UNDERSTANDING ESG RISKS IN OUR COTTON SUPPLY CHAIN Process map Grow Gin Spin Fabricate Manufacture Process steps Planting and growing Separating the Processing cotton lintProcessing cotton Processing finished cotton, harvesting cotton seeds from to remove short fibres, yarn into knitted or cotton into finished seed the cotton fibre align those remaining woven cotton fabric goods, i.e., homewares, and twist to form yarn,which can be dyed to clothing. Can include which may be dyed to produce different dyeing and finishing produce different colours i.e., laundry colours SOURCES OF INHERENT RISK ENVIRONMENTAL Pesticide and Water pollution Water pollution Water consumption fertiliser use (if dyed) (if dyed) Water pollution Water consumption GHG emissions GHG emissions GHG emissions Water pollution Harmful chemicals Harmful chemicals Soil depletion GHG emissions SOCIAL Child labour Child labour Child labour Forced labour Forced labour Forced labour Low incomes for Health and safety Health and safety smallholder farmers Working hours Working hours Health and safety Working hours Minimum wage GOVERNANCE Certification fraud Certification fraud Certification fraud Unauthorised sub-contracting Counterfeiting Increasing visibility OUR APPROACH Through this approach: We are working with Track Record ✓ We understand where our raw ✓ We identify good practices that Global to independently assess our materials come from meet our policy cotton supply chains against our ✓ We identify risks in the ✓ We support Tier 1 suppliers cotton policy. supply chain to continuously improve their sourcing practices TEXTILES 2030 TARGETS – SIGNATORY COMMITMENTS • Reduce the aggregate greenhouse gas footprint of new products by 50%, sufficient to limit global warming to 1.5°C in line with the Paris Agreement on climate change and achieving Net Zero by 2050 at the latest. • Reduce the aggregate water footprint of new products sold by 30%. • Target (to be developed and added in 2022): reduce the amount of virgin textile materials used to meet consumer needs (‘materials intensity’). DUNELM GROUP PLCANNUAL REPORT & ACCOUNTS 2021 59 STRATEGIC REPORT GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATION