CEO’S MESSAGE OUR ESG STRATEGY DASHBOARD PEOPLE SUPPLY CHAIN ENVIRONMENT TRANSPARENCY REFERENCE TABLES Transportation System Efficiency Measuring the Efficiency of Our Network Understanding Our Vendor Fleets Our global supply chain team seeks strategies and technology solutions to help We have created a global average shipping mile per package KPI to help As we continue to seek alternatives to lower the environmental impact of our increase the efficiency of our transportation operations. We are implementing monitor the efficiency and sustainability of our global supply chain network. As distribution activities, we are also partnering with our transportation providers a number of measures that seek to improve our fuel efficiency and reduce our this becomes an increasingly critical component of our ESG strategy, we are to understand the composition of their fleets and any planned investments they GHG emissions. For example, we are: investigating future uses for this KPI. may have in low carbon vehicles. • Using modeling software to improve the efficiency of our store For the first time in FY21, we assessed the carbon footprint of our global delivery network; outbound transportation network from our distribution centers to stores, and direct to our customers’ homes. Leveraging the transactions that underpin our • Utilizing trailer space more efficiently and shipping trucks and containers global average shipping mile per package KPI calculations, we overlayed fuel once full; consumption estimates based on the transport mode type and the estimated • Increasing the amount of freight we ship within each carrier; efficiency of that transportation mode. In FY21, we estimate these emissions to be 132,460 tons CO 17 • Prioritizing cleaner modes of transportation (e.g., ocean ships using liquified 2e . We endeavor to refine this calculation in future natural gas); years through the inclusion of actual vendor emission factors and expand the in Our Supply Chain • Encouraging the use of fuel-saving strategies and technologies (e.g., our calculations to include additional geographies. trucks frequently run overnight to reduce idling time and pollution); • Seeking carrier partners that are SmartWay certified and make sustainability a priority (95% of outbound loads in FY21); and • Shipping intermodal when available. We are also enhancing our data collection capabilities to better measure results. Localizing Distribution We were pleased to recently announce that we are adding our first west coast distribution center, which will be our second largest facility by volume. Located just outside of Reno, Nevada, the new facility will employee 200 new team members, and will provide closer access to our major shipping ports in California, while serving our western, southwest, and northwest markets across the United States. Ultimately, this investment will enable us to optimize our shipping network, reduce delivery times, and lower GHG emissions as we reduce the distance each of our packages travels. 17 Metric tons of carbon dioxide equivalent. 4343