Burberry is now in its fourth cycle of TCFD disclosures, having decided to get ahead of the game and introduce the measure before it became mandatory. 

“As a company, we have been keen to try and do more than is mandatory in terms of both our strategy and disclosures in this space,” says Aadam Nabi, Burberry’s Manager, Sustainability Finance. “The early work on TCFD was considered as part of Burberry’s wider risk disclosures, with climate change having already been identified as a principal risk.”

Burberry’s climate-related risk scenario analysis and TCFD reporting have evolved significantly since that first cycle. The finance team is now much more involved in the process, with the introduction of scenario analysis and more attention given to quantifying impacts of climate-related risks on the business. The company set up a new sustainability finance team last year to focus more efforts on climate and sustainability-related reporting. 

“It became such a big part of the new reporting framework that it really needed some dedicated finance resource,” says Helen Green, Group Financial Controller at Burberry. “Our 2022 TCFD report was significantly more developed in terms of getting modelling that quantifies our risks. That was pretty much a full-time occupation for some resource in the team, to produce that over a period of months. That made clear the need for some dedicated resource to keep pace with current developments and those coming down the tracks.” 

There is a desire from the top of Burberry to be best in class when it comes to tackling and reporting on climate-related risks. Its outgoing CO and FO, Julie Brown, is also personally driven to make a difference, working closely with Accounting for Sustainability for several years, co-chairing its Leadership network. “That has really instilled a forward-thinking approach in the finance team to look at sustainability as an impact on the business,” says Nabi.

Previously, there were more limited interactions between the finance and corporate responsibility teams. TCFD disclosures have created that link, and the teams now work closely together.

The process introduced different terminology and new ways of thinking to the finance team, says Nabi. “The finance people that were involved in TCFD in the first year didn't really come from a sustainability background or have any in-depth understanding of climate-related risk at all. For example, TCFD is coming from an investor angle. It’s all about the impact of climate-related risk on Burberry, not necessarily thinking in terms of our impact on the climate. Switching that way of thinking was certainly one of the initial challenges.”

The first year was approached almost as a gap analysis; something to demonstrate to stakeholders that Burberry was considering these climate-related factors and intended to work to improve reporting in this area and take decisions to mitigate material risks. While it looked at the four pillars, the information was largely qualitative. 

“Having something to build on is always much easier than having to go from nothing to full disclosure in one go,” says Green. “Part of that was also around getting the internal teams within the organisation comfortable with what we were planning on disclosing. Whenever you're putting out disclosures in an annual report – and especially when you're putting out new information – there's always a need to take people through the requirements, how these have been applied and the assumptions underpinning the disclosures, as well as ensuring that the narrative explanations are clear as to what it really means and how various stakeholder groups will understand it.” 

At this stage, Burberry’s TCFD reporting has more quantitative data and some relatively in-depth analysis, with some specialist third-party assurance. Getting started early created a foundation that has allowed discussions around climate risks to become more comfortable for internal teams, says Green. “That definitely made it an easier journey for us as we moved to having the more advanced level of disclosure that we were able to put out there for March 2022.”

Burberry also worked with a third party to quantify some of its supply chain risks. For example, with its leather supplies, it has mapped out its supply chain and identified its critical climate-related risks. It then developed quantifiable information gradually, initially mapping out those critical risks. Following that, it expanded on its previous work to encompass a wider range of risks within the scenario analysis, looking beyond physical risks to transitional risk. For example, Burberry looked at the impact of consumer preferences and future carbon taxes.

“We took a very stringent approach in terms of the analysis that we did,” says Nabi. “Some of those are quite difficult risks to quantify. There were a number of different experts within the business that we needed to pull into this scenario modelling to get that best insight.” 

Looking to the future, Burberry plans to continue to enhance its TCFD disclosures and is taking steps towards understanding the impact of Taskforce on Nature-related Financial Disclosures (TNFD) reporting as well. It’s a constant learning experience, and a source of great opportunity, says Green. 

“How can we use this rich source of information to identify, scale and prioritise those different risk mitigations and opportunities? For me, further understanding the sensitivities and development in the modelling to consider scenarios with net risks will give rise to richer reporting and much richer insights internally that will help us prioritise actions to mitigate those risks.”

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