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EXECUTIVE RESPONSIBILITY:

Company Secretary

LINK TO FOUNDATIONS:

Smart operations

LINK TO PRINCIPAL RISKS:

Brand damage, climate change

OUR TARGETS:

  • Reduce like-for-like electricity consumption by 5% in FY20.
  • Reduce car fleet emissions by 2% p.a. to FY25.
  • Increase miles per gallon (mpg) by 2% p.a. for vehicles in our Dunelm home delivery fleet by FY21.
  • Achieve 100% diversion from landfill for all operational waste, with 80% to be recycled over the medium term.
  • Measure scope 1, 2 and 3 emissions and set reduction targets which are Paris-aligned in FY21.

OUR ENVIRONMENTAL POLICIES AT A GLANCE

ENERGY USE

Our current policy objective is to reduce energy usage year-on-year. We will be developing long-term energy reduction targets during FY21.

GREENHOUSE GAS EMISSIONS (CO2e)

Our current policy objective is to reduce CO2 usage year-on-year. We will be developing an ambitious long-term target during FY21.

WASTE MANAGEMENT

Our policy is to be fully compliant with all relevant waste legislation and our policy objectives are to:

  • Promote reduction, reuse, rework and recycling, and minimise non-recyclable waste across the business.
  • Reduce use of landfill and other adverse environmental impacts.

OUR COMMITMENT

We are committed to minimising the impact of our business on the environment. When looking at our own operations, the focus areas are reducing energy consumption and carbon (CO2) emissions and reducing waste through recycling and careful waste management.

As part of our approach to climate change, we are measuring our carbon footprint across all of our business operations, including our products, and we will use this to inform how we can take more action to reduce our impact. See further details below:

OUR NEW APPROACH TO CLIMATE CHANGE

Responding to growing demands from our shareholders, colleagues and customers, and consistent with our shared value of long-term thinking, we have appointed Carbon Trust to help us to:

  • Measure our carbon footprint across the whole of our operations and supply chain.
  • Set an ambitious long-term carbon reduction target, that is aligned to the ‘Science-Based Targets Initiative’, and a supporting action plan which integrates carbon reduction into our decision making.
  • Carry out a climate change risk assessment, to understand the risks and opportunities for our business.

This work will be fed into our Customer 1st strategy to help us develop our focus area of ‘making sustainability accessible for all’.

We have also committed to report against the guidelines set by the Task Force for Climate-related Financial Disclosures by the end of FY22.

Our Board, Executive Board and colleagues are excited about how this work will help us to understand how we can reduce our impact on the environment, and promote the global effort to prevent irreversible climate damage.

ENERGY USAGE

ABOUT OUR ENERGY MANAGEMENT

Since 1 April 2019, we have purchased all of our electricity from renewable sources. Dunelm manages energy usage and energy reduction initiatives on a site-by-site basis. ‘Smart’ meters are fitted to electricity and gas supplies and energy consumption is measured frequently with analytics tools available to help identify issues and opportunities to reduce usage. Building Management Systems (BMS), designed to optimise energy use and reduce accidental usage through systemised cut-offs, are fitted as standard across our estate.

Energy consumption is monitored by our Energy Manager in conjunction with a specialist energy partner. We target underperforming sites alongside the implementation of various energy reduction initiatives to maximise energy efficiency, while maintaining a comfortable trading environment for our customers and colleagues.

Electricity forms the majority of our energy usage and carbon emissions. Over the past year we have continued to invest in more energy-efficient LED lighting, and over 98% of our estate (179 out of 183 sites) now have this installed. During the year we completed LED upgrades at our Crewe, Newport, Rugby, Scunthorpe, Barnsley, Rustington, Hull and Shrewsbury stores and across our regional home delivery depots.

UPDATE ON ACTIVITIES 2019/20

Raise awareness of good energy management across the business through internal communications.

Our Energy Manager attended store area meetings resulting in positive engagement with store and area managers, and we will continue to develop this. We were unable to attend all area meetings due to timing clashes and the restrictions of Covid-19.

Our specialist partner completed an assessment under phase 2 of the Energy Savings Opportunity Scheme (ESOS). The majority of the recommendations were ‘housekeeping’ improvements: all of them have been reviewed and are being actioned where appropriate. Others have been fed into the work being carried out by Carbon Trust on our behalf.

Test new technology that will further improve our energy performance by remotely detecting wasted or excessive energy usage.

We had mixed results. A trial to adjust the hours of operation of our heating and cooling in stores made the temperature uncomfortable for our colleagues and customers. A review by our specialist partner of how stores optimised energy usage did not identify any opportunities for improvement. However, we completed upgrades of external sensors during the year to enable us to make accurate LUX readings and so reduce the time when lights are switched on.

 

 

PERFORMANCE AGAINST TARGETS

% REDUCTION IN LIKE-FOR-LIKE ELECTRICITY CONSUMPTION %

72%

Why this measure is important

  • Electricity consumption forms the largest part of the carbon emissions from our own operations.

2019/20 performance

  • In 2020 we reduced like-for-like electricity consumption by 12.8% (2019: 8.2%) against a target reduction of 5%. This was favourably impacted by the closure of our stores from the end of March until mid-May.

    Before our stores closed in March we had achieved a like-for-like electricity reduction of 2.4% against FY19. This was lower than our 5% target, as we chose to heat our stores during extended periods of working in November 2019 and February 2020 to keep our colleagues warm. We also responded to a request from the National Colleague Voice to keep external lighting on later in the evening during the winter to improve the safety of colleagues who leave the building late at night.

WHAT'S NEXT FOR 2020/21

  • Target a 3% reduction in electricity usage v FY19.
  • Participate in the work with Carbon Trust to identify further opportunities to reduce energy usage.

GREENHOUSE GAS (GHG) EMISSIONS (CO2E)

PERFORMANCE AGAINST TARGETS

CO2 emissions tonne CO2e/£1m Group revenue

14.5 tCO2e/£1m

Commentary

  • In 2020 we reduced emissions relative to turnover by 15% (in 2019 by 21%), meeting our directional target to reduce this figure each year.

Why this measure is important

  • Our emissions measure encapsulates our overall commitment to reducing our impact on the environment and helps us focus on waste management and cost reduction.

DELIVERY FLEET – MILES PER GALLON (mpg)

Why this measure is important

  • This forms part of our commitment to reduce the carbon impact from our operations.

2019/20 performance

  • In 2020, the average miles per gallon of the Home Delivery Network improved by 2.6% from 14.9 mpg to 15.3 mpg.

AVERAGE CAR FLEET EMISSIONS CO2g/km

112 CO2G/km

Why this measure is important

  • Our company car fleet, including fitter vans, but excluding vehicles hired on demand, is graded on emissions and we encourage the use of fuel-efficient vehicles in all schemes. Please note that this measure excludes emissions from business-related journeys which are undertaken by colleagues in their own vehicles.

2019/20 performance

  • In FY20 our average emissions were 112 CO2g/km (2019: 110 CO2g/km). We are therefore not currently on track to meet our target to reduce car fleet emissions by 2% per annum to FY25. However, vehicles added to the fleet during FY20 averaged 93 CO2g/km, a significant reduction from those added in the previous year, which averaged 118 CO2g/km. We will encourage this trend to continue, which puts us on track to achieve our target by FY25.

WHAT'S NEXT FOR 2020/21

  • Participate in the work with Carbon Trust to set a long-term carbon target with milestone targets and KPIs, and a programme to deliver this.

 

 

ABOUT OUR GHG (CO2e) MANAGEMENT

The vast majority of our greenhouse gas emissions are generated by our electricity consumption. During the year we purchased all of our electricity from renewable sources, which has a significantly reduced carbon impact, and we intend to continue to do so. Other contributors to our emissions are usage of gas, emissions from our vehicle fleet, and a small element from use of refrigerants.

We have invested in photovoltaic systems (solar power) in five of our stores (Leeds, Dunstable, Bristol, Cambridge and Darlington). These systems replace energy sourced through the national grid with local renewable energy. We continue to monitor performance of these installations to inform future investment decisions as we assess additional sites for solar power generation.

We work with specialist partners to consult on our energy-buying strategy, investments in energy-saving technology and to further focus on reducing our carbon emissions.

UPDATE ON ACTIVITIES 2019/20

  • Continue to reduce CO2 emissions relative to turnover year-on-year. A reduction of Tonne CO2e per £1m Group revenue of 15% was achieved in the year.

    While gas accounts for a smaller part of our energy usage than electricity, during the year as part of our store refit activity, gas-fired heating systems were removed from our Newport store and heating and cooling converted to more energy-efficient electric power. In Crewe we reduced our reliance on gas-fired heating by 50%.
  • Target a 2% year-on-year reduction in emissions from our company car fleet, and increase mileage per gallon achieved across our home delivery fleet.
  • Introduce charging points for electric vehicles in our car parks at support centres and assess certain stores for suitability.

    We agreed to invest in the installation of charging points at our Store Support Centre, and a proposal was being prepared for our Stoke distribution centres. However, the work was delayed due to Covid-19. We intend to complete this work in FY21. We have adopted a flexible working policy for our support centre team and a ‘remote first’ protocol for all of our meetings, which will significantly reduce the number of commuting car journeys made by our colleagues.

  • Continue to review and assess our company car fleet to introduce more zero-emissions and low-emissions options for colleagues.

    We opened up our company car list to include all hybrid and electric cars irrespective of vehicle make, whereas before we were tied to a small number of specific manufacturers; this increased the choice for colleagues.

STREAMLINED ENERGY AND CARBON REPORTING (SECR)

Energy and transport fuel consumed

  FY20
MWh
FY19
MWh
%
change
Purchase of energy 50 57 (11)%
Vehicles on Company business 2 3 (22)%
Vehicles in the Home Delivery Network 12 9 26%
  64 69 (8)%

The principal measures to improve energy efficiency in stores are described above in relation to our electricity consumption. Miles driven by the Home Delivery Network increased by 30% year-on-year as a result in the growth of our home delivery sales, whereas energy usage only increased by 26%. The increase in mileage per gallon (mpg) was achieved through improved driver training and focusing on mpg analysis.nalysis.

Greenhouse gas (GHG) emissions

  FY20
Tonne CO2e
FY19
Tonne CO2e
%
change
Direct emissions (scope 1) 5,800 5,880 (1)%
Indirect emissions (scope 2) 9,510 12,774 (26)%
Total GHG emissions 15,310 18,654 (18)%
Turnover £1,057.9m £1,100.4m  
GHG intensity per £1m turnover 14.5 17.0 (15)%

The reduction in indirect emissions is a result of reduced electricity usage of 12%, and the reduction of UK grid electricity carbon intensity. Increased energy used within the Home Delivery Network as a result of the increase in miles driven has been offset by reduced gas usage in stores and reduced natural gas conversion factors.

WASTE MANAGEMENT

ABOUT OUR WASTE MANAGEMENT

Our approach to recycling and reducing waste generally is to adopt the following prioritisation: Reduce, Re-use, Rework, Recycle.

Last year we set recycling targets and communicated them to our colleagues through site huddles and Company-wide communications. Our partner, Biffa, conducts ten store audits a year and feeds back the results to store managers at their area meetings, with recommended actions. This year we identified the opportunity to improve the disposal of our food waste, and to improve our management of less than perfect stock by selling at a discount, rather than sending it for recycling or disposal.

All operational sites have cardboard balers, and all sites have colour-coded bins to segregate waste for recycling. Our distribution centres in Stoke recover and process our product packaging from our distribution centre and store operations (cardboard and polypropylene) for recycling. We have dry mixed recycling collections from our sites for paper, plastic bottles and cans, which are then sorted and recycled offsite. We also recycle wooden pallets and metal fixtures. All electrical waste is recycled through a WEEE compliant scheme. We also work with over 100 charity partners nationwide to donate ex-display or less-than-perfect quilts and pillows that cannot be sold to customers.

Food waste from our cafes and any remaining waste that is not sorted for recycling within the business is sent offsite for further sorting, and wherever possible is sent to an energy from waste-generation facility.

 

UPDATE ON ACTIVITIES 2019/20

  • Continued to improve recycling performance aiming towards 100% landfill diversion over the medium term.
  • Improved compliance in stores and in our Stoke distribution centres by continuing our in-store training and communications campaigns.
  • Our recycling partner Biffa attended area meetings to highlight opportunities to reduce waste sent to landfill, focusing on better management of food waste, and less-than-perfect stock. This work was interrupted by Covid-19 store closures but will be relaunched in FY21.
  • We set up working groups in our Stoke operations to review waste management opportunities, we will continue this in FY21 and set targets for that site.

WHAT'S NEXT FOR 2020/21

  • Continue to promote sound recycling and waste disposal throughout the Group through education and audit.
  • Identify opportunities to help our customers to recycle their used products, as part of our commitment to help them live more sustainably.

 

 

PERFORMANCE AGAINST TARGETS

% DIVERSION FROM LANDFILL

97%

Why this measure is important

  • It measures our success in diverting waste away from landfill to recycling or more sustainable disposal methods.

2019/20 performance

  • In 2020, we diverted 97% of waste from landfill (2019: 96%) against our FY21 target of achieving 100% landfill diversion.

% OPERATIONAL WASTE RECYCLED

78%

Why this measure is important

  • It measures our success in promoting the circular economy and avoiding landfill.

2019/20 performance

  • In 2020 we recycled 78% of waste (2019: 76%). Our FY21 target is 80%.