For many intrepid outdoor explorers, Recreational Equipment, Inc. (REI) is the go-to place for buying quality, performance clothing and equipment. But does a business with this level of passion for the outdoors really walk the walk, taking into consideration climate change as it structures its operations? The answer is YES.
Embracing the Role of Environmental Steward
As the effects of climate change ripple across the world, businesses face operational challenges grappling with physical effects as well as regulatory impacts. Companies like REI that depend on selling physical products that need to be manufactured, stored, and transported are vulnerable to cost spikes due to climate change. Rising fuel costs, increased emission regulation, and resource scarcity (and associated price hikes) can significantly impact the growth and viability of retail distributors, including REI.
REI was founded in 1938 as a cooperative (co-op), and remains to this day collectively owned by its outdoor enthusiast members. REI positions itself as “dedicated to inspiring, educating and outfitting its members and the community for a lifetime of outdoor adventure and stewardship.” (1) Stewardship is not just an aspiration; stewardship is at the core of REI’s operations. While many firms establish environmental programs as peripheral to core operations, REI VP Alex Thompson sees things differently:
We see sustainability work as an end, in and of itself. If the business can be healthier as a result of that work, that is a very good thing because we get to invest more money back into the outdoors and into our efforts. (2)
REI’s position as a leader in sustainable practices exerts pressure to make continued efforts in the area and constantly reassess its operations — and even more so as the threat of climate change looms.
REI puts emphasis on sustainable practices throughout its organization, in both corporate and in core operations of distribution and retail. REI has placed a strong emphasis on reducing the entire operation’s environmental impact through several initiatives.
Green building has been a core focus area for REI since its first flagship store in Seattle. This is clear in REI’s new distribution center in Goodyear, AZ, which is the first LEED Platinum and Net Zero Energy-designated distribution facility in the United States.(3) The facility features solar panels that provide all electricity for the building, cooling systems that minimize electricity and water use, equipment that shuts off when not actively transporting goods, picking systems that allow for low headcount (reducing demand on building facilities) and reduced lighting needs (since automated machines can operate without lights), and native desert landscaping around the facility that minimizes water use while also boosting employee happiness.(4) This distribution center furthers REI’s position as a leader in sustainable business practices by demonstrating that an operationally efficient and sustainably built facility is possible — an example that extends to other players in the retail distribution industry.(3)
REI has also implemented programs to identify, track, and reduce its greenhouse gas emissions, renewable energy use, waste reduction, and paper usage throughout its operations. Each year, REI produces a stewardship report that details its year-over-year improvements in environmental efficiency.(5) These roll up to internal initiatives to reach climate-neutral, no Freon-based HVAC, and zero waste-to-landfill by 2020.(6)
In addition to operational waste reductions, REI also manages its waste through used gear resale programs. REI’s retail outlets regularly hold Garage Sales to resell returned gear, and REI recently rolled out pilot programs to offer used gear online.(7)
(Natural) Disaster Looms
While many of REI’s initiatives and sustainable practices will protect the business from cost risks relating to regulations and resource scarcity, REI does not appear to address disruption risk due to natural disasters. With a US-based distribution and retail network, REI faces a growing rate of extreme weather events that pose high risk of damaged public infrastructure. In order to respond to these types of events, REI needs to proactively set up contingency plans and disaster management. REI could also explore leaner inventory or establish geographically diversified distribution networks to mitigate local disruptions. Any unmanaged disruption to the supply chain for REI could result in significant impacts to its sales and earnings.
Sustainable as a Sustainability Business?
Overall, REI’s emphasis on environmental responsibility has positioned the co-op as a leader in the realm of climate-conscious business practices. The company has led by example in its operations as well as in its mission, educational programs, and non-profit donations beyond what is discussed here.
However, as REI looks to the future, a few questions remain:
- Can REI continue to grow and expand its business with truly industry-leading sustainable practices? Is the focus on green operations a competitive disadvantage for REI?
- Looking more closely at its carbon-neutral initiative, is REI responsible for offsetting its suppliers’ carbon footprints? Should REI drop products that are not manufactured sustainably? How far does REI’s responsibility extend?
Featured image: REI. 2017. REI Distribution Center. Image. http://newsroom.rei.com/multimedia/photos/rei-distribution-center/.
- “REI Company Overview”. 2017. REI. https://www.rei.com/about-rei/business.html.
- “#Businesscase: REI Proves Values-First Approach Leads To Longevity | Sustainable Brands”. 2017. Sustainablebrands.Com. http://www.sustainablebrands.com/news_and_views/walking_talk/news_deeply/businesscase_rei_proves_values-first_approach_leads_longevit.
- 24/7. 2017. “System Report: Sustainable Distribution At REI – Supply Chain 24/7”. Supplychain247.Com. http://www.supplychain247.com/article/systems_report_sustainable_distribution_at_rei.
- “REI’s Newest Distribution Center Is A Model Of Sustainability – DC Velocity”. 2017. Dcvelocity.Com. http://www.dcvelocity.com/articles/20160822-reis-newest-distribution-center-is-a-model-of-sustainability/.
- “2016 Stewardship Report.” 2017. Rei.Com. https://www.rei.com/stewardship/report/2016.pdf.
- “REI Stewardship Core Practices At REI”. 2017. REI. https://www.rei.com/stewardship/core-practices.
- “Adventure Reincarnation: Outdoor Gear Giants Now Sell Used Goods”. 2017. Sierra Club. https://www.sierraclub.org/sierra/adventure-reincarnation-outdoor-gear-giants-now-sell-used-goods.