bring it to Iife. I mean 80% of our carbon footprint comes from heat rather than from renewable energy for electricity. So largely that comes from our brewing and distilling operations. If you look across scope 1 and scope 1 and 2, You published that figure last year, so that's less than 500,000 tonnes of carbon. But when you get into scope 3, that figure goes up quite Significantly, it's about 10 times.
And ultimately, that all comes through in glass and in agriculture. And I think across our portfolio, As you look at it, the bias of carbon definitely fits within Diageo and Rovin's Peritz.
Thanks, Ian. On the alcoholic strength of different products question, I mean, you have to remember that alcohol is alcohol. And what matters is how much ethanol you're consuming and how quickly. So you really need to look at what the product is and how it's being consumed. And there's a lot of myths around this ingrained in popular culture.
For instance, a gin and tonic ABV 3.5% is not necessarily a stronger product than a beer that can be at 7% or 8%. So what you need to look at is the behaviors when you're considering consumption of alcohol and health rather than the arbitrary product category. We actually see a lot of opportunity and we do a lot of work around getting that point across to both consumers and regulators, that alcohol Alcohol and trying to educate people on what's in their drink, the strength of their drink and what safe behaviors when it comes to drinking look like. And what we've actually seen a strong trend over the last couple of decades is regulators beginning to understand that. And you're seeing that the regulation of Alcohol should be as alcohol rather than having different sets of regulations or different taxes on the different product categories.
And I think we're seeing more and more of Taking the example of the introduction of seltzer, seltzer is going to have a spirit space, a wine base or a beer base. So it becomes very peculiar to tax them differently When they're at the same alcoholic strength based on what the ethanol in the drink is manufactured from. And so regulators are waking up at this point around is alcohol is And we're seeing much more proportionate and sensible taxation and regulation of alcohol across a number of different geographies. And we see that trend continuing, And it's something that we obviously want to encourage. I'm going to come over to Kate on you specifically on your point around illicit.
Kate, you might want to talk, for instance, around Senator Keg and the work that we're doing in Africa to make sure our products can compete with illicit.
Yes. No, absolutely. And I think that's a great question. And I think just I guess building on what Dan was saying, I think one of the things that we've been focused on for a long time in line with alcohol. Alcohol is really helping to educate consumers on the practice of moderation.
So there is no drink of moderation. And DrinkIQ, for example, which is our consumer information platform is designed to do just that. And it's really taking people on a journey from Piquing their interest perhaps through a brand moderation campaign and then really building that knowledge base. We know that consumers Are keen to live a balanced lifestyle, and as a result, we've upgraded that platform. It's now live in 21 countries, and it's really designed to help consumers and really empower them with the information they need on that practice of moderation.
But it's a great question just with regards to illicit and certainly Something that we have seen and particularly in emerging markets is around the need for Affordably priced high quality regulated alcohol is a way of addressing the challenge around illicit. And you may have heard of the Senator Keg brand launched by Diageo, which was designed deliberately to be delivered at a price point that will enable consumers that might otherwise consuming illicit alcohol in order to be able to consume a regulated product and that's certainly the dynamic that we've observed. And there definitely is a challenge, particularly as we think about regulation and just making sure that Regulations and restrictions don't have an unintended consequence of pushing people into the illicit consumption, which has obviously doesn't have the quality or the certainty in terms of the formulation and can be very dangerous for health.
Thanks, Kate. And I hope that answers your question.
Yes. I just wanted to clarify, it's not a new question. It's just, did I hear you correctly, Ewen, that for your beer portfolio, More of the emissions or a greater proportion of the emissions lie in Scope 3 than Scope 1 versus Spirit's, is
that the right rating process?
Yes. I didn't call that. So obviously, we've made a lot of progress reducing our carbon footprint across our network by 50% Up to 2020, we've got ambitious targets that are going to close the rest of that gap by 2,030. We haven't split out by beer versus spirits. As you look at it, it's the heat energy is the major part of that kind of scope 1 and 2 that sits within it.
When you get out into And the broader footprint. We posted on through transition. We've got a lot of our vehicles through kegs. We've got a lot going through cans in that can format. Glass is relatively small in beer.
So what you said, it wouldn't be the right conclusion to draw from that.
Thank you. And can we move to the next question please, Katie?
Thank you. Our next question comes from Edward Mundy with Jefferies.
Afternoon, everyone. Thanks for the presentation. I've got 2 questions. The first is, I appreciate There's no drink of moderation, any practice, but I think 0 alcohol in the responsibility agenda does change the goalpost Slightly. You've seen quite good success with the likes of Gordon Ziro and Seedlip, and one of your competitors has launched a light variant of whiskey in Spain.
How much more innovation in the loan note space do you expect over the coming years? And to what extent does it work across different categories as opposed to sort of just the white spirit Side of things is the first question. And then the second question is around taxes, specifically in the U. S. And I think, Ivan, you mentioned that It's encouraging that governments and societies understand the critical importance of the thriving hospitality sector.
I was interested in that Comments relative to a potential federal excise tax increase, but we haven't seen one for quite a long time. And then the second part of the question on taxes is The time frame on when you think taxes on seltzers might equalize between malt, wine and also spirits in the U. S.
Great. I'll come first to Ivan on the opportunity you see in low and low, which is obviously a very exciting space. And I should clarify it Around the volume point I was trying to make, which is actually if you're talking about the distinction in beer, spirits, Why? You obviously have to look at the volumes and beer in most markets overwhelmingly accounts for the volume, not the value. So some of the arbitrariness that we've seen in the tax Regulation system is shifting because regulators are moving more of the taxation on to where the largest volume is And therefore, not focusing on spirits more than they focus on Baylor wine.
Ivan, do you want to just explain around the opportunity on Milan?
Yes. So Ed, we see no and low as an exciting consumer opportunity. There's A clear trend when people what do you drink when you don't want to drink or when you want to drink less? And as we Mind the consumer and look at where the trends are going. We certainly see this as an additional stream of revenue and business for the company that's very exciting.
We've seen some of our plays, including the acquisition of Siebelip and what we've done on temporary 0 and Golden 0. And we are looking at this across our major markets, certainly in the developed world And see good growth there. Now we come at this from an additional incremental revenue stream standpoint. It's not A defensive stream because at the same time within alcohol, what we see is premiumization and people drinking better As a very positive trend. And so we see a lot of room since we're only 5% of the TBA dollars for the premiumization to play well into our spirits and premium beer portfolio as well.
So stay tuned to the space on low and no alc. And we are looking at it beyond white spirits.
Thank you, Ivan. And just specifically to tax, I mean, we obviously are very familiar with And campaign on tax issues in many countries around the world. You can never predict exactly where finance ministries will go. But what we've seen huge progress on over a number of years in many markets, including the U. S, has been a trend towards equalization or at least reducing the punitive Tax burden on spirits versus the other categories, and we see no reason why that would not continue.
The U. S. Has maintained a fairly proportion approach to alcohol taxation at both the federal and state level for a long period of time. And actually in the U. S, we see big opportunity around regulation Because there's still plenty of places where spirits can't be purchased, where the other categories can.
The consumer doesn't understand that, A lot of legislators at the state level are looking whether to remove those restrictions and we think we'll make more progress there over time. In Europe, the discrimination against the spirit We tend
to be more in the
form of tax and again numerous jurisdictions are starting to look at that because it doesn't make sense for either the public finances or public health. For example, the U. K. Government is committed to and will soon review alcohol taxation post Brexit with an aim of injecting what they term fairness into the system, Including for Spirit. So we expect to see some progress there over time.
So that's something we stay very close to in every country where we operate and we see plenty of opportunity in The medium term to address that. You raised the point finally on hospitality. And I thought, Ivan, you might just want to mention the importance of hospitality to Ion Michelle and
some of the work we're doing there.
Yes. So the one of the positives, as I mentioned on the webcast of coming through this crisis is the appreciation that Governments and society at large as of the hospitality industry. I mean, it's a $9,000,000,000,000 sector, Dollar Sector, it's 1 in 10 jobs and most of the jobs are young jobs, young people getting their first Run on the ladder of employment. And so we've been working very closely Right across the industry and with government to really support the recovery of the hospitality industry. And Ed, to your point, in that context, I would say penalizing the hospitality industry with higher taxes, this is not a good time to do it.
And that is part of the arguments we are collectively taking to governments right now, Because what you really want is the economic recovery and the job recovery coming through.
Understood. Thank you.
Thanks. Katie, could we move to our next question, please?
Thank you. Our next question comes from Celine Pammuti with JPMorgan.
Yes. Good afternoon. Thank you for taking my question. Hello. Can you hear me?
Yes, sir. Yes,
we can hear you. Go ahead, Salim.
Thank you. My first question is on Scope 1, 2 and that's Scope 3. So if I understood correctly, Scope 3 is about 90% of your total. Some of the companies in the cyclical categories are looking at net 0 across the full supply chain and you kept your ambition short of that. I just wanted to understand, I'm sure you've considered it.
What do you think is maybe It's public block for you to look at that. That's my first question. And then secondly, is it possible to have An idea in terms of incremental cost, all of those initiatives May there on the P and L, I'm thinking about whether it's a higher cost of packaging or in terms of Mora and P for your positive drinking Ghaul. So, yeah, if you could give us a bit of an idea of whether the magnitude of that and how you are going to pay for it? Thank you.
Thanks very much, Liam. Those are both very good questions. I'm going to hand to Ewan because we have set a commitment around our Scope 3, our supply chain Emission, so Ewan can cover that and then he can also talk about some of the costs associated with our sustainability work. I'll then turn to Kate to talk about The wider investment we're making in different programs.
Thanks, Dan. So hi, Celine. No, you were right in your interpretation of Scope 1 and 2 versus Scope 3. And look as we sit today and you've got it, right, I just want to check Question, Dan. My name is William Murphy.
I got the first part on the 90%. The second part was around what we're doing on the targets, right? Yes. Okay. So we set out and we've got a lot of progress actually on 1, 2 and 3, as I said, with a 50% reduction already delivered.
So it was about a 34% reduction in our Scope 3 during that Same period to 2020. We've outlined the commitment and our ambition to sit with a 50% reduction in close that gap in scope 1 and 2 to Carbon neutrality by 2,030 and we also set our group of scope 3 to be at net view by 2,050 or earlier, and we'll deliver a 50% reduction in scope 3 in the next 10 years as well through to 2,030. So we're looking to continue to accelerate those goals. But clearly, We've been focused on what we directly can control within our own operations and driving innovation in that space, but we're extending out in to Scope 3 already over the recent years and we'll continue to accelerate in that. So we've made a big commitment.
Our Scope 1 and 2 would be up there as a leading commitment amongst others and our Scope 3 would be in that place to be in line with the science based targets initiatives.
And then Ewan, do you want to touch on some of the costs associated with the investments we're On sustainability.
Sure. So as we look at, I mean, if I take capital costs first, we see that it's manageable over the Long term, over the 10 years, we expect to invest up to £1,000,000,000 of capital costs. We've purposely built an innovation gap, Well, I think of it as a decade of 2 halves. We've got much more certainty on what we'll do over the next 5 years with known technologies to continue to make year on year improvement. And then we expect to drive innovation in technology across the industries and sectors to make sure that that's investing at the right time for the right technologies the long term future, because these will be big investments.
So we want to get the pace of that right to allow innovation to come through. And we'll manage that in the context of When it comes to that OpEx cost, I think there's actually a real mix of some additional cost, but some opportunity as well. So if I could give examples today where we already know that sustainable solutions that can go in with the investment we've made in Sub Saharan Africa and we'll continue to make We know that it's actually cheaper than fossil fuels in some of those occasions. So there's a business case to do that much more quickly, and we are continuing to roll that out now. In the longer term, there will also be the opportunity as we think about brands and we think about where the consumers go and what their expectations are We'll actually see some opportunity to reduce our packaging in line with that, and that will drive savings.
There's no doubt too that with kind of resiliency in supply chains, we'll also see some incremental cost I think on balance, my job is to deliver sustainable profitable growth. I need to make sure that we've got the productivity coming through in line with the investments. And I'm encouraged by the outlook for our pipeline to do that over the next few years.
Great. And then I guess just building on that, As we think about the investments that we're making across our efforts to promote positive drinking and also in the hospitality skills arena, I think as we mentioned before, we do see certainly the long term focus in terms of moderation messaging coming through our brands As that's something that we cover within A and P, so that's covered within existing budgets. We don't have a separate provision for that. And we certainly do see that As a very effective and very engaging dialogue that we have for consumers and that also holds true, as Ivan mentioned before, in terms of the work we've done in inclusion and diversity and also in sustainability through our brands. Certainly, one thing that we have done this year for two reasons.
One is Moving with pace and agility to be able to reach individuals in the way we want to reach them during COVID And also as a means of driving greater scale with our programs, for example, on addressing the harmful use of alcohol and also in the hospitality skills arena, We've pivoted and we've launched online versions of those. So for example, we've launched an online version of SMASH, our award winning underage drinking program. And the benefit of that we see is having greater impact and also being able to scale within existing budgets. And it's the same approach that we're taking also with Learning for Life, which is our signature hospitality skills programs. We've also launched an online version of that.
And that really has enabled us to reach along with the Diageo Bar Academy to reach and have a dialogue with hospitality professionals during the pandemic and will help us also to scale our impact as we come out and move into recovery.
Thank you.
Thanks very much. Can we move to the next question please, Katie?
Thank you. Our next question comes from Trevor Stirling with Bernstein.
Yes. Hello. Thank you very much to Ivan, Javier, Dan, team, fantastic presentation this morning and great to see some progress on some of the dimensions. Two questions from my side. One was relating to diversity and inclusion.
I think Murray mentioned supply chain and spend as a particular focus. Another area of the business that traditionally has been very male dominated has been sales. And I wonder if there's what's going on in sales in terms of promoting diversity. The second, clearly, a little bit of a random question. So forgive me, and it's probably down here, Ali, down.
When I think about the debate around alcohol and health,
And a lot of it
is focused on either alcohol harmful, is it not harmful? Do you think there's any chance of shifting towards risk? Hask. I'm just thinking about the intelligence debate that went on around AstraZeneca starting to compare the risk of blood clots to other things that you do medically The blood clots rather than to say is it dangerous or is it not. So I'd be intrigued as to think about is there any chance or do you see any movement in the debate towards risk You have an absolute black and white around alcohol.
Thanks, Trevor. Both excellent questions. I'll hand to Lorraine on the inclusion and diversity piece around supply chains and sales, and she may also want to get input from Ewan on the supply side. And then I'll try and cover your question about risk and health. Sure.
I'll hand over to you and on the supply side. But yes, in sales, interestingly, we probably think there's A lot of myths around why there are barriers to women succeeding in sales, because if you look at some of our most senior roles in the organization, for example, in the U. S, our Head of Spirits, which is a phenomenal sized business is female. In GB, which is probably our single Very critical market for us. 1 of the 2 most senior roles in sales is held by a woman.
And they are succeeding in their very strong talent for the business. As we look at setting targets, we're not doing that differently by function. We're certainly expecting progress Across every market and in every functional area, we've seen actually in emerging markets probably Slower progress when it comes to women succeeding in both commercial and supplier roles. But again, we're testing that by demonstrating A commitment to placing people in those roles, even in India, where historically the percentage of women in senior roles held by women was Very low. We've seen, for example, a role that looks after reserves and key accounts is now held by a woman.
And so I think it's some mix, Some barriers that we can overcome by having flexibility of policy, and I don't think there's really any reason for us not to continue to see Current progress accelerates over the next number of years. So I'll hand over to Ewen to talk about supply specifically.
Yes. Thanks, Marie. So look, I mean, leadership and this continues to start from the top. My own leadership team across supply is more than 50% female. So there's been some exciting investment and we've been continuing in that space.
Other areas that are really important to bring through, if you look at Johnny Walker, One of our new consumer experience brands, 50% of the blenders, when we think about your stem rolls, 50% of our blenders are female And driving some brilliant innovation for that brand and will probably across our sports portfolio as well. And then we've long been recruiting around 50%, fifty-fifty in our graduate intakes, in our apprenticeship programs and really a lot of investment behind increasing the number of women in STEM is a big part of, as we say, our employee engagement and our employees in those groups Really focused to deliver in that space. And then there's no doubt that we do have a slightly slower turnover or flow rate within manufacturing People stay in those jobs for longer times. We're a good employer with highly skilled jobs. But we're also introducing things within traditional shift that makes those more attractive to both men and women.
So for example, kind of evening shift to early evening where it finishes or starts around 4:45, 3 till 10 o'clock So that people can take care of family duties and more broadly, but we get a real mix of people that want to come in and then that's a pipeline for the future The people are looking to as they come through their family life and I guess their child, so you can then graduate through into from part time working into full time roles and we've got ready, need skilled workers that are there to drive our business forward. So a lot of activity in supply chain in that space.
Thank you, Ewen. And Trevor, on your question on risk, I mean, We could this would be a very long conversation, but I'll try and answer it simply. It's a very well established Body of scientific evidence that alcohol consumption is a J shaped curve when it comes to mortality. And so what I mean by that is heavier drinkers there, the highest risk Premature death from all causes, but because it's J shaped, moderate drinkers have the lowest likelihood of death from all Causes of mortality and that is lower actually than people who choose not to drink at all and that is very well established and understood from the epidemiology. The exact Shape of that curve is hotly debated and new studies all the time shifted in different directions, but the logic holds very clear.
So looking at individual factors Individual causes of mortality, often drives kind of quite low in headlines, but it doesn't explain very much you have to look All causes and that J shaped curve relationship continues to hold. So within that, I completely agree the more that we and regulators and those that care about public Extremely difficult and complex to break down, and it leaves a lot of misunderstanding across a very broad range of public health debates, including around Vaccination as we're seeing at the moment. What we are trying to do is through our new website, drinkiq.com that Kate mentioned is rolling out in every country where We operate. And if you go in there, there's a wealth of independently sourced information about alcohol and health, including around risk. And one thing I'd encourage you to look at there is a new screening tool that we put on.
It's a very simple audit tool that the World Health Organization had created in the past, Which you answer a series of simple questions on your own behalf or on behalf of a loved one, and it will tell you what level of risk you're drinking at And whether you should be concerned about the level of risk that you're taking on and where you can seek help if you are drinking at higher risk levels. We're putting a lot of time and effort behind getting people, consumers, but also journalists, regulators and others to use that tool to understand this very complex debate, So they can understand their own risks and the risks of society around them. So it's a challenge to communicate risk effectively, but we think DrinkIQ is absolutely industry leading and trying to do that communication to our consumers.
Very good. Thank you very much, Stan, you and the Marie.
And Kate, I think we might have one more question.
Yes. Our final question today comes from James Edwards Jones with RBC.
Good afternoon. 2 for me as well, please. How much Of this, have you actually got nailed down? How fast towards your 2,030 goals can you get to on the base of what you know and have planned and I suppose had budgeted today. And secondly, following Ed's question on taxes, I suppose, but thinking more about Corporate taxes.
You had a low corporation tax for a long time, in part due to some clever tax planning and use of royalties. Are you conscious of a perception that Diageo doesn't pay enough corporation tax as opposed to excise tax? Great. I'm going to take the first question around how confident we are in our plans in getting from A to B. I'm going to start with you and I Because you can talk already a little bit about the innovation gap and then maybe bring in also Varev and Kate just around their specific areas.
And then I think, Ivan, if you'd like to cover the point up around the very large amount of tax that we pay around the world. So I'll start with Ewan.
Yes. So I think there are a number of different targets, as you know, that we've set. So if I take some of the big ones, I think when you look at water and that 30% reduction that we've committed to our customer operations, 40% in water stress. I'd say there's a more linear pathway towards that with a more solid roadmap with Technologies and the ability to take decisions and move those through over the period in a very aggressive way on carbon. I'd say that, as I said, it's a game of a century of 2 halves.
In the first half, there's lots of technology I can put in that would bring us through. If I continue that, it will get more and more expensive And have more and more impact. And with the work that we've done in some really exciting areas of our launch of Diageo's sustainable solutions that we launched last November, We're into the first six pilots now. And some of the technology that's coming through there is fantastic and really exciting. And we also hope that hydrogen plays a big role And again, investment project from the Committee First in Scotland.
So some of those areas that we've set the goals and we already felt that the innovation gap was intimidating. We're already seeing that, That bold ambition and that excitement is gravitating people towards us to help us with some of those solutions and that's got real kind of cross sector support as well. And then I think one of the biggest challenges, as I would predict, what I'd say that there's more to figure out, is definitely in that recycled content And particularly in the group market context into it as well. It's much easier in some markets where the maturity of that recycle material is much better and already Moving with an accelerated pace, there are other markets like the U. S, for example, where recycling rates are not as high.
And clearly, you're balancing that recycling not wanting to move waste around too much to create a different type of carbon footprint that we transport. So that's how I bring it to life down and three good examples, Some of it much more accepting than others. We can't hear you unfortunately.
Sorry, I
was on mute. Apologize. That's my fault. I was just saying we're confident because of the commitment of the Board, the executive committee and the fact that we have a culture But that's not new to Diageo. And for that reason, I'd say overall confidence would be my answer.
Yes. And I think building on that, as we think about, and you heard it from Ivan in the webcast earlier, is in crafting the strategy, which was a year in the We looked at where we were today. We looked at what we knew we could achieve and then we looked at what was necessary in this decade of action to deliver the UN Sustainable Development Goals and that's and deliberately built in that innovation gap. So I think as I think about the positive drinking space, for example, I think that there is an innovation gap, but we have a lot of learning. So on the moderation space, we know that the ambition and creativity and boldness of our market peers is second to none.
And the ability to craft really compelling campaigns is there. It's around really stretching that. And then as we think about the programs that targets the harmful use of alcohol. So our 10,000,000 target around underage drinking and the target also around Changing the attitudes of 5,000,000 people to drink driving there, it was the innovation gap really is around pivoting and program design around attitude change And then really scaling that up through all of our markets and also through partnerships. And so I think this year has been around Getting those programs launched, our new drink driving program just launched last Friday, The Wrong Side of the Road.
It's on diageo.com if you want to have a look at that DrinkIQ, which Dan mentioned before. So I think it's really around scaling them up and then also using those data driven insights to identify the best practice to amplify, and then also areas of challenge, to address. And then likewise, in the hospitality skills space, It's this online pivot and then creating a career journey between those coming into the industry and then also those wanting to continue to build their skills, which will do through the Diageo Bar Academy. So it's a similar philosophy, and I think Marie framed it well in terms of they're very bold, but we're confident in our ability to deliver.
Ivan, would you like to answer the tax question?
Yes.
Sorry, I was on mute. Yes, James, I would say Diageo stands For a free and fair and globally competitive tax system, we support what the OECD and governments are doing right now to get 2 way, a fair and transparent place. We pay 21%, 22% corporate tax. We pay a huge pool of indirect tax, £1,000,000,000 of pounds. And I would say I feel very confident about Our approach, the way our business is set up, we don't have any brass plate operation.
And we're extremely transparent and work very closely with Tax authorities around the world. And we see the direction this is heading and we support it because A well aligned global system of taxation, corporate taxation is something we're for.
Thank you, Ivan. Katie, do we have any final questions?
At this time, I am showing no questions in the queue.
Fantastic. I'm just going to hand back to you, Ivan, if there's any closing remarks you'd like to make before we finish today.
No, thank you, everyone, and I really appreciate the questions. I hope you got value out of it. So I'll just leave you with this summarizing part For us at Diageo, ESG as it's labeled is fully integrated into our business strategy and our performance ambition And is led by our senior leadership right across the business, and I hope you got a flavor of that listening to the senior leaders on this call. So thank you for your interest in the company and appreciate you spending your time with us. Thank you.
Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.