Guinness owner drops responsible drinking targets from boss’s bonus

Guinness maker Diageo has stripped responsible drinking and diversity targets from bosses' bonuses after Sir Dave Lewis launched a radical turnaround of the struggling beverages giant.

Under a new policy, the former Tesco chief and his fellow executives will have long-term rewards tied entirely to financial performance rather than environmental, social and governance (ESG) targets.

The responsible drinking measures included programmes to educate people about the dangers of underage drinking and drink driving, as well as campaigns encouraging consumers to moderate their alcohol consumption.

Executive bonuses were also based on hitting diversity objectives, such as achieving 45pc representation of leaders from ethnically diverse backgrounds by 2030.

By 2025, ESG goals accounted for 20pc of performance metrics for executive bonuses, five years after they were first introduced.

Diageo's decision to drop these objectives from executive pay reflects a broader corporate retreat from ESG, as the likes of BT and Haleon have also removed diversity targets from their bonus schemes.

Larry Fink, the chief executive of BlackRock , previously became a prominent target of critics who accused the asset manager of promoting "woke capitalism" by encouraging companies to consider environmental and social issues alongside financial returns.

Under Diageo's new scheme, which is scheduled to apply to awards made in November, the performance shares will instead be assessed against earnings per share growth, free cash flow and return on invested capital.

They will carry weightings of 40pc, 40pc and 20pc respectively.

The shift comes as Sir Dave attempts to revive Diageo after a period of weak performance. The company's organic sales fell 2pc in the year to June, with weakness in North America and China weighing on the business.

It has embarked on a sprawling restructuring programme, which is expected to generate $1bn (£73bn) in annual savings.

Sir Dave, who joined as chief executive in January, is focusing on the company's spirits brands, Guinness and ready-to-drink products, as he looks to help the business grow again.

Diageo said it would continue its responsible drinking work and retain its overall diversity targets, despite removing it from the measures used to determine long-term executive pay.

Diageo is not alone in reducing the role of ESG in executive pay.

Deloitte found that 20 of 55 large FTSE companies it examined had reduced the weighting given to sustainability measures, while 11 had removed at least one such measure.