Dunelm : ESG data sheet FY22

Issued: October 2022

Environmental, social and governance (ESG) data sheet FY22

Our approach to ESG disclosures

As we consider many environmental, social and governance (ESG) topics to be integral to our strategy and business model, our most material disclosures, primary metrics, targets and commentary are covered in our audited Annual Report and Accounts 2022 (AR22). This year, we also published a separate Sustainability Report (SR22). This report includes additional sustainability metrics and targets, more detailed data and further examples of initiatives and progress.

These two documents should be the starting point for ESG information gathering, alongside published policies and statements available on our corporate website.

Additional ESG data, which we did not have space to include in these reports, is set out below. Although we do not formally use the World Economic Forum's (WEF) Stakeholder

Capitalism metrics or SASB standards, we have used their frameworks to set out information, as they cover many questions that we are asked - particularly by external ESG rating agencies for benchmarking purposes.

We have also included a catch-all list for other topics/ questions that we hope is helpful. For transparency, we indicate the limited information which we choose not to disclose owing to commercial sensitivity or legal reasons, and explain where our data or definitions differ slightly to suggested disclosures. All information provided relates to FY22 unless stated otherwise. If data has not be updated this year, we have left references to latest published information in our Annual Report and Accounts 2021 (AR21). We aim to update this data sheet annually.

Building sustainability into all that we do

MATERIAL ESG INFORMATION IS PROVIDED IN

OUR ANNUAL REPORT AND ACCOUNTS 2022

i Sustainability section from page 32

Carbon reduction

Circular economy

Community

i Governance from page 82

1. Additional insight, data and case studies are available in our Sustainability Report 2022

Relevant policies and statements can be found on our corporate website, and are hyperlinked from this data sheet

Index

1. World Economic Forum: Measuring Stakeholder Capitalism	3
	- Pillar 1: Principles of Governance	3
	- Pillar 2: Planet	5
	- Pillar 3: People	6
	- Pillar 4: Prosperity	7
2.	SASB standards (now part of IFRS Foundation)	8
	- Multiline and Specialty Retailers & Distributors
3.	Other ESG information	9
4.	Activity metrics	9
5.	Contact	9

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ESG DATA SHEET 2022

WORLD ECONOMIC FORUM: MEASURING STAKEHOLDER CAPITALISM

In the table below, we share ESG information using World Economic Forum's (WEF) stakeholder capitalism pillars and its core and expanded metrics as a framework.

WEF theme

Core/expanded metrics

Notes and references

WORLD ECONOMIC FORUM PILLAR #1 | PRINCIPLES OF GOVERNANCE

Governing purpose	Setting purpose
	(Core)

Purpose-led management (Expanded)

Our purpose was last renewed in July 2021. Our CEO explains how this came about and who was engaged during the process in AR21. In AR22, our CEO talks about how our purpose is used in the business (see inside front cover) and it is referenced throughout the report. Our purpose is linked to our three long-term ambitions, focus areas, shared values and customer proposition as set out in AR22 on page 4 and relates to all stakeholders. Further commentary is in our Corporate governance report in AR22 on pages 88 to 93.

Quality of governing	Governance body	Information about our highest governance body (Dunelm Group plc, registered in England
body	composition	and Wales, number 4708277) and its Committees can be found in our Corporate
	(Core)	governance report in AR22 on pages 82 to 162. ESG focus areas, nationality and gender
		information, significant positions and Board stewardship/membership of relevant industry
		groups are set out in the Directors and officers' biographies in AR22 on pages 84 to 87.
		Information about Board independence is published in these biographies as well as in
		AR22 on pages 87 and 107; Board tenure information is on pages 87 and 119. Our Board
		appointment process in AR22 on pages 114 to 115 explains how we ensure Board members
		have sufficient time to carry out their duties. Our CEO champions our Pathway to Zero
		Steering Group (see AR21 page 33) and our CFO heads up our Carbon reduction working
		group, see SR22 page 6.
	Progress against	Our CEO provides commentary on overall strategic progress during the last financial year
	strategic milestones	in AR22 on pages 16 to 20; progress against our focus areas is also summarised in AR22 on
	(Expanded)	pages 22 to 23. These focus areas include non-financial elements and lead with
		'sustainability'. Progress against sustainability performance indicators, including
		forward-looking targets, is updated annually. Primary metrics can be found in AR22 on
		pages 34 to 35 with commentary on pages 36 to 60. In SR22, additional metrics and
		further insight into performance is shared. ESG indicators (relating to customers,
		colleagues, packaging, take-back services, 'more sustainably' sourced cotton and GHG
		emissions) that are Group KPIs are presented with commentary in AR22 on pages 24 and
		25. Examples of how these contribute to long-term value creation are in AR22 on page 5.
		We are unable to publish forward-looking financial targets as this contravenes UK Listing
		Rules. However, topline FY23 guidance and a summary outlook are provided in FY22
		Preliminary results presentation on slides 17 and 26.
	Remuneration	Group KPIs (including two ESG metrics: colleague satisfaction (eNPS) and customer
	(Expanded)	satisfaction (NPS)) that are linked to Group ambitions and remuneration outcomes are
		indicated in AR22 on pages 24 to 25. Our Remuneration Policy and Implementation
		Report relating to the year ended 2 July 2022 are provided in AR22 on pages 133 to 162.
		Bonus
		eNPS and customer NPS are annual bonus metrics for our CEO and CFO.
		Long-term incentive plan (LTIP)
		Four sustainability targets (related to reducing plastic packaging and Scope 1 emissions
		and increasing the volume of 'more responsibly' sourced cotton and the introduction of
		more customer take-back schemes) are performance targets for the FY23-25 LTIP. These
		are disclosed in more detail in AR22 on page 161.
Stakeholder	Material issues	Topics that are important to key stakeholders, and commentary on why and how we
engagement	impacting	engage with stakeholders, and how we measure our effectiveness, are provided in AR22
	stakeholders	on pages 94 to 105, as part of our s172 Companies Act 2006 disclosure.
	(Core)

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ESG DATA SHEET 2022

WEF theme	Core/expanded metrics	Notes and references
WORLD ECONOMIC FORUM PILLAR #1 | PRINCIPLES OF GOVERNANCE continued
Ethical behaviour	Anti-corruption	Commentary on our approach to anti-corruption,anti-bribery and tax evasion (including
		(Core)	colleague training and scope) is provided in AR22 on page 60; further information is in our
			Anti-Bribery and Anti-Corruption Policy available on our website. Commentary on our
			approach to combat modern slavery in our sites and supply chains is in AR22 on pages
			46 to 47 and our annual Slavery and Human Trafficking statement that is our on corporate
			website. Our use of contractors is minimal (although any that do provide work to us
			complete compulsory compliance training appropriate to their assignment). All suppliers
			and contractors agree to our Ethical Code of Conduct, available on our website, as part of
			their terms and conditions. We use a third party to audit suppliers against this Code and
			provide supplier training, as detailed in AR22 on pages 46 to 47 and page 100.
			There have been no prosecutions or formal sanctions against the Company or any of its
			officers or employees in respect of fraud or corruption by the Company in FY22 (FY21: nil).
		Protected ethics	We provide internal reporting mechanisms for colleagues, as described in AR22 on page
		advice and reporting	98, and encourage the use of these in the first instance. We also provide an independently
		mechanisms	run and anonymous whistleblowing mechanism for colleagues and suppliers as described
		(Core)	in AR22 on pages 60 and 47 respectively, and in our Whistleblowing Policy, available on
			our website. Issues raised are reported monthly to the Board, see AR22 page 98. In FY22,
			we investigated 44 reports made through our independent whistleblowing; no unlawful
			activity was established (see AR22 page 60).
		Alignment of strategies	As we do not normally engage directly in public policy development or lobbying, we have
		and policies to	not developed a strategy in this area. Dunelm is a member of the British Retail Consortium
		lobbying	and other industry bodies, which lobby collectively on behalf of their members. See also
		(Expanded)	our statement under Public policy in AR22 on page 166.
		Monetary losses from	There have been no fines levied against the Company or any of its officers or employees in
		unethical behaviour	FY22 in respect of fraud, insider trading, anti-trust,anti-competitive behaviour, or market
		(Expanded)	manipulation by the Company (FY21: nil).
Risk and opportunity	Integrating risk and	Our principal risks and uncertainties are explained in AR22 on pages 70 to 79; they include
oversight	opportunity into	how our risks have changed over time. Specific commentary on climate change and
		business process	environment risk is on page 76 and on IT systems, data and cyber security risk on page 78.
		(Core)	In our Task Force on Climate-related Financial Disclosures (TCFD) report in AR22 on pages
			61 to 67 we identify risks and opportunities associated with climate change.
		Economic,	Our purpose and ambitions (set out in AR22 on pages 4 and 22, and referenced
		environmental and	throughout the report) are integral to our overall decision-making. Specific examples of
		social topics in capital	how the Dunelm Board evaluated economic, environment and social issues in its
		allocation framework	decision-making in FY22, including capital allocation and colleague pay increases, can be
		(Expanded)	found in AR22 on pages 103 to 105 as part of our s172 Companies Act 2006 disclosure. In
			AR22 on page 94 we explain how decisions requiring a balance of stakeholder interests at
			Board meetings are supported and minuted.

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ESG DATA SHEET 2022

WEF theme	Core/expanded metrics	Notes and references
WORLD ECONOMIC FORUM PILLAR #2 | PLANET
Climate change	Greenhouse gas (GHG)	GHG emissions for FY22 can be found in AR22 on page 37 and our targets are on page 34.
		emissions (Core)	Commentary on progress to date and next steps are in AR22 on pages 36 to 40. GHG
			emissions split by GHG protocol are in SR22 on page 13.
		TCFD implementation	Our TCFD report is in AR22 on pages 61 to 67.
		(Core)
		Paris-aligned GHG	We have Paris-aligned targets to 2030 across our Scope 1, 2 and 3 emissions. Our progress
		emissions targets	to date, including our formal commitment to verifying our science-based targets through
		(Expanded)	the Science Based Targets initiative (SBTi), can be found in AR22 on page 37.
		Impact of GHG	Not currently published. However, as part of the scope of our evolving TCFD reporting we
		emissions (valued	assessed and quantified our major climate-related risks and opportunities against three
		impact) (Expanded)	climate scenarios; see pages 64 to 65 in AR22.
Nature loss	Land use and	In FY21, we evaluated UK sites from which we operate that are in or adjacent to key
		ecological sensitivity	biodiversity areas (KBAs) as reported in AR21 on page 55. The ground floor area of these
		(Core)	12 sites amounted to 2.9 hectares. This exercise was not repeated in FY22 as we are
			embarking upon a new biodiversity strategy; see AR22 page 43.
		Land use and	Our Responsible Cotton Policy and Responsible Timber Policy (available on our website)
		ecological sensitivity	and associated targets (see AR22 page 35) prohibit illegal practices and promote more
		(full supply chain)	sustainable practices. At the end of FY22, around 7% of our timber supply chains (AR22
		(Expanded)	page 35) and 30% of our cotton supply chains (AR22 page 35) met our 'more responsibly'
			sourced standards. Around 90% of palm oil used in Dunelm/Pausa products were certified
			by Roundtable on Sustainable Palm Oil (AR22 page 35 and SR page 21). As a signatory to
			Textiles 2030, we have committed to reducing the water and carbon footprint of new own
			brand products; see AR22 page 44. Own brand cotton products account for over half of
			our own brand product ranges, see AR21 pages 58 to 59.
		Impact of land use and	Not currently evaluated. In AR22 on page 43 we report that we are in the early stages of
		conversion	developing a new biodiversity strategy.
		(Expanded)
Freshwater availability	Water consumption	Based on invoices from our main water supplier, we estimate that we consumed around
		and withdrawal in	130,000 m3 of water in FY22 across all our sites. As at FY21, 31 of our sites were in regions
		water-stressed areas	with high baseline water-stress, according to WRI Aqueduct water risk atlas tool,
		(Core)	representing around 13% of our ground floor area (in hectares). This exercise was not
			repeated in FY22. In SR22 on page 20 we explain that as part of our biodiversity strategy
		Impact of freshwater
		work we have started to map water-related risks in our main timber and cotton sourcing
		consumption and
		regions. As a signatory of Textiles 2030, we have also committed to reducing the water
		withdrawal (Expanded)
			footprint of new own brand products; see AR22 page 44. Our impact is not currently
			evaluated.
Air pollution	Air pollution	We do not measure air pollution, except for refrigerants as part of our Scope 1 emissions
		(measurement)	reporting; see AR22 page 38. We monitor asbestos levels in six stores which contain
		(Expanded)	asbestos materials to ensure that these are within permitted levels. In FY22, over 88% of
			our sites are located outside town centres, with a further 7% on the edge of town centres.
		Impact of air pollution	Not currently evaluated.
		(Expanded)
Water pollution	Nutrients	Not currently evaluated.
		(Expanded)
		Impact of water	Not currently evaluated.
		pollution (Expanded)
Solid waste	Single-use plastics	In FY21 we introduced a Plastics and Packaging Policy, which is available on our website.
		(Expanded)	Commentary on initiatives to reduce plastic are in AR22 on page 45, with further examples
			in SR22 on page 24. Our plastic reduction target in own brand products is one of the
			performance targets for the FY23-25 LTIP and one of four metrics linked to our Revolving
			Credit Facility; see AR22 pages 34 to 35. Other related targets are in SR22 on page 5.
		Impact of solid waste	Not currently evaluated. An analysis of our operational waste streams and initiatives to
		disposal	reduce operational waste can be found in AR22 on page 41, including our commitment to
		(Expanded)	minimising food waste. We generate negligible hazardous waste; see AR22 page 41.
Resource availability	Resource circularity	Promoting 'the circular economy' is one of the main pillars of our Pathway to Zero strategy;
		'the circular economy'	see AR22 page 33. Commentary on product circularity initiatives can be found in AR22 on
		(Expanded)	page 42 and on our expanding take-back services on page 48. Our take-back target (% of
			own brand products for which we offer an easy-to-usetake-back service) is one of the
			performance targets for the FY23-25 LTIP and one of four metrics linked to our Revolving
			Credit Facility; see AR22 pages 34 to 35.

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ESG DATA SHEET 2022