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REI: Pioneering Sustainable Practices in the Outdoor Industry

Updated: Apr 27

REI's Good and Used Campaign

Founded in 1938 and headquartered in Seattle, WA, Recreational Equipment, Inc. (REI) is a well-known American retail and outdoor recreation services company, operating 181 retail stores across 41 states and Washington D.C. It operates as a national retail cooperative (co-op) famous for its outdoor apparel and equipment. As a co-op that means it’s a privately held company without shareholders.  Anyone can become a member with a lifetime membership fee of only $30. The co-op ended 2022 by adding 1.3 million new members bringing it to over 23 million members total.

Kate Wendt, former Vice President of Strategy, Transformation and Sustainability

Because the co-op consists of individuals, much, if not all, of the business priorities, are driven by member priorities on the outdoors. As a result, REI maintains a strong focus on more than just offering superior goods and services for mountain climbing, camping, and other outdoor activities.  That customer focus also motivates REI to demonstrate a strong commitment to sustainability and environmental stewardship.  "Climate change is an existential threat to life outside. We do not have the luxury to dismiss it as a political issue; it's a human issue," said Kate Wendt, former Vice President of Strategy, Transformation and Sustainability. "As a member-owned outdoor cooperative, it's critical to use our business and voice to fight collectively for the long-term health of the planet and our community. By working with communities and utilities across the U.S. to ensure that renewable energy is more local and more accessible, we're maximizing our impact and removing the barriers to access faced by small businesses and communities."  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.  In 2023, Wendt added that “we’ll be working on simplifying the process of sourcing renewable electricity for everyone so we can accelerate the transition to clean energy.” 

Eric Artz, CEO

In a 2019 letter to the members positioning REI as the leader of the fight for life outdoors, CEO Eric Artz, noted -  “The co-op has been around for an amazing 81 years and it’s my privilege, as REI’s eighth CEO, to serve you and our 13,000 employees. My job is to steward the co-op, and the outdoors, on your behalf—and on behalf of the generations who follow us. Today, that future is at risk. We are in the throes of an environmental crisis that threatens not only the next 81 years of the co-op, but the incredible outdoor places that we love. Climate change is the greatest existential threat facing our co-op. I believe we do not have the luxury of calling climate change a political issue. This is a human issue. And we must act now.  By anyone else’s measure, REI has been a leader in sustainability for decades. We source 100 percent green energy for all our operations, we’ve been advancing toward a zero-waste goal for years and we’ve pushed the outdoor industry to dramatically raise the bar on product sustainability through first-of-their-kind product sustainability standards. But it’s not good enough.

When it comes to putting Artz’s commitment and member motivations into action for renewable energy, REI uses the following strategy to address it’s scope 2 emissions.  The co-op seeks to power its stores and distribution centers using 100% renewable electricity in its operations by:

  • Using less energy through smart building design and energy-efficiency measures;

  • Generating our own energy (e.g., rooftop solar panels);

  • Contracting directly with utilities for long-term renewable energy;

  • Increasing accessibility to renewable energy transactions by supporting transaction types with flexibility to accommodate small- and medium-sized buyers; and

  • Where needed, committing to purchasing Green-e® certified renewable energy certificates for the remainder of our energy from the grid.

This strategy is based on the co-op’s desire to reach the following goals:  

  • In the near-term, REI has committed to reducing the absolute scope 1, 2 and 3 greenhouse gas (GHG) emissions 47% by 2030 from a 2019 base year, while further committing 41% of suppliers by emissions will have science-based targets by 2025.

  • In the long-term, REI has committed to reduce absolute scopes 1, 2, and 3 GHG emissions 90% by 2050 from a 2019 base year.

  • Overall, REI has committed to reach net-zero GHG emissions across its value chain by 2050.

REI’s current Impact Summary Scorecard reveals that it consumed 63,357 MWh of electricity in 2022. That year also marked the 10th year in a row that REI powered its operations with 100% renewable electricity. They achieved this through a combination of onsite solar generation, utility green tariffs, and renewable energy certificates (RECs).  In terms of RECs specifically, REI purchased 63,357 MWhs of RECs to account for the grid power consumed from utilities. The RECs were generated from wind and solar projects in the SPNO and MROW eGRID subregions (for its U.S. operations) and China (for an international office in Shenzhen, China).  In 2023 REI expanded on its renewable electricity procurement strategy by supporting a new off-site solar power system development in Texas which will supply an estimated 2,500 MWhs annually to fully meet the power needs of six REI’s retail units in the Houston and Dallas area.

Jay Creech, Renewable Energy Manager

The company explained the need for this approach as follows - “As demand for clean energy has grown, small businesses and communities have been priced out of the most common way organizations are achieving clean energy goals. Those goals are often met by purchasing renewable energy certificates (RECs) through a competitive marketplace. RECs offer buyers credit for the same amount of renewable energy produced in any location and fed to the power grid, not necessarily new renewable energy produced in the local area where it is ultimately used. While RECs can serve as a great starting point, committing to locally generated renewable electricity encourages new clean energy development and ensures that new solar and wind power is built to power local communities at an attainable cost.  But Wendt went further explaining that “renewable energy purchases are increasingly complex, require high volume purchases and long-term agreements that aren’t possible for most small businesses to commit to. Not every customer can buy renewable energy at the scale of a national retailer. That’s why we’re pioneering new models and working with the Clean Energy Buyer’s Association to make renewable energy more accessible to everyone.”   In a 2023 interview with Clean Energy Buyer’s Institute, Jay Creech, REI’s Renewable Energy Manager, noted - “there are real costs and challenges associated with identifying and transacting impactful carbon-free energy. Some of the biggest barriers that come to mind are high megawatt hour (MWH) volume, long-term length, and legal and financial complexity. Not every company, including REI, can transact in multiple (or even one) 100,000+ MWH/year virtual power purchase agreement (VPPA)-style agreement that requires dedicated outside counsel, risk management, and financial tracking as monthly settlement prices are determined.

However, that doesn’t mean that there aren’t interested companies with resources and teams that want to procure impactful renewable energy. So much of the REI team’s focus is on how to increase accessibility, both as a reflection of the challenges we’ve faced transacting in this space, as well as the broader reflection that we’re a member-owned cooperative and that we want to live by our words that “we go further, together” and want to support as many buyers as possible to enter this space.”

REI’s effort to innovate does not stop there.  In 2023 REI announced a partnership to procure renewable energy for its suppliers as they also work to reduce their emissions across operations. The co-op signed a three-year clean energy agreement alongside Nester Hosiery, one of REI's largest manufacturers of socks to purchase clean energy to make Nester’s electricity consumption 100% renewable. The agreement provides REI and Nester Hosiery with over 11,000 RECs per year, all sourced from recently built solar in North Carolina. This partnership followed REI’s first ever approach in 2022 to purchase and retire RECs on behalf of manufacturing partners in Asia. In that case the RECs, from rooftop solar and large-scale solar farms in Vietnam and Indonesia, addressed electricity-related emissions from manufacturing REI products in those two countries, resulting in a 6% emissions reduction for co-op products. REI collaborated with each supplier throughout the process to ensure accurate accounting and retirement of the environmental attributes.

ARECS: The Benefits Of Using RECs With Additionality

REI’s hunger for creativity and innovation when it comes to procuring highly impactful renewable energy that helps speed up the grid’s transition to renewables obviously won’t change. Including RECs with additionality would support that hunger on both their scope 2 and scope 3 goals.  As already noted by Wendt and Creech, procuring highly impactful renewable energy is complex, requires high-volume purchases with long-term agreements, and comes with associated legal, financial, and business costs that aren’t always apparent in the price of a virtual power purchase agreement or power purchase agreement (VPPA/PPA).  These things present obstacles to many well-meaning companies seeking to do their part as they aim to accelerate the transition of the grid to renewable energy.  Purchasing RECs with additionality (fixed price forward agreements for the RECs from new renewable energy projects yet to be built) would help mitigate the complexity and costs associated with VPPAs/PPAs for companies like REI and their suppliers. Moreover, when compared to using traditional unbundled RECs from existing renewable energy projects, using RECs with additionality would allow REI and their suppliers to make a more impactful marketing claim for sustainability purposes.  That’s because it would demonstrate a more direct contribution to future renewable energy development. 

In conclusion, REI's commitment to sustainability and renewable energy is commendable. The company's achievement of 100% renewable electricity procurement since 2013 is a significant milestone, and its continued commitment to hit this target is laudable. REI has demonstrated clear leadership in both the outdoor and retail space when it comes to renewable energy procurement. Through a combination of on-site solar projects and the purchase of renewable energy certificates, REI has successfully reduced its scope 2 emissions to zero and it's helping its supplier network do the same. However, the company would further enhance its impact by incorporating RECs with additionality into both its strategies for scope 2 and scope 3 emissions reduction, accelerating the grid's transition to renewable energy, mitigating long-term costs, and providing a more robust foundation for sustainable growth.


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