Shareprice

Executive responsibility:

Commercial Director

Link to foundations:

Committed suppliers

Link to principal risks:

Brand damage, regulatory and compliance, climate change

Our targets:

  • All own brand cotton products to be from responsibly sourced cotton by 2025.
  • All Dunelm and Pausa own brand products which contain palm oil to be 100% responsibly sourced by the end of FY21.
  • 100% of all timber to be from legally harvested sources by FY20, and 50% of all timber used in Dunelm own brand products to be responsibly sourced by FY25.
  • 30% of all plastic packaging of own brand products to be from recycled content by 2022.
  • 100% of Tier 1 factory base for own brand products to have an audit that is no more than two years old by FY20.
  • 90% low or medium risk factory audits by FY21.

Our commitment

We are committed to helping everyone create a home they love and this includes making it easy and affordable for our customers to shop and live sustainably. To achieve this, we need to understand and improve our environmental, social and governance (ESG) impacts across our supply chains.

Our commitments include reducing our carbon footprint, progressively improving the sustainability of raw materials and packaging, and ensuring that our suppliers (and colleagues) operate in accordance with recognised standards that uphold human rights and safety, and prohibit modern slavery.

ABOUT OUR SUSTAINABLE SUPPLY CHAINS AND PRODUCTS

We need to ensure our products are legal, fit for purpose, sourced ethically and, increasingly, meeting customer demand for higher environmental credentials. We have a pragmatic, risk-based approach, focusing primarily on products which are Dunelm branded or exclusive to us. These ranges account for 80-90% of our revenue and are sourced from around 150 suppliers with approximately 850 manufacturing sites. Gradually, we have extended our overall approach to cover other products such as food and drinks served in our Pausa cafes and third-party warehouses which store our products.

Our focus on ethical sourcing and the prevention of modern slavery extends to all of our suppliers of goods and services, and all suppliers are required to commit to our Code of Conduct (or equivalent policy). Further details are set out in our Ethical Code of Conduct, which is available here, and our most up-to-date modern day slavery statement, which is available here.

COVID-19 IMPACT AND LEARNINGS

Although Covid-19 related restrictions on travel and the closing of operations limited the number of site audits against our Code of Conduct that were carried out during the year, overall our progress was not materially affected. We learned that during the Covid-19 crisis our customers became more mindful about the environment and the sustainability of products, including evaluating ways to ‘make do’, reuse and upcycle, backing up the rationale behind product development ideas that were already in our pipeline.

OUR POLICY

Suppliers have to demonstrate compliance before we onboard them.

  • All sites that manufacture a finished product for a Dunelm brand, including warehouses that hold Dunelm brand products, must have a social and ethical audit.
  • The audit must be under two years old and carried out by an independent approved audit body that is APSCA accredited.
  • Audits must be unannounced or semi-unannounced i.e. within a minimum two week window.
  • All manufacturing sites in Asia must provide a valid structural report or buildings certificate.
  • Vertically shared manufacturing sites are not permitted.
  • Sites with annual turnover less than £25,000 ($35,000) including warehouses may provide an audit or complete a Self-Assessment on the online portal.
  • Failure to obtain and provide an audit or risk assessment will subject the site to inactivation.
  • Failure to notify Dunelm of a new site will lead to a £25,000 fine and loss of profit if goods cannot be sold.

Our Quality Manual sets out our standards including factory approval process, audit requirements, sharps policy and manufacturing standards.

UPDATE ON ACTIVITIES 2019/20

During the year, we developed our sustainability 2021 sourcing roadmap, taking into consideration environmental and social risks. This work helps set product sourcing priorities, standards and aspirations on a risk-assessed basis and covers the following key areas.

PERFORMANCE AGAINST TARGETS

% OF SUSTAINABLY SOURCED PALM OIL IN DUNELM AND PAUSA OWN BRAND PRODUCTS

90%

 

Why this measure is important

  • Palm oil has been and continues to be a major driver of deforestation of some of the world’s most biodiverse forests.

2019/20 performance

  • We increased our compliance to 90% (2019: 80%).

% OF TIER 1 FACTORY BASE (FOR OWN BRAND PRODUCTS) WITH ETHICAL AUDITS LESS THAN TWO YEARS OLD

99%

Why this measure is important

  • This provides an independent assessment of supplier compliance with our policies.

2019/20 performance

  • 99% of factories have a valid audit which is no more than two years old.

% OF FACTORY AUDITS WITH LOW OR MEDIUM RISK RATING

72%

 

Why this measure is important

  • This demonstrates how compliant our factories are with our policies.

2019/20 performance

  • 72% of our factories are graded low or medium risk.

What’s next for 2020/21

  • Introduce more sustainable materials into our product ranges, including more recycled, responsibly sourced and alternative materials.
  • Continue to reduce packaging and work towards our target to increase the recycled content of plastic packaging to 30% by 2022.
  • Help customers live more sustainably by introducing more re-usable, energy-saving and waste saving products alongside providing advice and tools to help them repair and upcycle the products we sell.
  • Grow business with suppliers that meet our ethical and environmental standards.

SUPPLY CHAIN POLICIES

Sustainable sourcing

All suppliers sign our Code of Conduct, which requires them to minimise waste and dispose of it in accordance with legal requirements, reduce packaging to optimise usage/best-fit and improve the recycled content of their products and packaging; and to commit to a strategy of carbon reduction. Suppliers of our own brand products are also required to comply with our cotton, timber and animal welfare policies, available here.

Human rights and modern slavery

Effective management of human rights throughout our supply chain is built into our product procurement procedures. All product suppliers are asked to sign our Code of Conduct, based on the Ethical Trading Initiative (ETI) base code, with a strengthened section on slavery. This requires that suppliers provide a clean and safe work environment, workers must be treated with respect and earn a reasonable wage, and relevant local laws and regulations must be met.

All suppliers of Dunelm branded products must have a satisfactory audit in place which is no more than two years old, and a valid building and fire safety certificate. Supplier branded products are not subject to audits but suppliers sign our Code of Conduct (or equivalent) and an assessment is made of their standards and capability.

We have assessed our own facilities and supply base (products and services) for modern slavery risk and have required the major providers to sign our Code of Conduct. Our statement made pursuant to the Modern Slavery Act 2015, which contains further information, is available here.

Fair and consistent

One of our business principles is to deal with suppliers in an open and honest way. We require all of our suppliers to sign our standard terms and conditions in advance of commencing trade, and we have signed up to the Prompt Payment Code. The average time taken to pay suppliers in the period was 46 days (2019: 45 days), and we consistently pay over 98% of our invoices within agreed terms (2019: 97%).

Our commitment to suppliers during Covid-19

We engaged with our suppliers early on and by 9 April 2020 had agreed our commitments to them, all of which we kept. These included:

  • Ongoing payment (if deferred, by prior agreement only).
  • Honouring range developments due for launch in July 2020 and January 2021.
  • Taking end-of-season stock.
  • Placing orders with them for replenishment as soon as possible.
  • Supporting them with health and safety, financial and banking advice.