Impact
At thredUP, we’re creating positive change by transforming the way we shop and consume.
We are committed to sustainable and ethical business practices and have implemented environmental, social and governance (“ESG”) policies and goals throughout our company to formalize and manage our commitment over time.
Environmental. The environment is one of our most important stakeholders and combating the harmful effects of disposable fashion is one of our greatest goals. By promoting a scalable, mainstream market for resale, thredUP drives meaningful impact for the planet by helping to offset the environmental cost of fashion. Our core business of reselling secondhand apparel sourced from consumers' closets helps reduce fashion's overall environmental footprint – buying a used item of clothing can reduce its carbon footprint by 82% and according to a recent study conducted by Green Story, we have displaced over a billion pounds of carbon emissions since inception. By extending the life of clothes, we believe that our unique supply chain and business model presents a powerful solution to the fashion industry's wastefulness.
Beyond the positive environmental impact of our core business model, we actively manage the environmental footprint of our operations. We are committed to disclosing the greenhouse gas emissions of our operations on an annual basis. We intend to disclose our greenhouse gas emissions based on a framework developed by the Greenhouse Gas Protocol, a partnership between the World Resources Institute and the World Business Council for Sustainable Development, for corporations to disclose the greenhouse gas emissions of their business. The Greenhouse Gas Protocol classifies greenhouse emissions across three scopes: scope 1 (direct emissions from our owned and controlled sources), scope 2 (indirect emissions from our generation of purchased energy) and scope 3 (all indirect emissions not included in scope 2 that occur in our value chain). We intend to make the results of our greenhouse gas emissions analysis publicly available by the end of 2022. We also continue to seek out initiatives that can lower our environmental impact, while also improving operations and lowering operating expenses.
We are also focused on educating the world about fashion waste, helping consumers understand how their fashion habits contribute to climate change and empowering individuals with the tools they need to make more sustainable fashion choices. For example, in 2020, we partnered with independent environmental research firm Green Story Inc. to create thredUP’s Fashion Footprint Calculator to help our users learn more about their carbon footprint associated with clothing purchases and disposal habits.
Additionally, we engage in public policy advocacy in partnership with industry groups and coalitions to educate policymakers and shape relevant public policy. We believe these efforts will be key for combating the fashion industry’s environmental impact. Our educational, public policy and government relations efforts shine a light on global issues such as overproduction, product circularity, disposable fashion culture and single-use fashion. We are a member of the Ellen MacArthur Foundation, an organization which supports growth of the circular economy by mobilizing solutions at scale, globally, with a diverse set of stakeholders. Earlier this year, we became founding signatories of Fashion Declares, an international business coalition focused on addressing climatic, ecological and social issues in the fashion industry. We have also come out in public support of the Fashion Sustainability and Social Accountability Act, a New York State legislative bill aimed at addressing the environmental impact of the fashion industry.
Social. Our business impacts society by engaging various stakeholders, but it starts with our employees. We believe our people are our greatest asset and are reimagining our employee experience to reflect that philosophy. We work diligently to attract the best talent from a diverse range of sources in order to meet the current and future demands of our business.
As part of this goal, we believe in the importance of fostering a diverse, inclusive and safe workplace and we are committed to ensuring our employees and professional contractors are comfortable bringing their authentic selves to work every day. We believe that a unique perspective is critical to solving complex problems and inspiring a new generation of consumers to think secondhand first. Overall, as of December 31, 2021, 70% of our workforce identifies as female and 72% of our workforce identifies as minority, including 56.6% as Black or Latinx. As of December 31, 2021, 35% of our senior leadership team identifies as female and 30% of our senior leadership team identifies as minority, including 7% as Black or Latinx. We are committed to increasing diversity and representation through our diversity, equity, inclusion and belonging initiatives and to disclosing our diversity on an annual basis.
We also have created programs to attract, retain and develop skilled workers of all backgrounds in our distribution centers, including thredUP University, a comprehensive leadership development program. All full-time U.S.-based employees are eligible to participate in our employee stock purchase plan (“ESPP”), paid sabbatical program and 401k plan.
Data security is also critically important to our operations. We have implemented extensive security practices to ensure appropriate physical, technical and administrative safeguards to protect customer and employee data. We have developed and implemented a comprehensive information security program with clearly defined roles and responsibilities. Our security policies and procedures are typically communicated and reviewed with our Audit Committee on a quarterly basis to ensure alignment at all levels on platform security efforts. Our data security program has been documented in our independently verified service organization control report, also known as a SOC 2 Type 2 report. We intend to continue engaging independent auditors to evaluate our security, confidentiality and availability controls on an annual basis. With respect to online payment acceptance, we continue to maintain Payment Card Industry Data Security Standard (also known as PCI DSS) merchant compliance through all our different channels of commerce. To protect our platforms, our vulnerability management program consists of several container, network and operating system (OS) scans, along with continuous penetration testing performed by researchers through a leading hacker-powered security platform. Internally, we have established an enterprise risk management committee to address security risks on a quarterly cadence. We also require all employees and contractors with access to our systems to complete a cybersecurity awareness training on an annual basis.
As a complement to our security efforts, we also take the privacy of our customer and employee data seriously. Our privacy program includes a comprehensive data inventory and a data map of the systems where personal information is stored and a data privacy impact assessment template to evaluate our processing activities. We have a consumer-facing privacy policy that outlines our data use and sharing practices to customers and a consumer-facing California privacy notice that informs individuals about their privacy rights and enables them to exercise data access, deletion and do not sell requests. We have implemented an automated privacy tool to publish cookie notices on our webpages and allow consumers to manage their cookie tracking preferences. To instill a privacy-by-design culture, we have provided privacy training guides and materials to educate our workforce on the importance of key principles such as data minimization and purpose limitation.
Governance. We have created a governance structure to promote responsibility and accountability for ESG matters across our company. Our dual-class capital structure provides our founder and CEO with the ability to prioritize our ESG efforts. The nominating and governance committee of our board of directors has specific oversight of ESG matters pursuant to its charter. We have an employee-led corporate social responsibility (“CSR”) committee, with participation from executive management and senior members of our operations, finance, marketing, people and legal teams. Our CSR committee meets quarterly to manage our long-term ESG strategy and reports to executive management and our board of directors.
We believe independent governance fosters effective board leadership. For this reason, we have appointed an independent chair to lead our board of directors and have confirmed that all of our directors, other than our CEO, are independent according to the Nasdaq’s listing standards, including all of the members of our Audit, Compensation and Nominating and Corporate Governance Committees. Under this framework, we believe that it is easier for board members to express dissenting views and that different viewpoints and perspectives will make us a more well-rounded and resilient company.
We are proud of having built a corporate culture that emphasizes and supports ethical corporate behavior. We have formally adopted and published our Code of Business Conduct and Ethics (“Code of Conduct”). We have established a whistleblower program for compliance, ethics and fraud, overseen by our Audit Committee Chairperson and Chief Legal Officer. We have also formed an internal enterprise risk management committee, reporting to the Audit Committee, to highlight emerging risks and oversee risk mitigation efforts across the organization.
In addition to supporting an ethical culture, our board of directors values diversity and representative governance. As of December 31, 2021, four of our 11 directors (36% of our board of directors), including our board chairperson, identified as female. Additionally, in January 2022, we appointed Coretha Rushing to our board of directors, increasing our percentage of female directors to 41% (five of 12).