As an outdoor gear and apparel retailer and active steward of public lands, the availability of healthy forests is essential for everyone's enjoyment. The paper products we use significantly impact our environmental footprint, including cardboard to ship products, paper in our catalogs, or packaging materials that protect our branded gear and apparel. The connection between healthy forests, outdoor recreation, and the paper fiber we use in our operations is clear.

REI formalized its paper and paper products purchasing policy in 2006. The policy is designed to positively influence our own environmental footprint, the paper supply chain including and beyond our purchasing practices, and align our operations with our values and aspirations. We strongly prefer to purchase paper products manufactured from post-consumer waste or virgin fiber harvested from Forest Stewardship Council (FSC)-certified forests. We work to avoid buying products where the fiber comes from unknown or unwanted sources.

Our goals for 2010 were to increase the percentage of certified and recycled fiber, while continuing to address the unknown and undesirable fiber in some of our cardboard and other operational supplies. Thus, our percentage goals for chain-of-custody and fiber source remained the same as in 2009.

RESULTS

While still the largest contributor to our paper footprint at 50 percent, our direct mail use has decreased to less than 3,300 tons due to our focus on optimizing our catalogs and exploring other means to market our brand such as mobile technology. This is our second straight year of a significant decrease in our direct mail paper use.

During 2010, we far exceeded REI's goal for FSC-certified paper fiber, increasing our total volume to 58.4 percent of our total paper footprint last year from 38.2 percent in 2009. The majority of this paper is used for marketing collateral, such as catalogs, and these sources are printed almost entirely on FSC-certified papers. Our cash resister receipt paper is also now FSC-certified. There remains some challenge to procure FSC-certified paper for some areas of our business operations, such as cardboard.

Areas that continue to present difficulty in meeting our goals to minimize our unknown and undesirable paper fiber procurement include toilet paper and paper towels, and challenges in finding preferred sources of fiber for shipping boxes, including those used by our REI Gear & Apparel brand to ship product from overseas. Our increase in the percentage of unknown and undesirable fiber comes mainly from the increase in our shipping boxes, as well as the reduction of direct mail, which is printed on our most-preferred paper stocks.

Industry collaboration remains a focus of our paper strategy, as well as is an emphasis as part of our product stewardship efforts. In 2010, we hosted a collaborative event in Seattle of our primary paper supplier and their peers to share sustainable paper strategies for the benefit of other companies. By collectively offering our insights and challenges, we are helping each other to become more knowledgeable in our shared interest for responsible paper procurement.

In addition, through our involvement in the Outdoor Industry Association Eco Working Group, we have collaborated with the outdoor industry to optimize the packaging used to ship products. This collaboration has also provided us the opportunity to share our insight from our redesign of Novara-brand bike boxes to decrease paper use and increase efficiencies, as also mentioned in the product transportation section of our 2010 stewardship report.

LOOKING AHEAD

We continue to face challenges in eliminating unknown and undesirable fiber from our operations, despite great success in increasing the amount of certified fiber we use. Besides continuing to optimize our use of operational supplies that come from non-preferred sources, we are finding ways to minimize our purchase of these supplies. For example, we are standardizing the size of the cardboard boxes used to ship our REI-brand Gear & Apparel so that we can recapture these boxes at our retail stores and include them in our cardboard box reuse program between our distribution centers and stores.

As we approach product manufacturing through the sustainability lens, REI is addressing how best to assess the total lifecycle of the paper we purchase, including factors such as the amount of energy used in the paper manufacturing facility, which inks are utilized and how paper is printed.

REI is also working to benchmark REI's paper use using GreenBlue's Environmental Paper Assessment Tool (EPAT). GreenBlue is a non-profit organization that works with businesses to evaluate, select and manufacture environmentally preferable wood and paper products. EPAT provides buyers and sellers of paper products a consistent language and metrics framework to evaluate and select environmentally preferable paper.

REI's ongoing work to minimize packaging will reduce the total amount of cardboard and plastic used for shipping product. New design tools, including palletizing software for optimizing packaging dimensions, will allow us to specifically measure and understand the reductions we achieve.