REI's Built-In Community Helped the Brand Survive the Covid-19 Crisis—and Become Carbon Neutral

Key insights:The cooperative sold its newly-built headquarters to bolster a strong balance sheet that helped it survive the pandemic. This week, REI Co-op announced that it is set achieve its 14-year commitment that it set for itself back in 2006 to be carbon neutral this year, not an accolade many retailers can make in today’s climate. In tandem, the company unveiled a new plan that goes beyond attaining carbon neutral status, aiming to halve its carbon footprint over the next decade. It’s one of the many initiatives underway at the 82-year-old cooperative, which was founded in 1938 by a group of climbers in Seattle, as it prepares for life after the pandemic. "We see the climate crisis as the biggest existential threat to our business," Eric Artz, REI’s CEO, told Adweek. "We view this as accountability where we close the loop." This work is helping REI to set itself up for the future. With sustainability and purpose-driven marketing proving to be good for business and sales of outdoor equipment increasing, the outdoor goods retailer is well-positioned to take advantage of these important trends during and after the pandemic. REI noted that it was one of the first retailers to measure and report its greenhouse gas emissions, which was in 2006, in line with its long history of involvement in conservation efforts. More recent environmental initiatives include attaining green building certifications by generating its own energy via solar arrays, implementing sustainability standards for its products and investing more than $100 million in the stewardship of outdoor spaces. Its latest efforts include joining Climate Neutral, a nonprofit that seeks to reduce emissions, where brands estimate carbon emissions and then offset them by purchasing carbon credits to remove them from the atmosphere. In this way, REI will hold itself financially accountable for the quarter million ton of carbon it will emit in 2020. “Going forward, we’re embedding the impact of doing business and the cost into our business model,” Artz said. The outdoor retailer also plans to shrink its carbon footprint in regards to the products it sells. It will also invest in projects that pull carbon out of the atmosphere such as planting trees in urban areas, reforestation and active forest management. In fact, REI has committed to planting 1 million trees by 2030 as part of the global 1 Trillion Trees project. A community-based approach It's fitting for the brand to take a community-focused approach. REI is unique among retailers in that not only is it a co-op but is owned by its members; it is the largest store of its kind in the U.S. “Right now, we have almost 20 million members in the co-op that care about the environment and future generations,” Artz said. In fact, 70% of the company’s profits go to members, employees and toward philanthropic giving. That engaged community amplifies the retailer’s message, and perhaps is its most powerful marketing tool, according to Artz. Rather than the use the word marketing, REI likes to think about its outreach in terms of community. A strong balance sheet While the pandemic has posed its challenges, Artz claimed that the retailer was one of the first to close its doors and one of the last to reopen, making the safety of its employees and customers a priority. And though the business took a hit from March through June, July sales have outpaced last year, he said. “We were able to live our values because our balance sheet was strong,” he noted. Since the company sold its new headquarters to Facebook last week for nearly $400 million, it has plenty of capital to invest in environmental initiatives and digital. Artz said the sale of the campus was viewed through a strategic lens, giving the company the opportunity to replenish its savings that were depleted when stores were closed while providing capital to invest the company’s purpose. As bittersweet as it was for REI to sell such an asset, the company was excited to take its learnings from Covid-19 to reimagine work-life, he said. Such a move means more employees will be working from home than before the pandemic but still coming together for certain events or projects when they need to. It also means that REI can cast a wider net for talent as it can hire people across the U.S. without uprooting them from where they are already established.