VIABILITY STATEMENT AND RISK MANAGEMENT In line with regulatory guidance and consideration of the Covid pandemic, the Going Concern and Viability Statement ENVIRONMENTAL, SOCIAL AND in the FY20 annual report was significantly expanded in the GOVERNANCE REPORTING light of the uncertainty caused by the Covid-19 pandemic, and the supporting analysis was increased accordingly. In FY20 it included both a ‘severe but plausible’ downside scenario and Last year the Committee reported on the increased a ‘reverse stress test’. This exercise was considered to provide focus of the Board and management on environmental, a useful level of assurance and was repeated in relation to the social and governance matters, including climate FY21 financial statements. In line with the Group’s most recent change, reflecting the growing importance of these financial plan, and anticipating the BEIS reforms, in FY21 the topics in society. Board reverted to a five-year time horizon for the Viability Statement. At the Committee’s meeting in September 2021, In January 2019 we committed to report in accordance the Committee reviewed the Viability Statement given by the with the Task Force on Climate-related Financial Board in this report and the process in place to support the Disclosures by FY22, aheadof the intrdctioou n o tefh assurance given and confirmed that it is appropriate and in regulatory requirement to do so. We have published compliance with regulatory requirements. This review took an initial short form statement in this Annual Report on into account the principal risks facing the Group, the impact pages 48 to 51. During the year, the Board and Executive of Covid-19 and the process by which they are managed by Board have continued our work with Carbon Trust, to the Board and management and were able to support the model our Scope 1, 2 and 3 carbon emissions, and set adoption by the Board. The Going Concern and Viability a target to reduce our Scope 1 and 2 emissions by 2030 Statement can be found on pages 89 to 91. against a 2019 baseline, which are aligned to science- based targets, and to carry out the first stage of a climate REVIEW OF NARRATIVE REPORTING change risk assessment. This work was circulated to the Last year the narrative sections of the Annual Report Board in advance of its strategy discussions in May 2021 were updated to comply with a number of new reporting and informed the debates on our 2030 ambitions and requirements, including the first report against the 2018 sustainability targets and the five-year plan. It was also Corporate Governance Code, an enhanced statement of incorporated into the review of principal risks by the how the Board has complied with s172 Companies Act, and Committee and the Board in September 2021. the inclusion of theCEO pay ratio. This year, the Committee In September 2021, the Board has approved our 2030 reviewed the enhancements made to the corporate target to reduce Scope 3 emissions. In FY22, the Board governance disclosures and other parts of the annual report will oversee development of the climate change risk to address the findings of the Financial Reporting Council assessment and ensure that processes are in place to (FRC) in its Annual Review of Financial Reporting issued deliver the targets and measure progress. This work will in November 2020, its Review of Corporate Governance be reviewed by the Committee throughout the year. Reporting issued in November 2020, its updated guidance on The Committee has also reviewed the Group’s Corporate Governance and Reporting issued in December environmental, social and governance (ESG) reporting 2020, and its Year End letter to CEOs, CFOs and Audit as a whole against the recommendations of the World Committee Chairs. As a result of this review, a number Economic Forum (WEF) in its ‘Measuring Stakeholde of improvements have been made to the disclosures in r this report, including those which relate to the Corporate Capitalism’ paper issued in September 2020, against Governance Code, s172 Companies Act, the Viability the relevant parts of the guidance issued by the Value Statement and alternative performance measures (APMs). Reporting Foundation (formerly the Sustainability Accounting Standards Board) (SASB), and alongside information scrutinised by the largest of our ESG investment ratings agencies. The Committee considered management’s proposals to enhance our disclosures in this and the FY22 annual reports to include relevant narrative and associated KPIs, and the outcome is reflected throughout this report, particularly in the Sustainability section. TheKPIs and assurance provided in support were also reviewed by the Committee. References to data required in these guidelines will be made available in ESG data sheets on our corporate website. DUNELM GROUP PLC ANNUAL REPORT & ACCOUNTS 2021 133 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTSOTHER INFORMATION