Why Drinks Giant Diageo has Slashed Sustainability Targets

Leading alcoholic beverage producer Diageo has outlined the reasoning behind its decision to slash a series of important sustainability targets.

Known for drinks including Guinness, Don Julio and Smirnoff, the organisation has set out revised targets for Scope 3 emissions and recycled packaging content in its Annual Report for 2025. 

Ewan Andrew, President of Global Supply and Procurement & Chief Sustainability Officer, Diageo, said: “In 2020, when we set ambitious environmental sustainability goals as part of our Spirit of Progress action plan, we didn’t have all the answers. But we knew progress would require innovation, long-term commitment and supportive policy environments.

“Five years on, we have better data, deeper insights and a clearer view of the practical realities to deliver net zero.

“Today, alongside our Annual Report, we’re updating our sustainability goals, with some important adjustments to our carbon and packaging goals to give us a stronger, more credible path forward.”

Revisions to emissions and packaging targets

All targets related to water use and replenishment—described by Ewan as the “biggest threat”—remain unchanged.

However, the company has adjusted its focus on direct and indirect emissions, as well as recycled packaging content.

The key changes are as follows:

Water efficiency in water-stressed areas

• 2024 – 40% improvement by 2030
• 2025 – unchanged

Water efficiency across the company

• 2024 – 30% improvement by 2030
• 2025 – unchanged

Water replenishment

• 2024 – 100% target in water-stressed areas by 2026
• 2025 – unchanged

Emissions from direct operations (scope 1 and 2)

• 2024 – net zero carbon by 2030
• 2025 – reduce emissions by 50% by 2030 (net zero by 2040)

Value chain (Scope 3) emissions

• 2024 – Reduce by 50% by 2030
• 2025 – Reduce by 26% by 2030 (net zero by 2050)

Increasing recycled content

• 2024 – by 2030, increase recycled content in products to 60%
• 2025 – by 2030, increase recycled content in products by 50%

Global complexities

Diageo’s report details the reasons behind the target revisions, addressing the “complexity of the challenges faced by society and the environment".

The report acknowledges the interconnected nature of climate, nature, agriculture and the human aspect, emphasising the importance of a sustainable approach across the value chain.

The report further iterates that these targets are subject to regular review as the landscape changes due to evolving regulations and new insights on addressing systemic issues like greenhouse gas emissions.

An ongoing review process allows for strategic adjustments that help Diageo enhance business resilience and protect its operational licenses.

Collaborating with Science Based Targets Initiative

Central to Diageo's strategy is ensuring that water preservation and a focus on greenhouse gas emissions reduction remains intact. 

However, the aforementioned adjustments stem from shifts in external conditions and Diageo’s growth ambitions.

It says: “This review, conducted as part of our regular update of Science Based Targets initiative (SBTi) targets, resulted in changes to greenhouse gas emission reduction percentages and timeframes to achieve those reductions.

“We also reframed our packaging targets due to both external factors and our growth ambitions, shifting our focus to recycled content of our packaging, with lightweight packaging reporting focused on examples, rather than a formal target.”

The impact of tariffs

As a multinational entity, Diageo is facing a battle the mitigate the impact of trade tariffs imposed by US President Donald Trump and his administration. 

Its report suggests tariffs could burden the business with costs of up to US$200m annually.

Diageo is taking proactive measures in inventory and supply chain optimisation to mitigate these impacts, aiming to neutralise around half of the potential profit erosion through strategic actions.

Nik Jhangiani, Interim CEO at Diageo, concludes: "We continue to believe in the attractive long-term fundamentals of our industry and in our ability to continue to outperform the market as the Total Beverage Alcohol landscape evolves.

“Diageo’s ambition remains clear: to be one of the best performing, most trusted and respected consumer products companies in the world.

“With world-class brands and talent, highly effective global consumer insights and an ongoing focus on efficiency and effectiveness, we are confident in our ability to outperform the market, restore Diageo to a top quartile TSR consumer company and provide stronger returns to shareholders.”