Profile – Siobhán Moriarty, General Counsel & Company Secretary, Diageo

After more than two decades at Diageo, Siobhán Moriarty speaks to In-House Perspective about what it’s like to oversee the legal team at the world’s biggest spirits maker, and the challenges – from Brexit to diversity and inclusion – that are keeping her on her toes.

A Dublin native, Siobhán Moriarty started her legal career in the Irish capital before moving to London and practising at magic circle law firm Clifford Chance. A secondment to Nomura Bank, what was then the small banking arm of Nomura Securities, did little to whet her appetite for in-house life. ‘I never wanted to see a swap or a derivative contract ever again after I left,’ jokes Moriarty, saying at that point in her career she was more than happy to return to private practice.

As Moriarty herself acknowledges, her route into working in-house was somewhat unorthodox. After a bad accident at a time when flexible working was not an option, she had no choice but to take six months off work to recover and get back on her feet. After taking some time to reflect on what she wanted from her career, she decided that private practice was not for her in the long run. ‘Six months was a long time to think and when I emerged from my enforced confinement I decided that I didn’t really want to continue being a law firm lawyer,’ she says. ‘Having stepped off the treadmill I realised I didn’t want to get back on again. Although I did go back for a little over a year, I had already made up my mind that I was going to try and find another role and I decided an in-house role was for me.’

In February 1997, after a little over seven years in private practice, Moriarty joined what was then Guinness plc. It was an exciting period. Just six weeks later the firm announced its £23bn merger with Grand Metropolitan, marking one of the largest mergers in UK history at that time. ‘It was probably one of the most interesting nine months of my legal career when we were going through the processes of getting the merger cleared through the regulatory authorities,’ she says. ‘Then I spent a couple of years still in the corporate mergers and acquisitions (M&A) team doing post-closing disposables as we had some brands that we were required to sell as a result of the merger and a number of brands that really didn’t fit well with the portfolio.’

Moriarty returned to Ireland just before the millennium to take up a role in the Dublin office. She subsequently took on various European-focused roles, but continued to be heavily involved in many of the company’s biggest M&A deals. These included the 2008 joint venture with the owners of Dutch vodka brand Ketel One and the 2012 acquisition of India’s biggest drinks company, United Spirits in India.

This all paved the way for Moriarty to step up to the general counsel plate in July 2013 after the company’s previous general counsel retired. She says she has spent much of the past six years ensuring that the legal function was following and supporting the same productivity and efficiency trajectory as the rest of the business. ‘I think the biggest challenge for the function, in common with many of the other functions in the business, has been growing and evolving and not necessarily growing in numbers, but evolving to best place us to support and make a valuable contribution to achieving the business goals,’ she says.

‘In the early 2000s, our internal costs and external costs were out of whack with a lot of the benchmarks and we had got into the right phase probably by the time I took over as GC,’ she says. ‘What we've been doing since is actually managing to reduce both internal headcount costs and external costs at the same time as part of our overall business productivity agenda. That has meant that the function and the lawyers themselves have had to be more selective about what they get engaged in and consciously not doing some things, which if you look at closely, don’t necessarily need a lawyer’s involvement.’

Today, from Diageo’s headquarters in London, Moriarty oversees 150 lawyers globally, as well as the corporate security and business integrity functions, spanning the company’s offices across Europe, North America and growing headcounts in Africa, Asia-Pacific, the Caribbean and Latin America. She also took on the role of Company Secretary in August 2018 after the previous occupant resigned.

Moriarty says the decision was a logical move for the business and one that followed in the footsteps of a growing number of other FTSE 100 companies that have opted to combine the two roles. ‘The governance requirements at the Board have become even more technical and legalistic such that it makes more sense to have the GC “double hatting” as it were,’ she says. She believes it is also advantageous that she is now in the boardroom for the entire duration of Board meetings. ‘Whereas before I would have a look at the Board’s agenda and decide which of the agenda items would be most useful for me to attend, now effectively I work with the chairman to manage the Board’s agenda. This does create a lot of efficiencies.’

Navigating the headwinds

As with any business operating in Europe, the implementation of the EU General Data Protection Regulation (GDPR) in May 2018 has thrown up a number of challenges for the legal function. ‘We've always had a data privacy internal capability,’ says Moriarty, but the sheer size and global reach of the company’s business operations has required them to ‘step that up in terms of the number of people supporting the GDPR migration’ to ensure Diageo’s practices are compliant across the board.

Brexit has also been a clear talking point for the drinks maker in recent years. ‘We’ve always said that we will take Brexit in our stride and we have been preparing for a “no-deal” scenario with a cross-functional working group, [which has] been focused on that,’ says Moriarty. ‘We’re in a fortunate position in comparison to other industries because even in the event of a hard Brexit, if the WTO [World Trade Organization] rules were to apply, our exports of spirits from the UK into the EU will continue to be zero-rated for tariff purposes.’

She says the company is somewhat sheltered from some of the issues facing other businesses ahead of Brexit. ‘We don’t have long and complicated supply chains, so we’re not importing parts from Europe into the UK, assembling and then sending products out like the car manufacturing companies are,’ she says. ‘Our supply chains tend to be locally sourced. For example, in Scotland we locally source the barley that goes into the production of Scotch. In Ireland, we locally source the ingredients that go into the production of Guinness and Baileys. In that sense those complexities don’t apply to us.’

Nonetheless, Moriarty stresses that a smooth Brexit process will be vital to securing much-needed certainty for small and medium-sized enterprises (SMEs), which stand to be one of the groups most affected by the UK’s withdrawal from the European Union. ‘Our assessment – and we’ve said this publicly in our annual reports and our analyst and investor meetings – is that we don’t expect the cost to be material for us,’ she says. ‘For the sake of commerce and industry more generally, and in particular for SMEs, the complexity of a hard Brexit for the likes of them would be considerable. A lot of our suppliers are SMEs, so we’re anxious more for others than for ourselves.’

Brexit is not the only trade challenge facing the business. In August, the US government said it was prepared to raise tariffs on a variety of EU goods in retaliation for illegal subsidies granted to European airspace company Airbus in the wake of its long-running dispute with Boeing. In early October, a WTO ruling gave the US the green light to slap 25 per cent tariffs on a number of European consumables. The tariffs will affect a small number of Diageo’s products, including single malt Scotch whiskies and Baileys liqueur. There are concerns this could have an impact on smaller, independent Scotch distillers and pose a risk to industry exports and jobs across Scotland.

Although these tariffs only affect a small part of Diageo’s overall portfolio, Moriarty says the company ‘wouldn’t be immune from a trade war or the impact of tariffs’ and that they are closely monitoring developments in the event that the dispute could escalate further. However, she stresses that the global nature of Diageo’s operations means both her legal team and other parts of the business must always keep a watchful eye on trade developments worldwide: ‘The reality is we do business in 180 countries around the world. There’s a level of volatility that goes on at any point in time in various countries. One of the advantages of being so globally spread is you’re used to dealing with levels of volatility all the time.’

Diverse thinking

Diversity and inclusion has been a strong focus for Diageo for close to a decade. ‘In 2010, we made a conscious decision that we wanted to make sure that our business was reflective of the communities where we produce and buy and sell our brands and also of our consumer base,’ says Moriarty. ‘We decided that we would focus on gender diversity in the business and set ourselves a goal that by 2015, 30 per cent of our leadership population would be female.’

However, she says it was clear by early 2015 that the company was going to fall short of this target. ‘The easy thing to do would have been to just extend the timeline to get to 30 per cent, but we decided that would not be a good outcome,’ she says. Instead, the Board set itself a higher target: that 36 per cent of its senior leadership team would be female by 2020 and this would rise to 40 per cent by 2025. Such progress required significant changes across the company. ‘Every business, every market and every function looked at where it was in 2015 and where it needed to be in 2020 and came up with a multi-year talent plan to move the needle on gender diversity in the business,’ she says.

These concerted efforts have garnered considerable attention. In October, Diageo was ranked the number one business globally for gender equality in Equileap’s 2019 Global Gender Equality Report and Ranking. As well as jumping 11 places in the global rankings since 2018, the company also retained its top spot in the rankings as the UK’s number one business for gender equality for the second consecutive year.

For Moriarty though, the company’s progress in this area is also thanks to its broader focus on inclusion and diversity. ‘We have active networking groups, such as our Rainbow Network and Spirited Women Network, which help develop people’s capabilities and give them confidence that they can be themselves at work,’ she says.

Diageo also announced an enhanced parental leave policy for all UK employees in April 2019. Under the new entitlements, all parents across Diageo’s UK operations are entitled to take up to 52 weeks of parental leave, with the first 26 weeks fully paid. The company has rolled out minimum standards for maternity and paternity leave across its other markets. Moriarty says this has been a game-changer as it has highlighted the company’s drive for equality across the board.

Although Moriarty says the legal function has had a good gender balance for some time, she is keen that the external counsel they work with are similarly focused on diversity issues. Diageo is one of more than 70 UK and European organisations whose general counsel have signed an open letter to work to progress the diversity and inclusion agenda in the law firms with which they work. ‘One of the things that I would observe, particularly when it comes to female lawyers in law firms, is historically it’s been assumed that they’re not necessarily interested in opportunities,’ she says. ‘Women [are also] not necessarily putting themselves forward. Particularly with the long hours culture that continues to prevail in law firms, as well as at banks and financial institutions, women often almost opt out because of the anticipation or genuine caring requirements that they have with family and children. This initiative with the law firms is saying that it doesn’t have to all be about how many overnighters you do and how many weekends you work.’

After more than two decades at Diageo, Moriarty is clearly enjoying her role at the helm of the legal function. In terms of product lines, her favourite tipples are household names like Guinness and Tanqueray and tonic, but it is the variety of legal work and challenges that cross her desk that keep her wanting more. ‘The thing about Diageo is you come probably largely for the brands because that’s all you know,’ she says. ‘You stay partly for the brands, but also for the people. If you said to me 20 years ago that I’d still be there I would have said absolutely not. But the thing about our business it has grown and changed and evolved so much that there are always things to keep you interested and engaged.’