CLIMATE & ENERGY: SCOPE 3 O INTR We’re focused on production and raw materials—the two areas of our supply chain that produce the most emissions. ANET SCOPE 3: OUR VALUE CHAIN To further reduce supplier emissions, we worked PL Most of our emissions occur from production and with a select subset of vendors to roll out an raw materials in our supply chain. We can’t achieve environmental engagement initiative focused our goals alone, which is why we’ve created two exclusively on GHG emissions reduction. strategies for meeting our Science-Based Target: a vendor engagement plan and a raw materials We identified the highest emitting vendors across roadmap, which we’re implementing in 2022. our supply chain, representing 80% of our product and manufacturing emissions, and will continue OPLE PRODUCTION working directly with them to collect better data PE We collect environmental data from our vendors and identify opportunities to reduce emissions. through the Higg Facility Environmental Module MATERIALS (FEM). In 2021, we added Higg FEM scores to our To reduce product emissions, we developed a vendor scorecard, which our teams use to evaluate roadmap (see pages 33-34) to guide teams in vendor performance across multiple criteria and choosing more responsible materials—from make sourcing decisions. We can now track our product design to vendor sourcing. Through vendors’ emissions and environmental impacts as analysis, we identified wool, cotton, polyester and we work towards our Science-Based Target. CDP medium-density fiberboard as our highest impact EMISSIONS EXPLAINED included WSI in its 2021 Supplier Engagement materials. They will be our strategic focus over the Rating LeaderBoard for our engagement with coming years. We’re also addressing emissions PURPOSE suppliers on climate targets. from product use, seeking ways to create more energy efficient, low-impact options for customers. Scope 1 Scope 2 Scope 3 Evaluating a vendor’s emissions is critical to Emissions from burning Emissions from the Emissions generated from T 2021 achieving our Science- fuel for vehicles, heating electricity we purchase our full value chain outside Based Target, so we and generators used in to power our stores, our operations, from farms T REPOR our operations distribution centers to factories to homes C rolled out new vendor and offices A APPENDIX IMP scorecards and engagement programs in 2021. 23 24