Climate Change Data

American Eagle Outfitters, Inc.

Climate Impact & Sustainability Data (2021, 2021-02 to 2022-01, 2022)

Reporting Period: 2021

Environmental Metrics

Scope 1 Emissions:9,248 tCO2e
Scope 2 Emissions:40,231 tCO2e
Scope 3 Emissions:3,663,900 tCO2e
Renewable Energy Share:26%

ESG Focus Areas

  • Planet (Environment)
  • People (Social)
  • Practices (Governance)

Environmental Achievements

  • Reduced water usage per jean by 36%, meeting the goal 2 years early
  • Recycled 45% of water in denim factories
  • 95% of AE jeans are Real Good
  • More than 50% of AE and Aerie styles are Real Good
  • Increased the amount of renewable energy in our operations to 26% of total energy used.
  • 3.5 billion gallons of water saved by jeans factories since 2017

Social Achievements

  • AEO Foundation and corporate giving exceeded $15 million in 2021
  • Launched the $5 million AEO Steven A. Davis Scholarship for Social Justice
  • 40 million meals donated to Feeding America over the last two years
  • Increased hiring rates and representation of Persons of Color across each of its business units
  • Full-time voluntary turnover rate of approximately 30%
  • Full-time promotion rate of approximately 28%

Governance Achievements

  • Established Board and Committee oversight of ESG initiatives
  • 88% of the Board of Directors are independent
  • 50% of the Board of Directors are diverse, defined by gender and/or ethnicity
  • 47% of executive leaders identify as female

Climate Goals & Targets

Long-term Goals:
  • Reduce carbon emissions 60% by 2040
Medium-term Goals:
  • Achieve carbon neutrality across owned or operated facilities by 2030
  • Reduce carbon emissions 40% by 2030
  • Contribute 100,000 hours of service by AEO associates to local communities by 2030
Short-term Goals:
  • Reduce water use per jean by 30% by 2023
  • Recycle 50% of total water used in denim laundries by 2023
  • Apply AEO Wastewater Management Standard to 100% of strategic water-intensive factories, mills and laundries by 2023
  • Use 100% sustainably sourced cotton by 2023
  • Use 50% sustainable polyester by 2023
  • Ensure 100% of viscose is from non-endangered forests by 2023
  • Convert all labels to sustainably sourced materials by 2023

Environmental Challenges

  • Supply chain disruptions due to COVID-19
  • Reducing emissions across the supply chain
Mitigation Strategies
  • Developed alternative sourcing strategies
  • Collecting metrics on supplier energy performance via the SAC’s Higg Facility Environmental Module
  • Joining the United Nations Fashion Industry Charter for Climate Action
  • Launching the AEO Carbon Leadership (CLP) Program

Supply Chain Management

Supplier Audits: 85% of active factories in 2021

Responsible Procurement
  • Code of Conduct
  • AEO Wastewater Management Standard
  • Water Leadership Program
  • Restricted Substance List (RSL)
  • Forced Labor and Migrant Worker Policy
  • Global Fire and Building Safety guideline

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: SASB Apparel, Accessories & Footwear Standard, Greenhouse Gas Protocol Corporate Accounting and Reporting Standard

Third-party Assurance: Ruby Canyon Environmental, Inc (RCE)

Sustainable Products & Innovation

  • Real Good product line

Reporting Period: 2021-02 to 2022-01

Environmental Metrics

Scope 1 Emissions:9248 tCO2e/year
Scope 2 Emissions:40231 tCO2e/year
Scope 3 Emissions:1067000 + 15000 + 11000 + 174500 + 29000 + 1000 + 23600 + 3800 + 2171000 + 157000 + 11000 = 3701600 tCO2e/year
Renewable Energy Share:26%
Total Energy Consumption:190582 MWh/year
Carbon Intensity:0.00001 tCO2e/USD revenue, 0.005036 tCO2e/sq ft

ESG Focus Areas

  • Climate Change
  • Water Reduction
  • Energy Reduction
  • Sustainable Raw Materials

Environmental Achievements

  • Increased renewable energy share to 26%
  • 21% decrease in water usage in products from suppliers participating in the Water Leadership program
  • Decreased average emission factor per raw material due to increased recycled polyester and nylon fabrics

Social Achievements

  • Launched AEO Water Leadership Program, decreasing water used per jean by 36% and increasing water recycling to 44%
  • Launched AEO Carbon Leadership Program for strategic factories representing 80% of procurement volume

Governance Achievements

  • Board-level oversight of sustainability issues, including climate-related issues, undertaken by the Nominating, Governance and Corporate Social Responsibility Committee

Climate Goals & Targets

Long-term Goals:
  • Reduce Scope 3 emissions by 60% by 2040 (Science-Based Target)
Medium-term Goals:
  • Achieve 100% renewable electricity by 2030 (RE100 goal)
  • Reduce Scope 3 emissions by 40% by 2030 (Science-Based Target)
  • Develop a formal transition plan aligned with a 1.5°C world within two years
Short-term Goals:
  • Investigating on-site solar generation at distribution centers
  • Expanding AEO Carbon Leadership Program to more suppliers

Environmental Challenges

  • Increased cost of raw materials due to climate change
  • Changing customer behavior and increased preference for brands addressing climate impacts
  • Potential stigmatization of the apparel sector
  • Increased upstream transportation costs
  • Scope 3 emissions increase due to business growth
Mitigation Strategies
  • Transitioning to more sustainable raw materials (recycled polyester, nylon, sustainable cotton)
  • Setting ambitious science-based targets aligned with a 1.5°C scenario
  • Expanding the 'Real Good' program to offer more sustainable products
  • Transitioning inbound transportation to ocean freight and reducing split shipments
  • Implementing AEO Carbon Leadership Program to encourage supplier emission reductions

Supply Chain Management

Supplier Audits: 38% of suppliers by number, 58% by total procurement spend

Responsible Procurement
  • Higg FEM data collection
  • AEO Water and Carbon Leadership Program
  • AEO Carbon Leadership Program
  • Apparel Impact Institute (AII) programs

Climate-Related Risks & Opportunities

Physical Risks
  • Acute physical risks not yet evaluated
  • Chronic physical risks not yet evaluated
Transition Risks
  • Increased cost of raw materials
  • Changing customer behavior
  • Reputation risks
Opportunities
  • Reduced energy costs through renewable energy
  • Increased revenue from sustainable product offerings
  • Reduced transportation costs through efficient logistics
  • Reduced raw material costs through efficient water usage

Reporting Standards

Frameworks Used: Science Based Targets initiative (SBTi), Greenhouse Gas Protocol, RE100, UNFCCC's Fashion Industry Charter for Climate Action

Certifications: LEED (for some facilities), Green-e (for RECs)

Third-party Assurance: Third-party limited assurance for Scope 1 and Scope 2 emissions

UN Sustainable Development Goals

  • Goal 7 (Affordable and Clean Energy)
  • Goal 12 (Responsible Consumption and Production)
  • Goal 13 (Climate Action)

Initiatives contribute to these goals through renewable energy sourcing, emission reduction targets, and sustainable product development.

Sustainable Products & Innovation

  • 'Real Good' products made from recycled fibers and sustainably produced materials

Reporting Period: 2022

Environmental Metrics

Total Carbon Emissions:57,819 tCO2e/year (Scope 1 & 2)
Scope 1 Emissions:12,343 tCO2e/year
Scope 2 Emissions:45,476 tCO2e/year
Scope 3 Emissions:3,510,658 tCO2e/year
Renewable Energy Share:23% of total energy use
Total Energy Consumption:206,570,708 kWh/year
Water Consumption:Not disclosed
Waste Generated:Not disclosed
Carbon Intensity:Not disclosed

ESG Focus Areas

  • Planet (Environment)
  • People (Social)
  • Practices (Governance)

Environmental Achievements

  • Reduced water usage per jean by 36% in 2021 (meeting goal two years early)
  • Reached 23% renewable energy in 2022
  • Reached an overall recycling rate of 64% in 2022 (exceeding goal one year early)
  • Reduced water usage by 38% in 2022
  • Reduced carbon emissions 31% from baseline in 2022
  • Recycled 64% of water in denim laundries in 2022 (exceeding goal of 50% recycled water by 2023)

Social Achievements

  • Introduced Be holistic program providing associates with tools and resources to manage their mental and physical health, financial goals, and more
  • Enhanced Paid Parental Leave and introduced Paid Caregiver Leave
  • Contributed more than $200,000 to help repay associates’ student loan debt
  • Awarded 30 new scholarships in 2022/2023 as part of a $5 million commitment to AEO’s Steven A. Davis Scholarship for Social Justice
  • Established the Aerie Real Foundation, donating over $10 million to local nonprofits
  • Associates volunteered more than 14,000 hours

Governance Achievements

  • Established an independent and highly competent board structure to oversee company’s operations
  • Introduced disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework
  • MSCI ESG rating upgraded from “BBB” to “A”

Climate Goals & Targets

Long-term Goals:
  • Net-zero emissions by 2050
Medium-term Goals:
  • Reduce carbon emissions 40% by 2030 and 60% by 2040 in AEO’s manufacturing
  • Reduce scope 1 & 2 emissions 80% by 2030
  • Secure renewable energy for 100% of electrical power demand for owned and operated facilities by 2030
  • Reduce virgin plastic by 50% and reduce total plastic footprint by 30% by 2028
  • Use sustainable sources for 75% of all fibers by 2028
Short-term Goals:
  • Reduce water use per jean by 50% by 2025
  • Recycle 70% of total water used in denim laundries by 2025

Environmental Challenges

  • Scope 3 emissions represent a majority of GHG footprint
  • Indirect emissions from the inputs and manufacturing of our products
  • Overall PG&S emissions increased due to increased capital investments
Mitigation Strategies
  • Focus on manufacturing supply chain (Category 1—Purchased Goods and Services (PG&S) and Category 2—Capital Goods)
  • Working to reduce Scope 1 and 2 greenhouse gas emissions by 80% by 2030, and reduce scope 3 GHG emissions from purchased goods, services and capital goods by 40% by 2030 and 60% by 2040
  • Goal to source 100% of electricity from renewable sources for owned and operated facilities by 2030
  • Completed upgrades to Energy Management System in 258 stores
  • Transitioned to LED lighting in Ottawa distribution center and all new retail stores
  • Launched Carbon Leadership Program (CLP) for strategic factories
  • Partnered with Apparel Impact Institute (Aii) to implement factory improvement programs
  • Committed not to accept any new factories into the AEO supply chain who use coal-fired boilers after 2025
  • Working with existing factory base to phase out coal-fired boilers entirely by 2030

Supply Chain Management

Supplier Audits: 81% of active factories in 2022

Responsible Procurement
  • AEO Vendor Code of Conduct
  • Better Buying Institute analysis
  • Uzbek and Turkmen cotton ban
  • Prohibition on raw materials from Xinjiang Uygur Autonomous Region

Climate-Related Risks & Opportunities

Physical Risks
  • Not disclosed
Transition Risks
  • Not disclosed
Opportunities
  • Not disclosed

Reporting Standards

Frameworks Used: SASB Apparel, Accessories & Footwear Standard, TCFD

Certifications: Null

Third-party Assurance: Ruby Canyon Environmental

UN Sustainable Development Goals

  • Not disclosed

Not disclosed

Sustainable Products & Innovation

  • Real Good product line

Awards & Recognition

  • 2023 REPREVE® Champion of Sustainability Newcomer Award
  • Fortune's recognition for innovation
  • Newsweek's naming as one of the most trustworthy companies