Organically Grown Company, Eugene, Oregon, USA

Planning for the future harvest: Sustainability in the food industry
A Natural Step Network Case Study

Summary

The Organically Grown Company was formed in 1982 as an organic farmers’ cooperative out of Eugene, Oregon. The cooperative expanded and eventually became a company so that employees could be included as shareholders. Today, it is the largest wholesaler of organic produce in the northwestern United States. From the outset, Organically Grown Company has promoted sustainability by selling organically-grown food to local communities. However, sustainability had not been integrated throughout all operations of the business. Organically Grown Company adopted The Natural Step Framework to guide this transition to a sustainable business model. It has since trained all employees in The Framework, created four long-term goals, developed annual action plans and routinely evaluated its progress. The long-term goals include the elimination of carbon emissions, material and toxic waste, and promoting social development with their employees and farmers. Organically Grown Company now draws 100% of its electricity from wind power, has reduced emissions in its fleet, and contributes to socio-economic development for banana-farming communities in Mexico. It has done all of this while ensuring that its business is profitable. Recently, Organically Grown Company was recognized with a “Fleet of the Year” award by the Clean Cities Coalition and the “Mayor’s Bold Steps Towards Sustainability” by the Mayor of Eugene.
 

Organically Grown Company
•  Organic Produce Wholesaler
•  In business since 1982
•  160 employees

Core values
1.  Health of workplace, community, food supply, soil, and planet
2.  Integrity in providing products and services and in community engagements
3.  Partnerships that build trust with organizations in food production and consumption
4.  Sustainable business model of distributing food that is “good, clean, and fair”

Background
In the late 1970s, several small farmers in the Eugene, Oregon area were competing to sell locally grown produce to the natural foods market. After working independently to grow, package, and distribute their produce, competition gave way to collaboration. The farmers pooled their resources and in 1982, Organically Grown was formed as a farmer-owned cooperative. Later, Organically Grown became a company so that employees could be included as shareholders.

OGC was founded with the mission of providing healthy, organic food to communities in the Pacific Northwest. This mission has always been closely linked to environmental and social sustainability. By supporting organic agriculture, Organically Grown is committed to food that is grown without the use of synthetic chemicals, or petroleum-based fertilizers. The environmental benefits of eliminating chemical inputs are long-term soil quality and the protection of local watersheds. While this promotes both local and global ecological security,

Organically Grown also includes the health and prosperity of their workforce and the communities they serve as part of their core values. The company is in the process of adopting an employee stock ownership plan (ESOP). This strong commitment to social equity has been rewarded with a very low turnover rate and a high level of employee job satisfaction. Organically Grown’s vision of providing sustainably-produced food, building trust and partnerships, and setting high standards for employee benefits, is in line with The Natural Step Framework.

Despite these notable accomplishments, OGC recognized that sustainability had not been integrated into its entire business model. While organic produce was being delivered to customers, it was still being carried by a fleet of gas-chugging, carbon-emitting trucks and trailers. Heating and powering their three facilities in Eugene, Portland, and Kent, Washington were having the same effect. Sustainability was also not being addressed in the energy used in harvesting, the material waste in packaging, and the labor conditions of the workers who harvested the produce at home and abroad. While there had been employee initiatives to reduce office paper consumption and introduce a more efficient cooler, these were individual efforts, not part of a larger, company-wide strategy. All that changed in 2005 when Organically Grown’s ownership—composed of farmers, former farmers, and employees—and Board decided that sustainability would become part of the company’s mission and be embedded in all facets of its operations. A sustainable business model that will distribute food that is “good, clean, and fair” became the 4th part of their mission. Once this was settled, the Board focused on finding a framework on which to build their sustainable business model.

Introduction of The Natural Step
The Natural Step (TNS) Network provides organizations with a scientifically-based framework to strategically integrate sustainability objectives. The framework is developed within an organization through a series of trainings, some which include the entire workforce and others that are developed for managers and directors. At Organically Grown, former interim CEO and current Chairman of the Board Rick Baker had been a colleague of TNS trainer Duke Castle at Hewlett Packard. Baker recommended The Natural Step Framework because of its ability to translate sustainability into a business-friendly language while forming a clear action plan by connecting discrete initiatives. Sustainability Coordinator Natalie Reitman-White noted the appeal of the science-based approach to agriculturalists, the backcasting process to planners, and the funnel metaphor for business strategists. While both Reitman-White and Baker agree that The Framework in and of itself is not a toolkit, they liken it to a compass that helped Organically Grown Company orient its long-term goals.

“A lot of companies get started with a lot of little projects in different departments—cutting out waste, doing something about energy—and the problem is that companies tend to stall. They don’t have this glue, this language, this overarching framework, which brings all these projects together.”

-- Rick Baker, describing The Natural Step Framework

In 2006, under the leadership of new CEO Josh Hinerfeld, Organically Grown set out to educate its workforce in The Natural Step framework. One of Hinerfeld’s first moves as CEO was to hire Natalie Reitman-White to be the Sustainability Coordinator. Reitman-White was given the responsibility of leading a management team in organizing, implementing, measuring, and evaluating the organization’s sustainability efforts. Rick Baker describes this as a turning point for OGC’s sustainability efforts:

“A huge step for any organization is to hire someone who is truly devoted and dedicated to carrying out a company’s sustainability mission.”

--Rick Baker referring to Organically Grown’s hiring of Natalie Reitman-White as Sustainability Coordinator

In 2006, OGC invited Duke Castle to give a series of training sessions covering The Natural Step Framework. In January and February, Castle gave an executive briefing to senior management, followed by a training workshop to management and Board members. At the general training for all 109 employees in the summer of 2006, CEO Josh Hinerfeld gave a speech demonstrating the Company’s commitment, Castle led a half-day workshop on TNS Framework, and Natalie Reitman-White explained how employees could get involved. The training sessions addressed a multitude of issues, such as: creating a vision for sustainability, delivering triple bottom line results, changing employee culture, applying the framework, measuring results, and creating a timeline. The different training sessions enabled them to be adapted to their audiences. While the general training sessions provided a common language and understanding of The Framework, sessions held with management and the Board focused on bringing multiple initiatives together and assessing tradeoffs.
 

Integrating The Natural Step Framework.
Immediately following The Natural Step training, Sustainability Coordinator Natalie Reitman-White formed Organically Grown’s first Sustainability Steering Committee. The Steering Committee is composed of 12-16 members from different departments representing the three Organically Grown locations. The Steering Committee was given a three-part mandate:

1.  Identify gaps in an internal sustainability audit
2.  Articulate a vision of a sustainable future
3.  Backcast to determine actions to be taken to reach this vision
 

The Committee convenes annually to educate new employees, evaluate progress, and plan for next year. Each year, the Committee provides an in-house training for all employees in The Natural Step Framework as well as the vision and strategies that have developed around the Framework. In addition to employee-training, the Committee meets to hash out its annual plan. The planning cycle reviews past projects, sets new goals, and integrates the new goals into the operating and budgeting plan. Reitman-White estimates that the Committee decides upon 10 new projects per year. These projects are developed using The Natural Step backcasting method. The Committee also develops partnerships outside the company, which will be discussed in more detail later. After the planning cycle, the Committee dissolves and work begins.

Figure 1: Annual Sustainability Planning and Implementation at OGC. Source: Organically Grown 2007 Sustainability Report
 

(A) Creating Awareness
Since The Natural Step training in 2006, Organically Grown has required annual sustainability orientations for all new employees. The purpose of these trainings, says Reitman-White, “is to develop a common framework, language, and basis of understanding throughout the organization”. To date, 134 Organically Grown employees have participated in this training. The trainings focus mostly on staff, but also include Board members and growers, to a lesser extent. The trainings are designed to address the following questions: 

• What is OGC's mission and why do we want to be a leading sustainable organization?
• How do our sustainability initiatives enable us to pursue our mission and company “Aspirations”?
• As an employee of OGC, what's in it for me? How can I participate in this process?
• What does the Natural Step framework mean and how will it help drive our triple bottom line?
• What's the blue-print and time-line for implementing the framework?
• How will we measure the results of our sustainability efforts?¹

Besides these annual trainings, Organically Grown has developed several other initiatives:

• The Sustainability Steering Committee is composed of non-managers, giving employees an opportunity to become actively involved with project
• The annual employee survey includes questions to evaluate employee reaction and buy-in to the sustainability program. Ninety-five percent of Organically Grown employees “strongly agreed” with the sustainability mission on the most recent survey.
• Sustainability goals are integrated into the job description so that employees are not expected to perform them voluntarily but rather as part of their daily work.

Figure 2: Radishes and scallions are part of the nearly 100% organic produce at Organically Grown

Figure 3: The Kenworth T300 hybrid-electric biodiesel truck³

(B) Baseline Analysis
For the first baseline analysis in 2006, Organically Grown relied on a few different tools. A sustainability audit performed by Resource Innovations in 2004 identified unsustainable materials or processes within business operations. This was supplemented with an internal staff survey on how a sustainable future would be envisioned and a SCORE² (Sustainability Competency & Opportunity Rating and Evaluation) audit that measured management capacity for sustainability. While baseline analyses are generally considered a one-time event that occurs at the beginning, Organically Grown has added new baseline indicators since 2006. In 2007, for example, OGC began measuring the carbon footprint from employee commuting. Some of the results from this analysis are below:

• Organic Produce: 98.8 percent of produce produced was certified organic by Oregon Tilth and other USDA accredited third-party certifiers..
• Transportation: OGC assessed miles-driven, fuel consumption and biodiesel usage for its fleet of 21 trucks and 13 trailers in 2006 and 2007.
• Energy: Total energy use has been calculated at all three facilities since 2006.

Table 1: Fuel Consumption in Transportation

• Greenhouse Gas emissions: OGC tracks greenhouse gas emissions resulting from electricity, diesel, biodiesel, and natural gas. In 2006, this produced 1,560 metric tons of CO2.
• Return on Resources Consumed: Organically Grown has developed a metric for measuring the total energy consumed for each case of produce delivered from Organically Grown’s shipping dock to the retail store or restaurant. 

Figure 4: Return on Resources Consumed: Energy consumed per case shipped (in BTUs)

• Waste: Waste reduction is one of the major ways in which Organically Grown felt sustainability could be incorporated into their business model. In 2006, OGC sent 1,882 cubic yards of trash to the landfill, 3,222 cubic yards to recycling, and 107 tons of food waste to composting services.
• Packaging: Organically Grown formed an alternative packaging project team to investigate substitutions for corrugated cardboard boxes. In a Michigan State University Lifecycle Study of Reusable Plastic Containers and found that they generated 95% less solid waste, 29% less greenhouse gas emissions and consumed 29% less total energy.

(C) Creating a Vision
When OGC decided to take The Natural Step to fully integrate sustainability into its business model, it was not a decision to change a core philosophy, but rather a challenge to embody the values and ethics that organic agriculture supports within its business practices. After the Sustainability Steering Committee performed the baseline analysis, it outlined four goals that would act as a compass for the future action plans.

These overarching goals are the basis for the annual projects that the Sustainability Steering Committee initiates. Organically Grown used The Natural Step backcasting method and funnel metaphor to develop these projects.

Table 2: Action Plan

(D) Down to Action
Organically Grown’s action plan includes steps that are no-brainers—those that cut waste and costs—as well as those that must get budgetary approval because they are somewhat costly. According to Reitman-White, using a biodiesel blend currently costs the company more, but she was able to win approval because of a willingness on the part of management and the Board to “pay for their values”. Reitman-White recognizes that these cost structures are also directly linked to factors outside of OGC’s control, such as federal and state policies, transportation infrastructure, and renewable energy technologies. Even in this regard, however, Organically Grown has been pushing for change. OGC has helped pioneer a cluster development group called the “Food Trade Sustainability Leadership Association” to join with other businesses within the food industry to lobby for the rapid development of sustainable technologies. The cluster development group also provides the opportunity to network across the sector and share resources. Additionally, OGC is part of a hybrid truck users’ forum that organizes around improving hybrid truck technology. This networking approach builds upon shared knowledge, lays the foundation for future partnerships, and generates a powerful voice for businesses that are serious about sustainability.

Organically Grown has also developed partnerships to improve socio-economic conditions for farming communities in the U.S. and abroad. The critical social element to sustainability is the ability for people to meet cultural, economic, and political needs, represented by the fourth Natural Step system condition. Natalie Reitman-White points out that while toxic chemicals are absent, organic certifications do not ensure that labor conditions are beneficial to the workers. To confront this issue, Organically Grown partnered with Organics Unlimited as part of their “Giving Resources and Opportunities to Workers (GROW)” program. OGC now purchases bananas exclusively from the GROW program for an extra 60 cents per box, the sales of which in 2007 sent $83,571 to fund educational and health programs in southern Mexico.
 

Table 3: 2007 Action Plan Results Key: vvv- Achieved vv- Making Progress ? Did not achieve

Other accomplishments: 

• Transportation: Biodiesel is purchased from Sequential Biofuels, which sources 95 percent of its biodiesel from used cooking oil feedstock. In 2007, all trucks used a B20 (20% biodiesel), while a pilot project was launched using B99 in four trucks. Organically Grown also purchased its first hybrid-electric biodiesel truck (pictured at right). The truck saves 10%-30% on fuel and has a gross vehicle weight capacity of 33,000 lbs.
• Energy: In 2006, warehouse capacity expanded, increasing energy use, but by 2007, all facilities were operating on 100 percent green power.
• Greenhouse Gas emissions: In 2007, GHG emissions fell to 1,347 metric tons due to greater biodiesel usage and increased green power purchases.

Measuring the Results
While sometimes overlooked because of lack of experience or resources, good metrics are critical to assessing progress. With the increasing availability and accuracy of metrics such as life cycle analyses and carbon footprinting, it is becoming easier for companies to find and implement these tools. Organically Grown has developed a metric for almost every major category of its sustainability program. Financial, environmental, and social data are collected and measured each period and used to determine how projects may be improved. In the early stages, Organically Grown borrowed the measuring methods from the sustainability reports of other companies within the food industry, as well as the Global Reporting Initiative. When a metric was not available, Reitman‐White has been able to backtrack the goal to the material or flow that needs to be measured. One more advanced metric that Organically Grown has developed is the “Return on Resources Consumed”‐‐where the total energy (in BTUs) is measured for each case of produce shipped. In each annual planning session, the Sustainability Steering Committee analyzes the metrics by assessing goal progress vs. financial cost, and uses the information to discuss goal feasibility.

Figure 5: Greenhouse gas emissions at OGC for 2006 and 2007 (in Carbon Dioxide metric tons)

Challenges
Since the decision to adopt The Natural Step framework and form a Sustainability Steering Committee in 2006, Organically Grown has developed a sustainability vision along with short and long-term goals, measurable results, and clear progress indicators. These are laudable accomplishments, especially considering that several goals have been met in the first few years. Of course, all innovative and progressive organizations face challenges when they choose to be an early adopter of new information or technology. One of the benefits of membership in The Natural Step Network is that members can be alerted to these challenges and lessons by the past experiences of fellow members. In essence, The Network provides a roadmap to a sustainable business model for early adopters, where the landmarks are the lessons learned by other members. Listed below are highlights of some of the early challenges that Organically Grown has faced.

• It is crucial to allow employees sufficient time to implement new practices. If employees are delegated new responsibilities, but expected to complete them voluntarily, or in addition to their normal workload, the project is likely to fail. New initiatives need time to take effect and if this isn’t provided, employees may not view the work as integral to their job, or they may be resentful of the increased workload.
• While some projects will reduce financial costs—reducing waste is an example—others will cost more. Organically Grown made the decision to use 20% biodiesel even though the price tag was higher because the Board decided that a strong commitment to their values was worth the added cost. Organically Grown has succeeded in balancing higher-cost programs with those that save money.
• The current state of technology and infrastructure may inhibit a company from choosing more sustainable solutions. Organically Grown, for example, has not found transportation for large loads of produce that does not rely on fossil fuels.
• •  Decisions that include social and environmental criteria will require more time to properly assess. Managers should expect decision-making processes to become more-involved and allocate time appropriately.

Benefits and Lessons Learned

• The Natural Step training series offered by Duke Castle was very helpful in providing a framework for action. The framework has provided employees with a common language and understanding of sustainability.
• The Network has given Organically Grown the opportunity to learn from other companies and share valuable experiences. This has been especially useful when the company faced challenges.
• Management and leadership need to be engaged and supportive of programs for them to have a lasting effect. Employees should see their work in these programs reflected in their job descriptions.
• The decision to adopt a sustainable business model has fed into customer loyalty and solidified relationships with customers.
• The A-B-C-D process has been instrumental. Natalie Reitman-White recommends having a long-term vision, a baseline, measured results, and taking the time to share the results with management and employees.

¹ Source: Organically Grown 2007 Sustainability Report
development. The members can come from any department and all three facility locations.

² Developed by Axis Performance Advisors Darcy Hitchcock and Marsha Willard along with Zero Waste Alliance

³ All photos courtesy of Organically Grown Company

Written by Jesse Worker for The Natural Step Network.