·  We have defined a strategy that leverages our brand appeal and global reach across multiple customer segments and regions to mitigate reliance on a particular customer group, however, we recognise the importance of Mainland China and the Chinese consumer for the luxury industry, as explained in the global Chinese consumer spending risk

·  In the short term, we continue to assess shifts occurring in the industry and with customers to ensure our plans are dynamic and responsive to the market

·  We monitor external macroeconomic and regulatory changes and perform horizon scanning supported by insights from the treasury and strategy teams into macroeconomic trends

·  Our steering committee continually monitors the evolving impact of the post-transition trading relationship between the UK and EU, and oversees our approach

·  While the business has experienced some short-term disruption, ongoing mitigation reduced the risk to all business activities, including supply chain, trade compliance, IP and people

·  We engage with UK government departments and other external stakeholders to ensure they are fully informed of our circumstances

·  FY 2020/21 marked the end of the first phase of our strategy, which focused on building the foundations, re-energising the brand, aligning our distribution to our new luxury positioning and establishing a new product offering. In consideration of the challenges posed by the COVID-19 pandemic and impact to luxury, we prioritised building resilience by taking a series of rapid actions across four areas: protecting our people and communities, tightly managing cash and costs, securing our product, inventory and supply chain, and driving revenue as economies rebounded

·  We continued to focus on our strategic priorities, and effectively adapted our plans to capitalise on opportunities as they arose across geographies

·  We continued to strengthen consumers' perception of our brand, investing in brand heat and visibility, signalling luxury through our campaigns and disruptive media experiences

·  We built on positive momentum with our collections, delivering newness and exceptional product, strengthening our position in leather goods, and managing product flows despite supply chain challenges

·  We planned and implemented localised and bespoke plans for each region, and increased our focus on the local consumers, shifting resources as required to focus on growth opportunities in rebounding markets while optimising revenues in markets most affected by the pandemic

·  In digital, we innovated and identified new ways to connect with our customers, especially those who could not visit our stores during the pandemic, strengthening our digital luxury experiences and e-commerce capabilities

·  Our Inspired People initiatives include replacing our annual questionnaire with shorter, more frequent surveys. This has shown a marked increase in the understanding of our strategic goals and transformation plan within the Group

·  Coordinated by the Strategy team, business owners for each pillar have ownership of the plan and responsibility to deliver its objectives. They monitor the risk associated with each of the major programmes and track progress and benefits based on a set of lead indicators in order to assess progress in product, communications, stores and digital channel performance

· Looking ahead, we devised a plan to strengthen our foundations, adapt to the COVID-19 environment, and sustain the momentum we have built for our brand and product. Details of the strategic initiatives forming our plan can be found on pages 24 to 43

·  Training and monitoring of adherence by personnel to the requirements in the Group's Responsible Business Principles

·  Review process in place for any engagements with collaborators, influencers or celebrities

·  Codified incident management policy, monitoring of social networks and response procedures

·  Oversight of mitigation of reputational issues by the Ethics and Risk Committees

·  The Group has established Corporate Responsibility standards, which aim to ensure compliance with labour, human rights, health and safety and environmental standards across our operations and extended supply chain

·  Supplier audits and supplier training programmes are in place to ensure compliance in day-to-day operations

·  Uphold our approval processes and editorial controls to ensure all product and content is reviewed and signed off prior to external release

·  Development of a global Diversity and Inclusion strategy and creation of an Internal Diversity and Inclusion Council to support the implementation of the strategy

·  Increasing awareness of and training with respect to Burberry's Model Wellbeing Policy to all people who engage with models on Burberry's behalf, including employees, freelancers, casting agents, contractors and external third parties to ensure they adhere to the policy

·  Undertaking of marketing risk analysis/risk register and implementation of mitigation

·  Development of due diligence policy in connection with retention of talent and partners

·  Development and execution of Mainland China strategy, including specific product designed for Lunar New Year and additional marketing spend to support growth targets

·  Prior to the outbreak of COVID-19 there had been significant focus on building brand heat in Mainland China. A clear strategy had been set, including building new strategic social partnerships, strategic locations and making customer experiences, storytelling and products more locally relevant. This strategy will continue assuming China continues to rebound from COVID-19

·  Investment in inventory and technology to support Mainland China digital across our own platforms and those of our third-party partner platforms

·  Supporting investment and growth strategies in other global markets to reduce Burberry's exposure to an individual country or group of customers

·  Burberry seeks to hedge anticipated foreign currency transactional cash flows using financial instruments. These are mainly in Burberry's centralised supply chain and wholesale business. Burberry does not hedge intra-group foreign currency transactions at present

·  Burberry monitors the desirability of hedging the net assets of non-pound sterling subsidiaries when translated into pound sterling for reporting purposes. We have only entered into modest transactions for this purpose in the current and previous year

·  Burberry monitors the overall impact of unhedged exchange movements and provides guidance to shareholders if exchange rates move on a quarterly basis

·  Governance provided through a cross-functional Cyber Security Steering Group with Executive membership and sponsorship

·  Continued investment in information security capabilities

·  Improved security for remote working

·  Second line assurance checks reporting on control effectiveness to Executive and IT management through monthly scorecards

·  24/7/365 security monitoring and analytics capability supported by security incident response processes

·  Information Security Advisory function to embed security in new projects and initiatives

·  Security training and awareness and phishing tests rolled out to employees globally with completion monitoring

·  Implementation of solutions to help detect personal and sensitive data loss with improved control over user access management

·  Test responses to cybersecurity incidents through simulations

·  Data Privacy Steering Committee, a cross-functional group to review data controls around existing systems and assess the potential data risks (from both a legal and reputational perspective) associated with new IT, Marketing, Retail and Digital initiatives across Burberry

·  Ongoing collaboration between the Data Protection office, Legal, IT and Information Security functions to ensure policies are adhered to in respect to the appropriate collection, security, storage, retention and deletion of personal data

·  In line with other organisations, Burberry encounters information security incidents from time to time and has policies, processes and technologies in place to detect and respond to these as appropriate

·  Burberry is independently audited against appropriate information security standards with results being submitted to the Risk and Audit Committee

Leadership and culture

·  All line leaders have a leadership objective and Diversity and Inclusion objectives included in their goals. Executive Committee members have overall accountability for attracting and retaining diverse talent and fostering an inclusive culture

·  Values integrated across the colleague life cycle with a focus on moments that matter (for example, onboarding, leadership development programmes, recognition, policies and talent processes)

·  Over the course of this year, we have enhanced our ability to source in-the-moment feedback from our colleagues, with three surveys completed with our new provider, Glint. Results shared with the Board in October 2020 demonstrated that employees remained very engaged, had a strong connection with the brand and were ambassadors for the future of Burberry. Leaders are held accountable for delivering against agreed action plans following the Employee Engagement Survey, with actions led at a central level for pulse surveys

·  Leaders are equipped with regular strategy updates, including talking points on key topics and regular leaders calls for the director-plus population, to engage their teams on our strategic priorities. The annual engagement survey illustrated a positive shift in confidence in leaders from 69% in 2018 to 71% in 2019 and 75% in 2020

·  Leadership Development Programmes were reimagined for the COVID-19 environment. Four cohorts (with 25 colleagues per cohort) participated in the New Manager Development Programme, which was designed to engage and equip people managers across the organisation. The programme is underpinned by Insights Discovery, a self-awareness tool, which enables line leaders to develop their management brand, decision-making preferences and strengths. Our Executive Development Programme has been overhauled and will be re-launched in the first quarter of FY 2021/22

Talent and careers

·  Scaled learning opportunities for all our people through enhanced self-directed digital content

·  Introduced global digital onboarding programme to elevate colleague experience and embed our purpose and values

·  Designed and deployed new Talent Management approach to identify and engage high-potential talent and support succession planning

·  Enhanced the performance management process through refined processes and systems, elevation of support material, and increased communications and leader touchpoints

·  Introduced standardised interview questions to ensure an equitable experience, piloting anonymous screening of CVs, and including diversity data monitoring forms in candidate applications for voluntary and confidential disclosure

Reward and recognition

·  Implemented the 2020 Directors' Remuneration Policy, which received strong shareholder support

·  Simplified our retail commission and incentive schemes to drive consistency and efficiencies, and ultimately business results

·  Introduced a new simplified long-term incentive plan, the Burberry Share Plan (BSP), to drive performance through retention and motivation of key talent

·  Took positive decisions in response to COVID-19, including maintaining base salaries for retail colleagues affected by store closures, adjusting commission and incentive targets and a discretionary payment under the annual bonus plan to approximately 3,500 colleagues below the Board to recognise individual performance and contribution to the business

·  Deployed a reimagined year-end global recognition experience, which brought together all our people to reinforce our values, celebrate our collective achievements and recognise top performers

Diversity and Inclusion and employee relations

·  The launch of a new Global Parental Leave Policy has seen an increase in the amount of paid leave globally for all employees, with all new parents receiving 18 weeks' paid leave and four weeks on reduced hours when they return to work

·  The celebration of global events such as World Mental Health Day, International Women's Day and Black History Month (in the USA and the UK) saw great participation across our global employee population

·  Deployed Diversity and Inclusion strategy and created regional and functional Diversity and Inclusion action plans

·  Deployed global training to embed Diversity and Inclusion agenda. This includes allyship training, which we expect all our people to complete by the end of 2021; mandatory unconscious bias training for all our people; training for all line managers as part of our annual reward review to ensure all reward decisions made by managers are fair and balanced, and specialised training for our Talent Acquisition team to mitigate bias in recruitment

·  Deployed a global Diversity and Inclusion Policy providing clear accountability and behaviours for all employees including contractors and third-party partners

·  Creation of a Diversity and Inclusion calendar to ensure all diversity events globally are captured and celebrated, feeding into our Diversity and Inclusion strategy for building a truly open and inclusive workplace

·  Deployed a diversity monitoring dashboard to monitor our Diversity and Inclusion targets

·  Onboarded a diversity recruiter focused on senior level roles globally

·  All new starters now experience our global Diversity and Inclusion strategy as part of their onboarding process

Wellbeing

·  Launched a new dedicated wellbeing home page on Burberry World to provide information, tools and resources to help our people make small positive changes in their everyday lives and bring their best selves to work

·  Launch of new Mental Health digital learning to develop awareness, identify signals and support the destigmatisation and normalisation of talking about mental health

·  Launched four interactive energy sessions to help our people take responsibility for their own mental and physical health and speak openly about health and wellbeing

·  Provided a selection of health and wellbeing webinars to support employees in their daily lives: "Balancing Work and Life", "Connecting Mind and Body", "Female Health" and "Menopause Health"

·  IT Portfolio Forum in place with Executive representation to support IT investment decisions and oversee delivery of prioritised IT programmes and initiatives

·  IT function has been strengthened with clear alignment between the IT teams, the strategic pillars, business functions and operations

·  Implementation of controls to help maintain the continuity of the Group's IT systems, including business continuity and IT recovery plans, which would be implemented in the event of a major failure

·  A tested Group incident management framework is in place to report, escalate and respond to high-impact events

·  Further evolution of the IT operating model with a newly created Business Systems Platform function to elevate the performance and security of core systems, supported by a business-wide steering community

·  Core "re-platforming" objectives for critical IT systems have been delivered both for Digital and Enterprise Resource Planning, addressing key operational and security risks

·  Elevated focus on "key risks" to support decision-making on operating budgets and investment in line with the financial needs of the organisation relating to the COVID-19 pandemic

·  Adjustment of external technology partner network and refocused delivery in line with current risk appetite and strategic priorities

·  We have policies and procedures in place designed to ensure the health and safety of our employees and to deal with major incidents, including business continuity and disaster recovery

·  The Group continues to evolve its supply chain organisational design to develop its manufacturing base, reducing dependence on key sites and vendors

·  A Group incident management framework is in place to ensure that incidents are reported and managed effectively. Across the Group, our Incident Management Teams managed over 20 incidents in the year. The two longest running events were related to the COVID-19 pandemic and the civil rights marches in the USA. In both cases, teams worked to mitigate the impact on our employees, customers and the business. The remainder of these incidents were localised to fire, flood or weather related issues or interruptions in the regular running of stores, offices and systems

·  Our GIMT and Regional Incident Management Teams all take part in training and incident management exercises involving large parts of the Group, our customers and media relations function. Our plans were tested through actual live events, like the COVID-19 pandemic and union strikes, and were found to be effective

·  Our product suppliers and vendors are subject to a quality control programme, which includes regular site inspections and independent product testing

·  Robust security arrangements are in place across our store network to protect people and products in case of security incidents

·  Business continuity plans are in place for our eight main sites, including our three major distribution centres and our two UK factories. Business continuity plans are being developed for our third factory, Burberry Manifattura in Italy

·  The Group's key IT systems are protected to prevent and minimise any potential interruption. This includes resilient design and the provision of disaster recovery services to continue operating within pre-agreed times in case of a major incident. Our plans as tested during the year were found to be effective

·  Management regularly reviews and manages business continuity and disaster recovery risks, recognising that these plans cannot always ensure the uninterrupted operation of the business, particularly in the short term

·  A comprehensive insurance programme is in place to offset the financial consequences of insured events, including fires, flood, natural catastrophes and product liabilities

·  The Group monitors and seeks to continuously improve processes to gain assurance that its licensees, suppliers, franchisees, distributors and agents comply with the Group's contractual terms and conditions, its ethical and business policies, and relevant legislation

·  Specialist teams at corporate and regional level, supported by third-party specialists where required, are responsible for ensuring the Group's compliance with applicable laws, ethical and business policies and regulations, and that employees are aware of the policies, laws and regulations relevant to their roles

·  Ethical trading, environmental sustainability and community investment matters reported to the Ethics Committee, Risk Committee and the Board

·  Annual independent and internal assurance processes are in place to monitor compliance in a number of key risks, with results reported to our Ethics Committee, Risk Committee and Audit Committee

·  We have an established framework of policies that aim to drive best practice across our direct and indirect operations, including our Responsible Business Principles and Global Environmental Policy. Policies (available on Burberryplc.com) are owned by senior leadership and are issued to supply chain partners and form part of our contractual agreements with supply chain partners. Implementation of these policies is monitored on a regular basis

·  In FY 2020/21 we updated and consolidated our Code of Conduct for our people and thirdparties into one comprehensive document

·  We have established a Data Privacy Steering Committee to oversee compliance with applicable data legislation

·  International tax reform is a key focus of attention with significant developments reported to the Audit Committee

·  We have a wide range of programmes to support the communities we operate in, as well as those of our supply chain and the wider luxury industry. Community programmes focus on tackling educational inequality and building cultural capital, supporting social and economic development in remote communities and fostering community cohesion and employability skills

·  Launch of annual mandatory training to employees and to targeted functions to ensure awareness and compliance with our policies governing anti-bribery and anti-corruption, Market Abuse Regulations, annual conflict declarations, criminal finances, anti-money laundering and privacy

·  Our culture and policies encourage employees to speak up and report any issues without fear of retribution. A global confidential employee helpline is in place in almost all countries where we have retail or corporate locations, and where it is legally permitted. All calls and emails are logged and independently reviewed and followed up. During the year, 158 cases were received and the results and themes are reviewed by the Ethics Committee. No significant issues were identified from these cases during FY 2020/21

·  During FY 2020/21, our Responsibility team provided training on the Modern Slavery Act to 158 members of our internal supply chain, sourcing, internal manufacturing and product teams. We have also focused on raising awareness among our key finished goods vendors

·  In accordance with our Anti-Bribery and Corruption Policy, annual training is required to be performed. This year the annual e-learning module was rolled out to all 2,859 corporate, manufacturing and retail colleagues of manager level and above. The training reached a 99% completion rate. Any incidents or potential areas of concern are investigated by highly experienced investigators in our Asset and Profit Protection team and ABAC risks are covered as part of the scope of Internal Audit reviews. During the year there were no ABAC-related issues

·  The Group's global Brand Protection team is responsible for brand protection efforts globally, online and offline. Where infringements are identified these are addressed through a mixture of criminal, civil and administrative legal action and negotiated settlements

·  Trade marks, copyrights and designs are registered globally across all appropriate categories

·  The Brand Protection team partners closely with the design teams to ensure that our products do not infringe the rights of third parties and to ensure that we have adequate protections in place prior to market entry

·  The team explores new and emerging threats and ways to combat threats

·  The team partners regionally with enforcement agencies and digital platforms to minimise the visibility of counterfeit and infringing products both online and offline

·  We aim to disrupt the flow of counterfeit products by enforcing at source level

·  Brand protection controls have been implemented to safeguard the brand in connection with our commitment to stop destroying unsaleable finished products

Physical Risks

·  Building on our work in FY 2018/19 and FY 2019/20, during FY 2020/21 we developed a quantitative scenario-based analysis of climate-related risks that could impact the value chains of Burberry's key commodities. For more information see pages 133 to 137

·  To understand the key climate-related risks to Burberry, the cross-functional TCFD working group undertook a risk assessment across Burberry's business to identify the key risks and vulnerabilities for our key commodities, both in terms of physical and transitional risks. Multi-hazard risk maps were used to evaluate which hazards (such as drought, heat stress and flooding) and vulnerabilities (including property damage and decreased productivity) had the most material impacts

·  In the short term, we are conducting specific analysis of the acute risk of our locations and operations

·  We developed a quantitative scenario-based analysis of material climate-related risks for the supply chains of Burberry's key commodities. The scenario analysis was based on 2°C and 4°C scenarios, which reflect a "best" and "extreme worst" case, and for which there is sufficient quantity and quality of data available

·  In our own operations and supply chain we continue to use the WWF water risk assessment tool and the Aqueduct Water Risk Atlas to identify current risks, anticipate potential future strains on water resources and understand emerging long-term risks

·  We use our Net-Zero target and science-based targets to focus our efforts in order to address our GHG emissions along our entire value chain (see page 86)

·  We support a number of industry initiatives that address climate change impacts, including the British Retail Consortium's Net Zero commitment, RE100, Ellen MacArthur Foundation's Make Fashion Circular Initiative, New Plastics Economy Global Commitment, UN Fashion Industry Charter for Climate Change, The Fashion Pact, Accounting for Sustainability and SFA

·  We invest in programmes that help to sustain our industry and supplier communities, specifically initiatives that support social economic development in remote communities and promote more sustainable herding practices in the cashmere industry, working with SFA, PUR Projet and Oxfam. In addition, we also support programmes that build employability skills in the circular economy, with partners including Elvis & Kresse and Progetto Quid

·  We have a Regeneration Fund to support nature-based compensation and insetting projects in the supply chain that will reduce the carbon impact of key raw materials our industry depends on, and improve biodiversity and local producer livelihoods

·  We continuously engage and educate employees around the topic of climate change through focused events, strategic communications, volunteering opportunities and through our network of Responsibility Champions

Transitional Risks

·  As part of the quantitative scenario-based analysis of climate-related risks conducted in FY 2020/21, we modelled the impact of transitional risks such as the introduction of mandatory, globally applied carbon taxes

·  Through our memberships with various industry bodies, associations and external assurance partners, we contribute to consultations and keep informed of upcoming environmental legislative changes

·  Environmental sustainability matters are reported to the Sustainability Steering Committee, the Ethics Committee, the Risk Committee and the Board

·  Our longstanding responsibility programmes, coupled with our Responsibility goals, are driving continuous improvements in moving beyond social and environmental compliance

·  We identify and explore scarce resources while also developing alternative materials through research and development. For example, in FY 2020/21 we worked in partnership with HKRITA to develop a system to recycle post-consumer leather goods

·  Our target is for 100% of our products to have more than one positive attribute by 2022

·  We continue to increase our sustainable product mix, by including recycled content, bio-based materials and more sustainable cotton in our collections. During FY 2020/21 we established new raw material sourcing and traceability targets. Full details can be found in the ESG section on pages 60 to 91

·  In FY 2020/21 we expanded our product sustainability messaging to make customers aware of improved sustainability credentials, through the ReBurberry Edit and BConscious label. This includes dedicated sustainability labelling across all key product categories. The labels provide customers with an insight into the industry-leading environment and social credentials of the Burberry programme. The pistachio-coloured sustainability labels indicate how a product meets a range of externally assured stringent criteria. Defined as "positive attributes", these include the amount of organic content or recycled natural fibres used in materials

·  As part of the scenario analysis, we assessed long-term technological trends that could significantly impact our business model

·  Our IT Innovation team is exploring new systems and ways in which sustainability priorities can be supported by advancements in technology

·  We continue to increase our focus on a zero-waste mindset across the business and have a clearly defined waste hierarchy. We have established a waste baseline and are setting targets and KPIs that will cover operational, manufacturing and finished goods waste as well as packaging. Since FY 2018/19 we have publicly committed to not destroy unsaleable finished products

·  Our climate goals are approved by the SBTi. We also advanced our climate change commitments during the year by committing to be Net-Zero by 2040

·  In line with the increased expectations of our stakeholders, we are providing greater transparency in our corporate reporting, as well as participating in a number of ESG investor indices, including the 2020 Dow Jones Sustainability Index and the CDP A List, and achieved Gold Class Distinction in S&P Global's Sustainability Yearbook in 2021