Norm Thompson, Portland, Oregon, USA

A Natural Step Network Case Study
 
Overview
Norm Thompson is an Oregon-based catalog retailer with three sales divisions: 1) Norm Thompson – traditional, high-quality clothing for travel, leisure, and people on the go; 2) Early Winters – rugged clothing and products for those who play outdoors; and 3) Solutions – goods that make life easier by providing “solutions” to challenges throughout the home. In 2002, Norm Thompson will distribute approximately 80 million catalogs to its national customer base. Annual revenues are approaching $200 million. The company employs approximately 675 yearround employees and an additional 1200 during the peak holiday season.

Norm Thompson has a history and corporate value of being a community citizen. Part of this value is recognizing its global responsibility to leave a healthy environment for future generations. The company addressed this environmental concern in 1994, when it began construction of its “green” corporate headquarters in Hillsboro, Oregon. In 1997, a year after moving into that building, the CEO attended a one-day Natural Step workshop and took what he learned back to the top management team. In 1998, the team embraced The Natural Step (TNS) as a framework to bring sustainability to business operations.

Background
The company’s history began in 1949 when Norm Thompson, the man, began selling hand-tied fishing flies from his home in Portland, Oregon. In 1950, Thompson produced his first catalog, offering high quality gear and clothing to discerning outdoorsmen. Thompson’s son-in-law Peter Alport, who joined him the following year, envisioned a company offering items that escape from the ordinary. As the company grew during the ‘50s and ‘60s, it became viewed as a premiere fly-fishing resource. During the late ‘60s and ‘70s, the company introduced the Irish Country Hat, sheepskin coats, and sheepskin seat covers to the United States. It continues to offer unique products to its customers.

John Emrick, Norm Thompson’s CEO, joined the company in 1965. He became president of the company in 1971 and majority stockholder in 1981. Emrick and his wife and partner Jane have a long-standing commitment to caring for the environment. Based on this commitment, the couple took the opportunity when the company needed to expand its corporate headquarters to do something better for the environment. Rather than constructing and owning a traditional building, the company found a developer that accepted the challenge of “green” building. A construction team was formed, and with each decision, the team considered what would have the least impact on the environment and remain within the tight budget. The resulting building was within budget, and Norm Thompson leases it for less than the cost of its previous leased space. In addition, the building was the first to receive Portland General Electric’s Earth Smart Gold certification for energy-and-resource-efficient design. It also won a City of Portland BEST award for energy efficiency and an American Institute of Architects award for energy and design. The added costs of the building’s environmental features were paid off in the first four years by energy savings. These energy savings, 35% over Oregon code, now contribute approximately $30,000 per year to the company’s bottom line.

Introduction to The Natural Step
In January 1996, as Norm Thompson was moving into its new headquarters, Jane Emrick suggested that the same question about “what is best for the environment” be asked of the business itself. With this concern in mind, the couple heard about TNS. In 1997, the Emricks and two managers attended a one-day TNS workshop, hosted by the Oregon Natural Step Network. They perceived TNS as a framework that had been used successfully at other companies and could guide Norm Thompson toward sustainability. They began the process of integrating the framework into the company. That process has been filled with exciting challenges as creating a cultural and structural change within an organization takes time and deep commitment.

Sustainability as a Strategic Initiative
In the autumn of 1997, the Executive Committee met to identify a set of strategic initiatives. As the process came to a close, John Emrick suggested an initiative on the environment. At the time, he said that the initiative would deal with “sustainability” and that more would be forthcoming. Over the next several months, as action plans for the initiatives were developed, Emrick spoke with top management about the importance of sustainability and introduced TNS framework as a tool for achieving it. In May 1998, Emrick attended the TNS five-day annual workshop in Chicago to learn more specific information on the framework and its implementation. Emrick’s efforts as TNS champion were successful. Top management came to consensus about the importance of sustainability as a strategic initiative.

Later in 1998, the management team began to revise the company’s mission statement. A management-consulting firm helped the team identify the company’s vision, mission, goals, and core values. To realize change within the organization, TNS principles were expressed in and integrated with the core values. For example, an environmental mission statement was adopted that says: “Norm Thompson Outfitters will be a leader in developing business practices that sustain, restore and move in harmony with the natural environment.” The company’s “escape from the ordinary” philosophy has been extended to become the mission of the company, thus incorporating sustainability as a break from the traditional manner of conducting business. Management understood the importance of integrating environmental awareness and the framework of the TNS system conditions into employee activities and decisions at all levels. Hoping to empower all employees so that the program was driven as much from the “bottom up” as it was from “top down” management support, it began to implement a company-wide training program.

Employee Training
Upon returning from the 1998 five-day TNS workshop in Chicago, Meg Miller (the manager of quality assurance) and Jane Emrick designed a training curriculum for all employees, using the TNS curriculum as a guide. This material was presented to the company’s in-house trainers and selected individuals. Based on the attendees’ critiques, Miller and Emrick modified the training materials. They also discovered that participants wanted to brainstorm about taking TNS framework into their personal lives. To help facilitate this desire, they included a hands-on exercise that asked trainees to evaluate products based on the system conditions. This exercise helped demonstrate the goal of Norm Thompson’s TNS training “to put in place a thinking filter.”

• This training program is four hours long, multimedia, and interactive. It includes:
• Several descriptions of sustainability
• An overview of global conditions, including global warming, deforestation, waster
• scarcity, and poverty
• An introduction to The Natural Step framework
• Examples of Norm Thompson’s commitment to sustainability
• Case studies of other companies’ movement toward sustainability

Most employees went through the training program by April of 1999 in groups of 15-20. Now, approximately every six months, new hires receive the training. And guests from other companies and organizations are always invited to participate.

In hindsight, Emrick and Miller would have planned the training over a shorter time period and had a structure in place for ongoing idea exchange and implementation. After the training, they became concerned that memories had dimmed and initial enthusiasm from the training had not born fruit.

Further, the company realized that it needed to prioritize and focus on some targeted areas where it could achieve measurable results, rather than diluting focus by trying to accomplish everything at once. Management also realized that the program itself would be more likely to succeed if staff were dedicated to serve as an information resource and coordinator between the different departments. Thus, preparations were made for a company-wide sustainability plan and a new sustainability position.

Embedding TNS into the Culture
In July 1999 the company hired Derek Smith, from outside of the company, to fill the new, fulltime position of Corporate Sustainability Manager, reporting directly to the CEO. In the fall of 1999 Smith worked with an internal advisory board to answer the question “what will it take, culturally, for our company to move toward sustainability?” The focus was not on specific actions the company could take related to resource use, pollution, etc., but rather how to effect a cultural change so that all employees would actively work to bring the company into closer alignment with TNS system conditions. The 10-member advisory board consisted of employees from different work areas as well as different levels of the company’s organizational chart.

The advisory board identified the top drivers behind Norm Thompson’s evolution toward sustainability, as well as the top barriers. Top drivers included clear vision from the CEO (John Emrick), a trained and enthused workforce, and accountability in one person (the sustainability manager). Barriers were that sustainability had not yet been integrated into the company’s business plan, and there were no firm metrics for the company to measure its achievements.

Other barriers included perceived conflicts between profitability and sustainability and no unified sense of urgency around the topic. The board sent a Cultural Integration Plan to the CEO and president with recommendations to set departmental sustainability goals and to develop an action plan.

Sustainability Action Plan. In December 1999, the company began working on its Sustainability Action Plan. The Action Plan identifies four top environmental issues for Norm Thompson: global warming, toxics, habitat destruction, and waste. These were drawn from the U.S. EPA’s list of emerging environmental issues but also parallel the four TNS system conditions. These issues were then tied to the areas where Norm Thompson believes it can have the greatest impact as determined by a subjective review of business operations. The five categories of impacts are products, packaging, printing (including catalogs), transportation, and influence.

The Action Plan includes goals and deadlines for every department in these areas. (See the appendix of this case study.) The Plan was finalized in February of 2000 and was approved jointly by John Emrick and President Becky Jewett. The goals and deadlines of the Plan were then integrated by Jewett and the division vice presidents into the company’s business plan. Derek Smith tracks the progress in meeting the five-year goals. Each year during the fiscal-year planning and budgeting phase, he negotiates with department heads to set annual goals for the coming year.

In April 2000, the company organized a half-day “Sustainability Celebration.” The main office closed operations as most Portland-area employees and invited guests from several nonprofit and for-profit partners attended an interactive event, the intent of which was three-fold:

• First, to celebrate winning the prestigious “Rodale Environmental Mailer of the Year Award” from the Direct Marketing Association.
• Second, to recognize individual employees and their accomplishments.
• Third, to introduce the Sustainability Action Plan. This was done not by the CEO, the President, or the Sustainability Manager. Rather, each vice president spoke to all employees about his or her departments’ plans. This sent a strong signal to all employees that sustainability was now firmly integrated into the company’s business plan and operations.

Featured keynote speakers included Janine Benyus, author of Biomimicry, Joel Makower, editor of the Green Business Letter, and Portland Mayor Vera Katz, who, as the US Conference of Mayors representative, awarded Emrick the Rodale award. The celebration concluded with a multi-media presentation that was very effective. Norm Thompson’s CEO took the podium and asked rhetorically “so, why are we doing this?” With Louis Armstrong’s “What a Wonderful World” playing in the background, photos of employee’s children and grandchildren (collected previously under the guise of “take your child to work day” and then digitized) were shown on the screen. According to Derek Smith, this final activity, tying the company’s sustainability initiative to a sense of personal responsibility for the future, “left not a dry eye in the house.” Employee involvement. To officially communicate that sustainability was now being integrated into all jobs, the CEO and President issued a “declaration of sustainability” to be in every employee’s job description:

From this day on, sustainability is part of your job. This means you can share in a common mindset, earn recognition and contribute to the health of the world. Think outside the box, challenge yourself and feel good about your efforts to improve our business and help our planet and future generations. Each of us, no matter what department we're in, can do things--small or large--that will help us achieve our goal of sustainability.
 

The company places a lot of emphasis on recognizing individual employees. Whenever employees implement a “great idea,” they can be nominated for an environmental award. Derek Smith works with them to document the results (both environmental and financial savings). The awards are presented in person by John Emrick and Becky Jewett at quarterly associates’ meetings. This highly visible program generates many suggestions from employees and helps sustain employee interest and involvement.

Employees are further trained in sustainable practices through workshops, e-mails, and special events. For example, Derek Smith has sponsored in-house workshops for product buyers (often featuring professionals from outside the company) related to the company’s phase-out of PVC and conventional cotton. A monthly “Eco-Tips” e-mail message goes out to all employees with information and suggestions for environmental actions both at work and at home.

Results
Employee morale
Knowing that progress toward the company’s goals wouldn’t be immediately apparent, Smith encouraged some projects with quick results. A big organic garden was built on-site.

Employees separate their lunchroom food scraps, the maintenance firm incorporates the food into compost bins, and the resulting compost enriches the garden soil. Norm Thompson constructed a huge recycling center and encouraged employees to bring non-curbside items like batteries, plastic bags, light bulbs, and foam packing material. Free transit passes were given to all employees. The volunteer, match program where employees get time off for volunteering in the community was expanded. Employees feel good about working for a company that cares about the health of people and the planet. One said, “I love this company. It stands for the right things—sustainability and work/life balance.” Norm Thompson’s commitment to sustainability also has an advantage in recruitment. Candidates for significant positions have sought Norm Thompson because it is moving toward TNS system conditions.

Catalogs
In 1999 Norm Thompson entered into a partnership with Environmental Defense’s Alliance for Environmental Innovation to analyze recycled paper and paper reduction options. Two years later it announced its most high-profile project--inclusion of 10% post-consumer waste in the paper of all catalogs. By working with its supplier it was able to purchase the recycled paper at prices comparable to virgin paper, and focus groups showed that the paper had no effect on customer response. Norm Thompson received good press coverage of its accomplishment and through this exposure was able to convince other catalog retailers to make the switch. It is now testing 20% content. Norm Thompson also discovered through the project with the Alliance that it could eliminate envelopes holding catalogs to new requestors. This measure saves $50,000 a year plus $50,000 in extra demand because customers respond better to catalogs not in envelopes. Still under consideration are other options such as reducing the size of order forms and sending smaller catalogs or even postcards that refer customers to Norm Thompson’s Web site.

Other waste reduction efforts

• “Ship all Together.” When customers order multiple products, standard practice has been to ship those products that are in stock and follow up with shipments of other products as they come into stock. Under a relatively new program, “Ship all Together,” if the out-ofstock items are expected to be in within one week, sales agents at the call center will ask the customer if they want their order shipped all together, or in separate boxes. Sales agents were trained to add a new closing line to their script: “And, shipping all together means less packaging so we can work together to help the environment.” In the period of several weeks, the percentage of customers choosing this option almost doubled, from 8.3% to 15.2%. It is now 17.5%, saving $252,000 annually and over 30,000 shipping boxes or bags, plus filler, tape, labels, and inks, and energy and pollution from shipping.
• Packaging. Norm Thompson is testing several packaging alternatives. In 2000 its shipping department added a small-sized box. Previously, the smallest sized box had been about the size of a shoebox. Norm Thompson currently uses wadded kraft paper for padding but is pilot-testing the use of molded, recycled paper “packing cubes.”
• In-house waste prevention and recycling. Toward its five year zero waste goal, the company committed to reducing its solid waste in half in 2001. In the first year it had reduced waste by 41% at its headquarters site. Recycling polystyrene foam and garment bags helped tremendously. One dramatic example of office waste prevention is the elimination of heavy-gauge plastic cups from vending machines. By providing every headquarters employee with a reusable mug, the company eliminated the use of 120,000 disposable cups a year, saving almost $10,000 annually. To help create demand for recycled products and reduce toxics, Norm Thompson is purchasing 100% post-consumer-recycled, processchlorine-free copy paper.

Selection of more sustainable products
Early on, Norm Thompson realized that merchandising would be its most difficult area. It had very little knowledge of the contents or impacts of the products it sold, which come from hundreds of vendors. Therefore it started with materials it learned about through colleagues, such as Nike and Patagonia—cotton and vinyl. In 1999 the top executives and cotton apparel buyers toured both conventional and organic cotton farms in California to learn the impacts of growing practices. They came back with a commitment to organic. The first product made of organic cotton was a casual short-sleeve shirt, which sold so well that a long-sleeve version was added. These successes led another supplier to introduce organic cotton into a line of sleepwear. The company goal is to replace all conventionally grown cotton with organically grown cotton within five years. It also intends to phase out vinyl, also known as PVC, within five years.

Sustainability Scorecards. Even with this initial success, progress after two years seemed too slow to meet the five-year goals. In working with vendors, buyers needed a tangible way to interpret benefits and drawbacks of a range of choices. With the help of the buyers and a sustainability consultant, Michael S. Brown, Ph.D., senior management constructed Sustainability Scorecards. For example, the textile scorecard places organic cotton at the top and synthetics at the bottom. Twelve Scorecards are incorporated into a Sustainability Toolkit that also includes sourcing preferences and a glossary of social and environmental terms. The buyers are to improve their aggregate scorecard over time, and they are held accountable in performance evaluations. As soon as the scorecard was launched, more movement started taking place.

To identify specific toxics to eliminate, Norm Thompson helped Business for Social Responsbility (BSR) develop a Restricted Substances List. The list on BSR’s Web site includes dyes, flame retardants, formaldehyde, PVC, chromium in leather, and pesticides. Norm Thompson’s quality department is communicating with vendors about its desire to eliminate these substances. It also needs to develop the capability of testing the products so that it’s not relying totally on vendors.

Energy. Norm Thompson has calculated its greenhouse gas emissions from electricity, natural gas, and company vehicles and is participating in EPA’s Climate Leaders program, which means it has committed to reduce its greenhouse gas impact by at least 90 percent by the end of 2005.

It has purchased green power through its utility and offsets through Ecumenical Ministries of Oregon. Programs converting oil burners to natural gas in low-income Portland schools and retrofitting lighting in community buildings used by non-profits saved energy, which then offset the energy used by Norm Thompson. Between 2003 and 2005 the company plans to significantly increase its offset program to cover 25%, 50%, and then 100% of its electricity. To influence a societal shift from fossil-fuel to alternative energy, the money will be invested in new renewable energy through Bonneville Environmental Foundation’s Green Tag program.

Social Equity. Norm Thompson is committed to insuring that the human rights of workers in the factories that make its goods are upheld. A code of conduct based on guidelines from the Fair Labor Association is included in the company’s vendor manual, and several audits have been carried out in factories. In addition, the company tries to select products that support indigenous cultures. For example part of the proceeds from a sweater knitted by women in Nepal goes to a non-profit that improves women’s literacy there.

Extending Influence
One of Norm Thompson’s sustainability goals is to become a practical model for the business world. Influencing vendors and other companies is one of the roles that Norm Thompson most clearly relishes, and one of the accomplishments that most empowers and excites the company’s employees. Sometimes communication with vendors can yield nationwide results. For example, an employee asked a vendor if it would e-mail its twice-weekly report instead of faxing it. The vendor agreed, then later said that as a result of Norm Thompson’s suggestion, it had begun offering e-mail as an alternative to its other customers nationwide. It was very gratifying to the employee to know that her simple request had initiated a nationwide change.

Norm Thompson shares results of its research with other businesses, including competitors. For example, it met with other catalog retailers to share what it learned about post-consumer recycled paper.

The company is more cautious in the area of customer education and is careful to avoid claims of “greenwashing” the public. It has made a few references to environmental issues in product descriptions and a limited number of small articles in the catalogs. As the company improves its own performance, it plans to eventually provide more information to customers on its Web site.

Challenges and Lessons Learned
One of the greatest challenges facing Norm Thompson is that the cultural and structural changes necessary to adopt TNS framework take time. The process is complicated; the issues are deeper than they seem on the surface. As a catalog retailer, the company does not directly see the environmental impact of its choices everyday as a manufacturer would.

Using the TNS framework is about process, not perfection. Aspects that appealed to John Emrick are that “you don’t fail” and “you won’t be judged.” Given the baseline efforts of Norm Thompson, change will come. Emrick and Smith share the following lessons learned:

• It was helpful to tailor the training to the business. Even though it took energy, the presenters got more buy-in because employees could relate to the industry issues.
• At times, you may feel “out-there” by yourself, but you are not without support.
• Collaborate with others; partnership is critical to making sustainability a reality.
• TNS framework has to be part of your mission and needs complete buy-in on the executive level, or it is not going to work.
• Integrate sustainability with the business plan. Put measurement systems in place so that all employees, from the president down, are held accountable for the company’s improvements.
• Prove that sustainability is congruent with profitability by taking a holistic approach to financing environmental improvements. Savings in one department can be used to justify sustainability investments in another department.
• Get employees to talk about it; talking generates more thinking. But don’t invite employee involvement unless you’re prepared to respond to it. In 1998 the company hosted a meeting to brainstorm ideas for TNS initiatives. Approximately 80 employees participated, generating 270 different ideas. Without the staff to respond to employee suggestions, however, some employees went almost a year before seeing a response from the company.

Sources
1. Interviews with John and Jane Emrick in December 1998 and January 1999
2. Interviews with Derek Smith in September, October, and November 2000
3. Company documents

For more information on sustainability and environmental initiatives at Norm Thompson, please contact Derek Smith, Corporate Sustainability Manager at Norm Thompson, dsmith@nortom.com. This case study was written in February 1999 by Heidi Owens for the Natural Step Network. It was updated in December 2000 by David Allaway and in October 2002 by the Network.

APPENDIX

SAMPLE SUSTAINABILITY GOALS AND DEADLINES, NORM THOMPSON

FY01 Goals: Merchandising
1. Begin phase-in of organic cotton (to replace non-organically grown cotton).
2. Begin phasing out PVC (polyvinyl chloride).
3. Begin supply chain engagement
4. Track the “environmental value” of products.
5. Build environmental value into brands.

FY01 Goals: Paper/Forestry
1. Partner with Alliance for Environmental Innovation on review of catalog issues
2. Test recycled content in catalog pages
3. Reduce resource and energy use, and pollution (associated with catalogs?)
4. Prove the case for why the industry should switch to better source reduction, Internet-based sales, and recycled content paper.

FY01 Goals: Packaging
1. Review minimization, biodegradability, recyclability
2. Test alternatives

FY01 Goals: Operations
1. Reduce office paper use by 50%
2. Cut solid waste by 50%
3. Launch employee transportation program
4. Incorporate green building practices into renovation/expansion
5. Recognize employees

FY01 Goals: Finance and Influence
1. Contribute $500,000 net to the company’s bottom line
2. Solidify position as environmental-thought leader in the industry

5 Year Goals: Environmental
1. Global warming: Zero net carbon impact
2. Toxics: Elimination of identified toxins (formaldehyde, PVC, others) from products and processes
3. Habitat destruction: Zero negative forestry impact
4. Waste: Zero waste in facilities

5 Year Goals: Finance and Influence
1. Contribute $5 million net to the company’s bottom line (total, over the first five years)
2. Become a practical model for the business world