With United Spirits Ltd (USL) becoming a subsidiary of UK-based Diageo Plc, a new code of business conduct has been put in place for the Indian company. In an e-mail interview, Steven Grubb, Global Compliance Transformation Director, Diageo, shares the salient features of the code as well as the challenges the company faces in implementing it.
What are the salient features of USL’s new code of business conduct and what were the reasons for having one?
USL has a new mission to become the most admired and respected company in the consumer goods industry in India. Being an admired company means more than financial performance – it means we must be a responsible corporate citizen that creates value for all our stakeholders like customers, employees and suppliers. USL’s earlier code of business conduct and ethics was drafted more than eight years ago. The company has now launched a new code, which has been revised to provide greater clarity and guidance and to make sure that we are complying with applicable laws and regulations.
USL’s updated code is a framework for doing business the right way. This enhanced code embraces the requirements of good corporate governance and ethical personal conduct. It defines the standards by which the company and its employees are expected to operate, including information management and security, sexual harassment, health safety and security, a revised USL marketing code, anti-bribery and corruption; anti-money laundering and quality and responsible drinking.
The Indian liquor industry as well as government liquor policies are difficult to navigate. Do you think such a code will work in India?
I think the biggest challenge on compliance in India is that some unacceptable practices are sometimes a way of life here. So changing that mindset is the big step forward that we need to make. At the end of the day, paying a traffic policeman a small sum of money when you don’t wear a seatbelt is illegal. Transparency International ranks India 94 {+t}{+h} on the list of 177 countries in their Corruption Perception Index. Anti-corruption is part of the political parties’ manifestos now – so clearly it is an issue which is being recognised and addressed
Is the code different from those you have elsewhere?
Compliance is a global priority at Diageo, which means that worldwide, we have a common set of expectations and standards to ensure that all our businesses operate at the highest benchmarks and that every employee knows what is the right thing to do every day. Through its partnership with Diageo, USL has been propelled into the global marketplace. It must adhere to global standards and increased accountability. Diageo is bound by the US Foreign Corrupt Practices Act and the UK Bribery Act. As a result of its relationship with Diageo, USL is now subject to the same laws in all its business activities, no matter where they occur, as well as other locally applicable laws and regulations.
For us at Diageo, no matter which country we operate in, we have a clear standard by which we want to abide. Consequently, the codes follow a similar format and set out similar expectations. However, consideration is given to specific local laws and culture and, therefore, there may be some minor differences.
How much work went into writing the code and how is it being implemented?
Diageo and USL have made a huge investment to strengthen the compliance and governance standards at USL to ensure they meet international standards. We have put in place a dedicated and experienced compliance and ethics team, comprising both local and international talent with the right capabilities and experience. We have also built strong working relationships with other USL functions such as legal, finance, audit and HR. Most notably, Ashoke Roy, a senior USL professional and former CFO of Whyte & Mackay, was appointed to the role of Deputy President Compliance, Ethics & Internal Audit. In addition, my current role of Global Compliance Transformation Director was created and I moved from London to Bangalore to provide expertise, guidance and support for the development of the compliance structure and programme.
The CC&E team spent several months assessing current practices and policies and mapped them against local and international standards before writing up the enhanced code.
Do you have a whistleblower policy in place as well?
Yes, we have an independent Speak Up helpline known as “i-Speak”, which is available to every single employee and provides the opportunity to raise issues confidentially, and anonymously, if so preferred. To protect confidentiality, it is managed by an external company, independent from Diageo and USL. Contact can be made by phone, internet or email. The i-Speak helpline is well publicised throughout the company and has been made easily accessible to all. Both USL and Diageo have a non-retaliation policy with regard to issues raised through I-Speak in good faith.
What happens if the Code is ignored and are there any penalties in case it is violated?
USL is clear that any breach or suspected breach will be investigated and, if substantiated, could lead to disciplinary action for individuals, including dismissal from service. Certain breaches could lead to fines and even imprisonment. For the company, its very reputation is at stake and there are many examples of companies attracting media and stakeholder attention for the wrong reasons. In addition, regulators are imposing increasing large fines and corporations are facing criminal prosecutions or restrictions on how and where they can operate. Employees need to appreciate that when operating on the global stage local breaches can have a global impact
By implementing the code, did USL management have to make any changes regarding the way they had to market their brands?
Earlier, USL followed the industry code of marketing set out by the industry body, CIABC. In the past year, USL implemented its own USL marketing code, which draws quite heavily from Diageo’s global marketing code. The USL code of marketing practice for alcohol beverages underpins our strategy of leadership in responsible marketing and innovation. We are aware of the positive, and sometimes negative role alcohol can play in the lives of consumers, individuals and society. We understand our responsibility to develop, produce, market and sell our brands responsibly. This USL marketing code helps us ensure that all our marketing and innovation activities meeting our high standards of responsibility every day.