Greenhouse Gas Methodology

REI’s greenhouse gas (GHG) footprints are based on the best practice carbon reporting standards of the Greenhouse Gas Protocol, developed out of a joint partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). The Greenhouse Gas Protocol serves as the foundation for nearly every GHG standard and program in the world.

REI’s carbon footprinting is based on WRI’s GHG Protocol, though there are some variations in our use of WRI emissions factors if we have direct information about our climate impact that is more accurately representative of our footprint.

As a retailer that doesn’t directly burn fossil fuels or own production facilities, we have very few direct (Scope 1) greenhouse gas emissions, and our carbon footprint falls mostly with Scope 2 and Scope 3 indirect emissions. REI includes several significant Scope 3 emissions in our GHG inventory, as we decided that they were material and significant to our business operations. We report significant detail in our accounting of Scope 3 emissions, where the majority of our impact occurs.

In defining the boundaries for a company’s climate footprint, the GHG Protocol methodology differentiates between direct and indirect emissions.

• Direct GHG emissions: emissions from sources that are owned or controlled by the reporting entity, known as Scope 1.
• Indirect GHG emissions: emissions that are a consequence of the activities of the reporting entity, but occur at sources owned or controlled by another entity. The impacts of purchased electricity are known as Scope 2, and other indirect emissions are known as Scope 3.

Scope 1: Direct Emissions

5 percent of REI’s 2008 impact (5,247 tons CO2e):

• Natural gas usage
• Fleet emissions
  • Outdoor School passenger vans
  • Mail and courier vehicles
• Other (estimated 1 percent of emissions)
  • Possible refrigerant leakage from HVAC systems

Our only significant non-CO2 greenhouse gases in our footprint are the possible escapee refrigerants used in our HVAC systems on our facilities. No other Kyoto gases show up in REI’s footprint.

Scope 2: Indirect Emissions from Electricity:

23 percent of REI’s 2007 impact (26,206 tons CO2e):

• Electricity usage

Scope 3:

72 percent of REI’s 2007 impact (80,180 tons CO2e):

• REI Adventures’ customer travel
• Employee commuting
• Product transportation
• Direct fulfillment shipping
• Corporate travel
  • Air travel
  • Rental car
  • Employee mileage

Moving Products

To create our GHG inventory, we claim the carbon impacts for the shipment of goods that we own, or in cases where we schedule and control the transportation. Thus, we take responsibility when a vendor ships products from their location to our distribution centers because we control the method and timing of deliveries. We also include the emissions resulting from sending product by truck from our distribution center to stores, or when we fulfill a direct sales order by shipping a package via a carrier such as UPS. This approach means that REI assumes responsibility for emissions in three areas: goods inbound (from vendors or factories to our distribution centers or stores); intra-company transfers (shipments from our distribution center to our stores, between stores, or from stores back to our distribution centers); and direct fulfillment (Internet and catalog sales shipped directly to customers).

Increases in REI's GHG impacts can result from the growth of our business, such as increasing the number of stores and factories that supply our goods and using additional air transport to fulfill direct next day customer orders. However, the 2007 opening of our distribution center in Bedford, PA—which provides the distribution point for stores east of the Mississippi—will help to reduce total truck miles, resulting in smaller GHG emissions and lower logistical costs.

Goods Inbound

This category has three sub-sections:

Sea shipments. This category primarily includes shipments of REI-brand gear and apparel from overseas factories to U.S. ports and then to our distribution center. We computed the impact of container loads based on the container miles. We then use CO2 per container mile data published by the Clean Cargo Group accounting for the average CO2 impact of all container ships. This is a volume-based calculation.

Truck transportation from vendors to our distribution center is computed by a ton-mile calculation using the vendor location, the distance of the shipment and the freight weight to arrive at a total ton-miles of freight. The CO2 impact per ton-mile is derived from the average values published for "less than truckload" freight shipments consistent with our method in inter-company transfers. Because the average density of our product is less than other shipped goods, we adjust this average value to more accurately represent the CO2 impact of our shipments. Without adjustment, our impact would be significantly lower.

Our product vendors also deliver some product directly to stores, and this occurs via parcel post and “less than truckload” freight shipments. The CO2 impacts have been computed based on total ton-miles of freight multiplied by the average impacts of parcels or average impact of LTL freight.

Goods Outbound

Truck transportation from our distribution centers to our stores is computed by a ton-mile calculation using the distribution center location, the distance of the shipment and the freight weight to arrive at a total ton-miles of freight. The CO2 impact per ton-mile is derived from the average values published for "less than truckload" freight shipments consistent with our method in inter-company transfers. Because the average density of our product is less than other shipped goods, we adjust this average value to more accurately represent the CO2 impact of our shipments. Without adjustment, our impact would be significantly lower.

Intra-Company Transfers

This category is dominated by less-than-truckload freight transportation of goods between our two distribution centers, goods moved between stores, and shipments from our stores back to our distribution centers. These shipments are via common carrier freight services.

Our method of calculation is to measure the total tons of cargo, the number of deliveries and the distance from the distribution center to each store. We use these factors to compute a total freight "ton-miles." To calculate CO2 impact, we use a national average for fuel mileage of truck fleets (7 miles/gallon) and truck hauling weight based on the density of our shipments. Our shipments are less dense than the shipping industry norm, so our factor adjusts for this. Then we apply a standard conversion from diesel fuel gallons to pounds of CO2 (22.2 pounds/gallon), which gives us a CO2 factor per freight ton-mile. We then multiply our total freight ton-miles by this factor to give a reasonable calculation of our CO2 impact.

Direct Fulfillment

This category includes fulfillment of customer orders placed through the REI catalog or through REI.com. The majority of these shipments go through the United Parcel Service (UPS) or other carriers such as FedEx or the U.S. Postal Service. To compute our CO2 impact, we separated shipments between ground and air transportation.

For ground shipments, we assume a delivery directly from our fulfillment centers, to the customer. While this eliminates the possible shipment routes to and from the carrier's logistical system, we think it is a fair representation of the distance traveled. To simplify calculations, we have assumed the average shipping distance is 1342 miles (delivery to Denver). We computed the total CO2 impact based on our average package weight shipped for the average distance and we used the same CO2 factor computed for truck delivery.

For shipments by air, we omitted any ground component because the air impacts are so large that it makes the ground portion negligible. To account for the CO2 per air mile, we used the passenger air travel factor developed by the Climate Neutral Network. However, we adjusted the impact for the average weight of a package compared to a person. This may overstate the impact because cargo transportation is more efficient in terms of pounds per aircraft, but it has the benefit of consistency with our other reported metrics. As our carbon reporting evolves, we continue to seek best practices in carbon footprinting and its methodologies and emissions factors.