Greenhouse Gas Methodology

REI's estimated greenhouse gas (GHG) footprints are based on the best practice of 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 footprint is based on WRI's GHG Protocol, though there are some variations in our use of WRI emissions factors; especially when 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) GHG emissions. 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 (where we can) in our accounting of Scope 3 emissions, where the majority of our impact occurs.  We are aware that a material amount of our Scope 3 climate impact is due to the embedded greenhouse gas emissions in the products we sell, and that we don’t have rigorous accounting methods to accurately capture this data.

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

4 percent of REI's 2011 impact (4,490 tons CO2e):

• Natural gas usage
• Fleet emissions
  • Mail and courier vehicles
• Other
  • Refrigerant leakage from HVAC systems

Our only significant non-CO2 greenhouse gases in our footprint are the refrigerants that escape through normal operations used in our HVAC systems in our facilities. No other Kyoto gases show up in REI's footprint.

Scope 2: Indirect Emissions from Electricity

25 percent of REI's 2011 impact (30,084 tons CO2e):

• Electricity usage

Scope 3: Other Indirect Emissions

71 percent of REI's 2011 impact (86,627 tons CO2e):

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

Energy Use (Climate Impact):

Electricity & Natural Gas

Energy consumed by REI's operations, including natural gas and electricity at all owned and leased facilities. We do not include the energy used in third-party facilities, such as vendor factories or catalog printing facilities.

Our burning of natural gas directly converts into CO2 using standard conversion factors.

Electricity we buy from utilities is converted to CO2 by using the latest EPA eGrid emissions factors at the sub-region level. The most current data from eGrid2010 is from calendar year 2007.  Because the eGrid sub-region for western Washington significantly under-represents the CO2 impact of electricity from our utility, we use Washington state reported CO2 figures that more accurately represent our climate impact for this area. We use this methodology because a significant percentage of our overall electricity usage occurs in western Washington (where our headquarters, several stores and one distribution center are located), so without this adjustment we would under-represent our climate impact.

Moving Product:

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 that result from sending product by truck from our distribution centers to our stores, or from fulfilling 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 centers to our stores, between stores, or from stores back to our distribution centers); and direct fulfillment (Internet, 800 number 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 we operate or the factories that supply our goods, and by using additional air transport to fulfill direct next day customer orders.

Goods Inbound:

Truck transportation: Truck transportation from vendors to our distribution centers 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" (LTL) freight shipments consistent with our method for 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.

Direct delivery to our stores: Our product vendors also deliver some product directly to stores, and this occurs via parcel post and LTL freight shipments. The CO2 impacts from these deliveries 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 LTL freight shipments consistent with our method in intercompany 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.

Inter-Company Transfers:

This category is dominated by LTL 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 (seven 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. We then 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.  We also use a similar factor for calculating CO2 from rail freight.

Direct Fulfillment:

This category includes fulfillment of customer orders placed through the REI catalog, 800 number or REI.com. The majority of these shipments go through 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 1,342 miles (delivery to Denver), as this is representative of the average distance. 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 used for measuring corporate air travel. 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 than personal transportation 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.

Moving People:

Corporate Travel & Employee Commuting

To measure the climate impact of corporate travel, we count the impacts of transportation (air flights and rental car usage.) We do not currently include indirect impacts, such as the energy used in the hotel where the employee stays.

For air travel, we use the same conservative emissions factor per passenger mile as we use for our REI Adventures trips. This emissions factor includes a significant multiplier to account for the increased climate-change impacts of radiative forcing, and does not calculate CO2 based on flight segment length, carrier, or class of air travel (economy vs. business or first class). Our calculations are more conservative than most, meaning that they generally overestimate the climate impact compared to other methodologies. We continue to seek rigorous flight and carrier level CO2 factors, so we can more accurately measure our impact as well as shift our business to the most efficient carriers.

For rental cars, we measure the number of rental days booked by REI employees, and use industry averages for average miles per day and fuel mileage for the classes of cars we rent to calculate CO2.

Employee Commuting:

To measure the climate impact of our employees commuting to work in 2011, we combined our employee headcount data with our fifth annual commuting behavior survey. This survey confirms trip distances, work schedules, and commuting behavior. We assume that employees who didn't respond to the survey have the same commuting habits as those who did respond. This can introduce some error into our calculations. To calculate total miles and emissions, the measurements are projected to reflect the entire population at each location, with the exception of our headquarters, where we projected emission factors for each individual department (rather than the campus as a whole).

In order to project the total company emissions, a number of estimates are used to calculate the carbon emissions for retail employees and the Bedford distribution center. In 2011, these estimates were calculated using these guidelines:

1. Our largest facilities (our headquarters, Sumner, Wash. distribution center, Bedford, Pa. distribution center, and Seattle store) were measured directly, and their CO2 output was calculated from employee responses.
2. Other stores with significant public transportation options were assumed to have the same carbon output per employee as Seattle. These include: Berkeley, Portland, Boston, San Francisco, Pittsburgh, and Manhattan.
3. All remaining retail stores were considered to have similar commuting patterns to the Sumner distribution center. In 2007, a distance comparison was done between the average commute to the Sumner distribution center and retail stores. Store commutes were found to be shorter, so carbon emissions were adjusted downward accordingly. Secondly, part-time store employees, on average, work 3.5 days per week compared to 4.1 days per week for part-timers at the distribution center. Again, carbon emissions were adjusted downward to reflect this difference.

Miscellaneous:

A small portion of REI's climate footprint comes from small, but meaningful sources. Miscellaneous emissions include the climate impact of fuel for fleet vehicles and the leakage of refrigerants from our heating, ventilation & cooling (HVAC) systems for our facilities where we control maintenance. These are tracked through invoices, vehicle logs, and bills.