Conserving Resources

We've introduced measures to reduce the use of energy, water, and other natural resources in many areas of our company.

Pittsburgh Corporate Office Location

In 2007, we made a landmark decision to move our corporate world headquarters to the South Side neighborhood of Pittsburgh, Pennsylvania. Once home to many steel mills, the city of Pittsburgh has undergone a dramatic transformation in recent years with the revitalization of former industrial sites. As a local company, we wanted to support this urban renaissance.

Today, our corporate headquarters sits on a brownfield site on the banks of the Monongahela River. Once home to a steel mill, the site has been cleared of all lingering contaminants and is now a lush green landscape dotted with parks, restaurants, shops, and office buildings. We are proud to call it home.

Energy Audit of Corporate Office

In July 2010, we conducted an energy audit of our main corporate office in Pittsburgh. The audit assessed our performance on energy, water, and waste, as well as the use of environmentally-friendly materials and innovation in design. The audit highlighted several important areas in our operations, in particular, opportunities to improve energy efficiency. Improving office energy efficiency is now a key priority for 2012.

Energy Reduction in Distribution Centers

We have introduced several initiatives over the past few years to reduce energy consumption in our three distribution centers.

Lighting Retrofits

In July 2010, we began a lighting retrofit project at our largest distribution facility in Kansas. The project included updating lighting fixtures and adding lighting sensors. We replaced 911 1000-watt fixtures with 480-watt high efficiency fluorescent fixtures, and we swapped out another 114 480-watt fixtures with 354-watt fixtures. We were also able to replace half of the 1000-watt fixtures located in outside parking areas. This reduction in wattage and the use of motion sensors also reduced our air conditioning needs. Our projected energy savings from the Kansas lighting retrofit is 7,741,469 kilowatt hours per year - an annual reduction of 38%.

We are planning to implement similar lighting retrofits at our other two distribution centers in the near future. In the meantime, bulbs that burn out in our other two facilities are replaced individually with higher efficiency fixtures. We have also installed motion sensor lighting in less-trafficked areas, such as offices, restrooms, and parts of the warehouse floors. When the buildings are empty, all lighting is manually shut off and HVAC settings are adjusted to reduce energy consumption.

"White" Roofs and HVAC Units

We have reduced our energy usage at our Kansas and Pennsylvania distribution centers by installing white roofs, which absorb less heat from the sun and lower cooling needs in the summer months. At our Kansas facility, the entire roof was replaced with a white surface. In Pennsylvania, one third of the roof was replaced during the summer of 2010 and we hope to replace another sizeable portion in the near future. In the Pennsylvania distribution center, we also replaced 12 HVAC rooftop units with high efficiency SEER-15 units. The energy reduction has been considerable: our new HVAC units on the white roof portions have run 30% more efficiently since installation.

Energy Reduction in Stores

In May 2010, we introduced a new lighting policy for store management. All store lighting panels are now color-coded, with each color representing the time of day at which certain lights should be turned on. Before stores are open to customers, minimal lights are used. More lights are gradually turned on throughout the day to accommodate store and customer needs.

In June 2010, we also introduced a policy instructing our open-air lifestyle center stores to keep their doors closed year-round so that we don't waste energy trying to heat or cool outdoor space.

Our newest New York flagship store, which opened in November 2010 in Manhattan's Soho neighborhood, is a leading example of energy efficient design. The Soho store was designed to utilize energy-efficient electronic displays. Multiple seven-foot tall displays are located throughout the three-story, 24,000 square-foot store. Three columns in the main entrance provide window displays and in-store branding. Four additional columns, located at each escalator, help to guide customers throughout each level of the store. These innovative displays use up to 75% less power than traditional backlit or projection technology-based products. This reduction in power usage decreases the amount of heat generated, which in turn reduced our need for air-conditioning.

Water

Water plays an important role in the manufacturing of textile products. Water is necessary to wash and dye garments to create the look and feel envisioned by our designers.

Unfortunately, water usage in textile production has led to negative environmental impacts, including shortages of fresh water and contamination of water sources when appropriate wastewater precautions are not taken. The Pearl River Delta in Guangdong, a province on the southern coast of China, has been particularly hard hit. Numerous manufacturing facilities in this region have been cited as a major cause of contamination for that region's water sources.

In 2007, we joined Business for Social Responsibility (BSR)'s Sustainable Water Group (SWG) to learn about ways to minimize the potential negative impact of our own products and explore industry-wide efforts to reduce the negative impact of manufacturing on global water sources. The SWG is a partnership of five global apparel companies committed to responsible wastewater practices in global textile supply chains.

The SWG uses industry-developed Water Quality Guidelines to help companies mitigate the potential harmful impacts and business risks from global operations. In 2007, we began monitoring water quality test reports submitted by supplier mills and laundries. After analyzing these reports, we realized that the data we were receiving was not comparable between facilities because different local governments test by different standards of sampling, water quality parameters, and other methodologies. As a result, we implemented a new process in 2010 to physically extract our own samples to ensure consistent, accurate test results using BSR standards for our top denim laundries. The results showed that all of the tested suppliers met their local standards for water quality, but seven out of ten fell short when it came to the more stringent SWG standards. These seven suppliers were sent corrective active plans and we are currently working with them to develop clear, achievable goals for improvement, which may include external advisory services, on-site consultations and re-testing.

We know that many stakeholders share our desire to ensure that apparel laundries, mills, and other manufacturing facilities around the world discharge clean water back into the environment. In June 2011, we were contacted by Greenpeace, which had concerns about water discharge from Well Dyeing, a fabric mill in southern China. Although we no longer had any programs in development with Well Dyeing, we did respond to Greenpeace's request to engage in their Detox Challenge campaign. A copy of our response is available here.

Carbon Emissions in Transportation

We don't own or operate the planes, cargo ships, and trucks that transport our products from factories around the world to our stores. But we have been working actively with our transportation partners to monitor and promote greater fuel efficiency.

We have begun to reduce our usage of fuel-intensive transportation methods between US ports and distribution centers. In 2010, we converted approximately 90% of our freight from truck to rail between the port of Long Beach, California - one of the key entry points into the United States for our merchandise - and our distribution center in Kansas. This initiative not only reduced our reliance on expensive fuel associated with trucking, but also helped reduce our emissions between the port and our distribution center.

We have also begun to track the carbon footprint of our transportation network, with an initial focus on ocean vessel and domestic truck transportation. We are still in the beginning stages of this process but hope to provide more data on carbon emissions in future reports.

Promoting cleaner transportation

We do not own or operate our own transportation fleet. However, meaningful reduction in the total carbon footprint of our supply chain is important to us.

For years, we have expected our transportation suppliers to deliver quality and timely service. Now we are asking them where possible to take meaningful steps to reduce fuel usage and minimize their reliance on the most polluting forms of fuel.

Many of our domestic transportation suppliers participate in the SmartWay Transport Partnership, a collaboration between the U.S. Environmental Protection Agency (EPA) and the U.S. freight industry. SmartWay seeks to lower the environmental impacts of freight operations by providing incentives for carriers to improve fuel efficiency and reduce carbon emissions, greenhouse gases and air pollution. All of AEO, Inc.'s domestic truck-load (TL) and less-than-truckload (LTL) carriers, who move shipments from US ports to our distribution centers, are SmartWay-certified. In addition, 43% of our Delivery Agents, who move shipments from consolidation points to our stores, are certified, and another 14% are currently working towards certification.

Recently, we sent a letter to our transportation partners asking them to share more information with regards to their practices to reduce fuel consumption and minimize reliance on the most carbon-intensive forms of fuel, including fuel derived from oil sands. We plan to formalize our request for transportation partners to prioritize cleaner fuel sources into our contractual process later this year.

Sustainable Practices in Cafes

Our Pennsylvania corporate office locations and US distribution centers all boast cafes managed by Guckenheimer, an external catering company. Guckenheimer is firmly committed to sustainability in restaurant services, emphasizing not only nutrition and healthy meal choices for our associates, but also utilizing energy-conserving restaurant equipment and offering local and organic produce, organic, free-range, grass-fed and naturally raised poultry, pork, lamb, and hormone-free beef, cage-free shell eggs and hormone-free dairy products.