Greenhouse Gas Emissions

There is substantial evidence that greenhouse gas (GHG) emissions are the root cause of global warming. Global warming is a clear threat to the natural environment and, as a result, a direct threat to our continued success. The core human-powered outdoor activities supported by REI's business and popular recreational destinations are at risk as climate change accelerates.

In 2008, record oil prices had an impact on almost all of our business operations. However, with these challenges came opportunity. Looking at our business activities through the lens of climate impact allows us to see strategic opportunities for our business that we otherwise might have missed if we hadn't understood these connections.

At REI, we actively reduce our contributions to climate change by identifying the GHGs generated throughout our operations and finding sustainable business solutions to dramatically reduce and eventually neutralize these GHGs.

In 2008, we conducted our third annual greenhouse gas inventory. We identified and measured the following sources throughout our operations:

These sources can mostly be grouped into three activities of REI's operations:

• Using energy
  • Electricity and natural gas
• Moving people
  • Impacts from customers on REI Adventures trips
  • Employee commuting
  • Employee travel
• Moving product
  • Logistics to move product around the world and country
  • Direct shipment of packages to our customers

Our greenhouse gas footprint is based on the methodology of the Greenhouse Gas Protocol, a joint project of the World Resources Institute (WRI) and the World Business Council for Sustainable Development. Our footprint includes the direct and indirect impact of our operations, including product transportation (WRI scope I, II and III). We know that product impacts are also important contributors to our environmental impacts and we are addressing the product supply chain. The details of how we measure our environmental impacts can be found in the methodology appendix.

The following section details our overall work on climate change, and individual sections give specific information about the major components of our greenhouse gas footprint.

REI's Sources of Greenhouse Gas Emissions

It is useful to understand two terms we use to refer to climate change at REI. "Greenhouse gas footprint" is the total amount of greenhouse gases that REI is responsible for converted into the equivalent amount of carbon dioxide. Our "climate impact" is the net contribution REI has on climate change, after our carbon offsets are subtracted.

Highlights

In 2006, we communicated our long-term goal to be a climate-neutral company. Since that time we have taken action to reduce our climate impact, add business value to REI, and make our business stronger and more stable by hedging against future high costs of fossil fuels.

Using 2006 as our baseline, when we had the equivalent climate impact of over 90,000 tons of CO2, we set an intermediate target to lower our total emissions to 60,400 tons (one-third less than our 2006 emissions) by 2009. Had we allowed our emissions to grow without putting carbon reduction efforts in place, we would expect to generate 150,000 tons of CO2 equivalent climate impact by 2009.

Through some successes between 2006 and 2008, we significantly slowed the growth of our footprint and brought our climate impact close to our upcoming 2009 goal, all while growing our business at a responsible rate.

Our successes have included seeking financially stable sources of renewable energy, including generating our own energy through solar power, finding ways to minimize the carbon impact of transporting goods through less carbon-intensive shipping methods, and in one case, purchasing carbon offsets when no other options were available. These efforts reduced our climate impact to the equivalent of releasing 73,876 tons of CO2 into the atmosphere.

2008 showed us very clearly the connection between climate impact in our business operations and the volatility of fossil fuel prices. We also learned that our lines of business that were most ahead of managing their CO2 impact avoided what would have been even larger fuel surcharges and unbudgeted costs by proactively implementing efficiency solutions ahead of time.

Challenges

Despite our successes, in 2008 our greenhouse gas footprint grew by 11 percent (from 100,820 tons in 2007 to 111,635 tons in 2008). This increase was primarily caused by the continued growth of the co-op, which included opening nine stores. We have reduced the rate of increase, but we have not completely decoupled our growth from an increasing climate impact. A significant impact in 2008 was the first full year of operation for our Bedford, PA distribution center. Although Bedford was built to be energy efficient (see the green building, this new facility did add 525,000 square feet (over 13 percent) to our overall building footprint, which contributed to the increase in our total energy usage.

Though we aggressively pursued long-term greenhouse gas reduction strategies, we were still faced with short-term challenges. Several segments of our greenhouse gas footprint are coupled to business volume. In these cases more business does—for now—directly increase our climate impact (such as product transportation and air travel. Looking closely at our 2009 goal of reducing emissions by one-third below 2006 levels, we have had significant success, but we see some clear challenges and may fall short of our goal.

Additionally, the wide swings in the costs of fossil fuels presented challenges in our business planning. As fossil fuels become more volatile in their price, the need for cost stability goes up. However, the increased volatility also makes it harder to financially model returns from investing in progressive projects like renewable energy.

Looking Forward

Because climate change poses such a significant impact, finding business-savvy solutions to how we operate our business will continue to be an essential component of REI's stewardship efforts. Even with the challenges we face in the short-term to achieve our 2009 goal, we are striving to be a climate neutral company by 2020. The next set of successes will require creative solutions that we haven't discovered yet—but holding ourselves accountable to this goal will drive us toward the right business solutions that also minimize our environmental impact.