TO OUR STAKEHOLDERS,
Our commitment to corporate sustainability is deeply rooted in
our purpose to improve the health and wellbeing of society
through higher quality sleep. As a global leader in sleep health,
innovation, science and research, Sleep Number has a decadeslong record of improving individual lives and societal wellbeing.
Our environmental stewardship, social priorities and strong
governance (ESG) are integrated into our strategy, culture and
operations. Our ESG investments are aligned with our pursuit of
superior value creation that benefits all our stakeholders.
The events of the past two years have underscored the
relevance of our purpose – and the importance of our ESG
efforts. More than ever, society is prioritizing health and
recognizing that quality sleep is a vital contributor to overall
wellbeing. In addition, the impact of the pandemic, climate
change and racial inequity, among other factors, is creating
heightened urgency for public and private sector action in
addressing social and environmental issues.
While we have incorporated sustainable practices and policies
into our business for years, our responsibility to make the
world better is further reinforced through our role as a
signatory of the United Nations Global Compact (UNGC) and
support of their Ten Principles and Sustainable Development
Goals. As detailed in this report, during the past year, we
made important progress on our ESG ambition, including
achieving the following milestones:
ENVIRONMENTAL
• We established a cross-functional Environmental
Impact Team (EIT) to implement near-term initiatives
related to reducing energy, fuel consumption and
waste and identified longer-term opportunities for
increased stewardship.
• As a result of the EIT’s focus, we developed a
baseline inventory of our Scope 1 and 2 emissions,
preliminary quantitative waste reduction goals and a
plan to initiate measurement of Scope 3 emissions
beginning in 2022.
• We are also advancing efforts to increase our use of
renewable energy alternatives, beginning in 2022 in
Minnesota, California and Texas.
SOCIAL
• We significantly increased our investment in team
member wellbeing through our smart bed benefit and
other individualized offerings and initiatives related to
improving physical, mental, emotional, financial,
community and career health.
• We further strengthened our culture of individuality and
advanced our diversity, equity and inclusion (DEI) strategy,
delivering on our commitment to provide a workplace
where all team members unequivocally feel they belong.
Our high team member retention and best-in-class
engagement survey scores affirm our actions.
• We amplified our social impact in the communities
where we operate by working closely with strategic
partners who share our commitment, directly engaging
Sleep Number team members in our efforts and
supporting individuals and families in need through
product donations and financial support.
• We also continued to fund studies to advance sleep
science research that will enhance understanding of
sleep's impact on disease prevention and care. We
expect outcomes to contribute to life-changing
improvements in individuals’ health. In addition to our
ongoing collaboration with the Mayo Clinic, Sleep
Number recently announced a multi-year partnership
with the American Cancer Society.
GOVERNANCE
• We further strengthened our Board and its diversity,
adding two new members and increasing disclosures
about all members’ gender, race and ethnicity. With
gender parity and racial and ethnic diversity, our
Board composition reflects our culture of individuality.
• Through proactive education and deliberate
engagement, we broadened and deepened our Board’s
and leadership team’s ESG knowledge and expertise.
• And we increased our ESG transparency by initiating
reporting in accordance with the Global Reporting
Initiative (GRI) Standards and Sustainability Accounting
Standards Board (SASB).
Realizing that society has never needed Sleep Number more, our
mission-driven team is motivated by both the clear impact and
continued promise of our purpose. Our decisions and actions are
guided by our values of Passion for making a difference and
changing lives, Integrity to always do the right thing, Innovation
to find a better way, Courage to embrace a challenge and
Teamwork that celebrates individuality and the joy of working
together. Through the power of our purpose, consistency of our
differentiated strategy and agility and efficiency inherent in our
vertically integrated business model, we will continue to deliver
sustainable value for all our stakeholders.
Sleep well, dream big,

Shelly Ibach
Chief Executive Officer, Sleep Number

Our report includes information on several SDGs, including Gender Equality, Reduced Inequities and Peace, Justice and Strong Institutions.

Laws and regulations touch all aspects of our
business – from how we make, market and sell our
products to how we disclose our financial results
and from how we treat one another to how we do
business with third parties.
Sleep Number requires strict adherence to the
letter and the spirit of all laws applicable to the
conduct of our business.
We are also committed to the highest standards
of ethical business practices throughout our
Company. Our Company values, team member
training, Company policies and culture underscore
our expectations for integrity and provide clear
guidelines for business decisions and behavior.
We have a Code of Business Conduct (p. 55),
provided to all team members, which instructs
and requires that our team members comply
with applicable laws, engage in ethical and safe
conduct in our work environment, avoid conflicts
of interest, conduct our business with integrity
and high ethical standards, and safeguard our
Company’s assets. Annually, each team member
is required to complete training and acknowledge
their commitment to this Code.
Our Code of Business Conduct directs team
members who observe or suspect unethical or
illegal behavior to report it to their management,
Human Resources or our Chief Legal and Risk
Officer. We also offer a confidential Business
Abuse Hotline for team members. The hotline is
operated by an independent third-party service
to ensure confidentiality and 24-hour accessibility.
On a quarterly basis, senior management
provides the Audit Committee of our Board of
Directors with a detailed update on any and all
reported concerns and shares corresponding
mitigation plans and actions, demonstrating our
accountability and governance practices.
We train our team members on our equal
employment opportunity, anti-harassment and
standards of conduct policies to foster a culture
of diversity, inclusion, dignity and respect, and
ensure adherence to our high standards of
integrity. As part of a larger strategy to bolster
our compliance and prevention efforts related
to bribery and corruption, we conduct annual
training in key functions where team members
may interact with foreign entities and officials,
increasing their vulnerability to Foreign Corrupt
Practices Act (FCPA) issues. Members of the
Direct Materials and Bedding departments are
among those who participate in this focused
training which includes how to identify and refuse
bribery or “agent” payments.

Sleep Number expects our suppliers and third-party business partners to uphold high standards of business integrity,
reputable business practices and sound ethical judgment. To ensure all of our suppliers are aware of their responsibilities,
we provide our Business Conduct for Business Partners (p. 55), to all active business partners and suppliers of goods
and services. This Code articulates our expectations for performance that align with Sleep Number’s Code of Business
Conduct for its team members and describes our rights to monitor and enforce supplier compliance. The Code of
Conduct for Business Partners contains provisions that explicitly address business partner responsibilities related to: labor and human rights, health and safety, environmental issues and legal and ethical practices.

In addition, we leverage our contracts with business partners and suppliers to underscore our expectations of business
integrity, incent appropriate behaviors and enforce compliance with our Code. For example, the contractual terms that
are applicable to the vast majority of Sleep Number suppliers include language that requires each supplier to represent
and warrant “that it will, at all times, comply with the Code of Business Conduct for Business Partners as may be
amended from time to time.”
In 2021, we also added human rights-related content to supplier audits and report cards to ensure explicit awareness
of Sleep Number expectations. Suppliers representing approximately 90% of direct spend are audited annually for
compliance with the Sleep Number Code of Conduct for Business Partners and are asked to renew their written
adherence to the Code.

Our values of Passion, Integrity, Innovation,
Courage and Teamwork are our compass and
guide our decisions. We expect Sleep Number
team members and our business partners –
both key stakeholders in the implementation
of our Human Rights Policy (p. 55) – to act
with the highest ethical standards and to
treat others with respect every single day.
Their conduct should be in accordance with
standards set forth in our Code of Business
Conduct, our Team Member Handbook, our
Code of Conduct for Business Partners, the
expectations of the United Nations Global
Compact, of which Sleep Number became a
signatory in 2020, and the principles detailed in
our Human Rights Policy. Our enterprise-wide
commitment to human rights, which is overseen
by the Sleep Number Board of Directors and
senior leadership team, include the following
principles: Child Labor Restrictions; Equal and
Nondiscriminatory Practices; Human Trafficking,
Slavery and Forced Labor; Wages and Working
Hours; and Right to Freedom of Association and
Collective Bargaining. These principles provide
guidance to ensure that our business practices
and processes support our commitment to
human rights, and that our team members and
business partners understand their role in – and
responsibility for – upholding human rights and
equality in the workplace. No Sleep Number
team member or business partner should ever
be complicit in human rights abuses or ethical
violations of any kind.

In 2021, we also added human rights-related content to supplier audits and report cards to ensure explicit awareness
of Sleep Number expectations. Suppliers representing approximately 90% of direct spend are audited annually for
compliance with the Sleep Number Code of Conduct for Business Partners and are asked to renew their written
adherence to the Code.

Our report also includes robust demographics of our Board of Directors, senior leadership team and all other team members. We disclose that we have 12 members on our Board of Directors, of which 6 self-identify as female, three Board members self-identify as African American or Black or Hispanic or Latinx, and one Board member self-identifies as LGBTQ+. We disclose that three of our eight senior leadership team self-identify as female, and that two members of our senior leadership team self-identify as African American or Black or Hispanic or Latinx. We also disclose the gender makeup of our entire team member demographics.

Our values of Passion, Integrity, Innovation,
Courage and Teamwork are our compass and
guide our decisions. We expect Sleep Number
team members and our business partners –
both key stakeholders in the implementation
of our Human Rights Policy (p. 55) – to act
with the highest ethical standards and to
treat others with respect every single day.
Their conduct should be in accordance with
standards set forth in our Code of Business
Conduct, our Team Member Handbook, our
Code of Conduct for Business Partners, the
expectations of the United Nations Global
Compact, of which Sleep Number became a
signatory in 2020, and the principles detailed in
our Human Rights Policy. Our enterprise-wide
commitment to human rights, which is overseen
by the Sleep Number Board of Directors and
senior leadership team, include the following
principles: Child Labor Restrictions; Equal and
Nondiscriminatory Practices; Human Trafficking,
Slavery and Forced Labor; Wages and Working
Hours; and Right to Freedom of Association and
Collective Bargaining. These principles provide
guidance to ensure that our business practices
and processes support our commitment to
human rights, and that our team members and
business partners understand their role in – and
responsibility for – upholding human rights and
equality in the workplace. No Sleep Number
team member or business partner should ever
be complicit in human rights abuses or ethical
violations of any kind.

Sleep Number expects our suppliers and third-party business partners to uphold high standards of business integrity,
reputable business practices and sound ethical judgment. To ensure all of our suppliers are aware of their responsibilities,
we provide our Business Conduct for Business Partners (p. 55), to all active business partners and suppliers of goods
and services. This Code articulates our expectations for performance that align with Sleep Number’s Code of Business
Conduct for its team members and describes our rights to monitor and enforce supplier compliance. The Code of
Conduct for Business Partners contains provisions that explicitly address business partner responsibilities related to:
Labor and Human Rights: Including fair
treatment
of workers,
nondiscrimination
in hiring and
employment
practices, strict
prohibition of
underage and
involuntary labor
and human
trafficking,
respect for
freedom to
associate and
fair and timely
compensation.
Health and Safety: Including training,
injury prevention
and workplace
environment such
as safeguards
from physical
hazards, access to
potable water and
sanitary facilities,
fire safety and
adequate lighting
and ventilation.
Environmental Issues: Including
compliance with
environmental
laws, rules and
regulations related
to hazardous
substances,
conflict minerals,
waste disposal
and recycling, as
well as adoption
of initiatives and
programs to reduce
and conserve
natural resources.
Legal and Ethical Practices: Including
compliance with
the principles
described in our
Code of Conduct
for Business
Partners, which
is a condition of
doing business
with Sleep
Number. We ask
our suppliers to
agree, in writing,
to the terms and
conditions of our
Code of Conduct
for Business
Partners.

We leverage our contracts with business partners and suppliers to underscore our expectations of business
integrity, incent appropriate behaviors and enforce compliance with our Code. For example, the contractual terms that
are applicable to the vast majority of Sleep Number suppliers include language that requires each supplier to represent
and warrant “that it will, at all times, comply with the Code of Business Conduct for Business Partners as may be
amended from time to time.”
In 2021, we also added human rights-related content to supplier audits and report cards to ensure explicit awareness
of Sleep Number expectations. Suppliers representing approximately 90% of direct spend are audited annually for
compliance with the Sleep Number Code of Conduct for Business Partners and are asked to renew their written
adherence to the Code.

Our report highlights some of our work to support SDG 12 - Responsible Consumption and Production and SDG 13 - Climate Action. We have adopted an Enterprise Environmental Policy. This year's report includes tables reporting our company-wide consumption of energy, waste and natural resources.

We have a plan to initiate measurement of Scope 3 emissions beginning in 2022.
We are also advancing efforts to increase our use of renewable energy alternatives, beginning in 2022 in Minnesota, California and Texas.
Our report discloses our aim to align on enterprise greenhouse gas (GHG) emissions reduction goals and commit to science-based targets by the end of 2022.

Our report discloses that we developed a baseline inventory of Scope 1 and 2 emissions and discloses the relevant metrics. We track, monitor and plan to set goals related to greenhouse gas (GHG) emissions.

Our report discloses our commitment to ethical business practices and legal compliance.

Laws and regulations touch all aspects of our
business – from how we make, market and sell our
products to how we disclose our financial results
and from how we treat one another to how we do
business with third parties.
Sleep Number requires strict adherence to the
letter and the spirit of all laws applicable to the
conduct of our business.
We are also committed to the highest standards
of ethical business practices throughout our
Company. Our Company values, team member
training, Company policies and culture underscore
our expectations for integrity and provide clear
guidelines for business decisions and behavior.
We have a Code of Business Conduct (p. 55),
provided to all team members, which instructs
and requires that our team members comply
with applicable laws, engage in ethical and safe
conduct in our work environment, avoid conflicts
of interest, conduct our business with integrity
and high ethical standards, and safeguard our
Company’s assets. Annually, each team member
is required to complete training and acknowledge
their commitment to this Code.
Our Code of Business Conduct directs team
members who observe or suspect unethical or
illegal behavior to report it to their management,
Human Resources or our Chief Legal and Risk
Officer. We also offer a confidential Business
Abuse Hotline for team members. The hotline is
operated by an independent third-party service
to ensure confidentiality and 24-hour accessibility.
On a quarterly basis, senior management
provides the Audit Committee of our Board of
Directors with a detailed update on any and all
reported concerns and shares corresponding
mitigation plans and actions, demonstrating our
accountability and governance practices.
We train our team members on our equal
employment opportunity, anti-harassment and
standards of conduct policies to foster a culture
of diversity, inclusion, dignity and respect, and
ensure adherence to our high standards of
integrity. As part of a larger strategy to bolster
our compliance and prevention efforts related
to bribery and corruption, we conduct annual
training in key functions where team members
may interact with foreign entities and officials,
increasing their vulnerability to Foreign Corrupt
Practices Act (FCPA) issues. Members of the
Direct Materials and Bedding departments are
among those who participate in this focused
training which includes how to identify and refuse
bribery or “agent” payments.

We train on our Code of Business Conduct and have a 24-hour hotline for team members to report abuses. We also maintain a Code of Business Conduct for Business Partners that we include in our key contractual requirements and use to set expectations with suppliers and vendors.