Norm Thompson: Commerce With a Conscience

There was a time when corporate executives who wanted to establish sound environmental practices also had to resign themselves to reduced profitability. The thinking was: You could institute terrific environmental initiatives or you could make healthy profits. But you couldn’t have both.

Not anymore. In an age when every CEO is looking to boost profits and position his or her company for future growth, environmental sustainability programs deserve greater study—now more than ever.

“It’s only a matter of time before we Americans truly begin to understand that one of the reasons other nations dislike us is because we take more than our share of the planet’s resources,” says John Emrick, CEO and chairman of Norm Thompson, a four-title catalog company based near Portland, OR.

“Of course, being angry because America takes that larger share isn’t reason enough to fly a plane into the World Trade Center,” Emrick continues. “But I believe Americans will begin to feel a bit uncomfortable about our energy consumption and our impact on the planet and on other countries. So adopting environmental awareness now also can be seen as a defensive business measure for the future.”

Emrick, whose company produces the catalogs Norm Thompson, Solutions, Early Winters and Waterfront Living, is ahead of the curve on a general business trend recently spotted by The Conference Board, an economic research firm. The public, which once looked to government to protect the environment, now looks to individuals and businesses to do the job.

Meredith Armstrong Whiting, a senior research fellow in government affairs at The Conference Board, recently wrote: “A strong commitment to the environment and a record of good environmental stewardship serve to bolster a company’s reputation in the marketplace, which can have a positive impact on relationships with stakeholders, especially customers.”

Emrick and his staff couldn’t agree more. During the past few years, they’ve instituted numerous environmental sustainability projects. What sets these initiatives apart is that the cataloger has linked the projects, for the most part, to the company’s bottom line. The result is a fascinating study in fiscal responsibility coupled with environmental sustainability.

The Building

In 1994, Emrick, just back from an overseas sabbatical, was asked by his catalog staff to build a new headquarters. The business had grown during the years, and staffers needed larger, updated facilities. “I came back into town and was looking for something to do at work, and my employees gave me a job,” Emrick jokes. “They told me we needed a new corporate headquarters.”

Emrick’s wife, Jane, had been studying environmental issues for many years before then. In addition, John Emrick is a long-time friend of Paul Hawken of Smith and Hawken, a stalwart environmentalist. “So when it came time to design our new headquarters, I was hit from two sides with this idea to construct a ‘green’ building,” Emrick recounts.

He hired architects and construction crews, telling them that Jane would help with the building’s design. “It’s a shame. They really didn’t know what they were in for,” he says.

At every weekly project meeting, Jane Emrick would ask the question: “Which of these building options will have the least impact on the environment?” At first, says John Emrick, the construction managers and the developers couldn’t answer her question: “They said that no one had ever asked them that before.” But in time, crews came to the meetings armed with alternatives in materials and construction methods. If alternatives were cost-prohibitive, they were discarded. But many more were incorporated into the 54,000-square-foot building constructed next to beautiful wetlands in Hillsboro, OR.

Emrick set a goal: The environmentally sound features installed in the building, such as energy-efficient lighting and temperature controls, should pay back in cost-savings within eight years. Turns out it paid back in only four years, so the money budgeted for the payback initiative in years five, six, seven and eight became pure profit.

“We didn’t build the structure with every conceivable energy-

efficient feature out there,” Emrick says. “If we did that, we’d have constructed a building that was a monument to ourselves, which we didn’t want to do. Instead, we approached it as a business decision with a financial goal in addition to an environmental goal. And because of that, we were able to reap both financial and environmental rewards.”

To date, Norm Thompson has saved about 35 percent a year in energy costs compared to other buildings of similar size in the region. This translates to about $25,000 a year saved on just that one line-item, Emrick notes.

An Action Plan

The resounding success of the headquarters construction emboldened Emrick to turn his attention to other sustainability projects, this time in the company’s day-to-day operations. Becky Jewett, Norm Thompson’s president, agreed to fund the new position of sustainability manager. The job involved assisting Jane Emrick in training all employees on sustainability issues, finding credible partners in the non-profit environmental arena and managing the environmental projects the board devised.

“On paper, Derek Smith was the least-qualified person we interviewed for the sustainability manager’s job,” says John Emrick. “He came to us from an MBA program at the University of Oregon. But he has a deep love and understanding of environmental issues as they relate to business. So we just clicked.”

Smith (who also credits Hawken with influencing his environmental ideas) spent his first three months learning the catalog business, listening and watching. “By the time Derek was ready to make proposals, no one viewed him as an outsider or as a threat,” Emrick remembers. “Derek networks like nobody’s business. He spent three months building relationships in the company.”

In 1999, Smith formed an advisory board comprised of employees from various departments and job levels to determine the next appropriate steps for building momentum throughout the company. The board advised developing an action plan.

Smith outlined some business practices that had the greatest impact and deserved action, such as the catalogs’ printing processes (which include paper-making, forestry management, printing processes and mailing), and the products sold in the catalogs.

Before long, ideas on improved sustainability started bubbling up from the company, says Jewett. Indeed, once employees were trained to filter all business practices through the “environmental lens,” they devised ideas on how to save on paper, packaging, postage, waste collection and other costs. And many of those ideas went into the action plan.

The Paper Project

Besides constructing the energy-efficient building, the company’s move to recycled paper is its most ambitious sustainability project so far. Today, all of Norm Thompson’s 80 million catalogs mailed per year are printed on a minimum of 10-percent post-consumer recycled paper. And the cost to do so is the same as printing on traditional catalog paper—a prerequisite for the program, says Jewett.

The company partnered with the non-profit Alliance for Environmental Innovation to pilot a one-year project on finding, selecting and testing recycled paper. The Alliance works cooperatively with companies to create environmental solutions that make business sense. A full history of the pilot program is outlined in the report, “A New Norm in Catalogs,” available to catalogers (see “For More Info”). The short version follows.

Between summer 2000 and spring 2001, the project team tested recycled-content paper in the Norm Thompson and Solutions catalogs. The tests included both the offset and rotogravure printing processes. In each mailing, team members tracked the number of orders, size of orders and revenue per catalog from the test group (which received catalogs printed on recycled-content paper) and two control groups (each of which received catalogs printed on virgin paper). The catalogs were mailed simultaneously to randomly selected groups and were identical except for the paper.

The tests showed no statistically significant difference in response between the recycled-content and virgin paper catalogs—great news for the project team. So all of the company’s catalogs were switched to recycled paper. Steve Jones, vice president of marketing, says the project is far from complete, however. “We’re testing higher levels of PCR [post-

consumer recycled] content; for example, we’re testing 20 percent PCR in our Early Winters catalog. And preliminary results are promising.”

In the meantime, Norm Thompson and the Alliance estimate the following environmental savings from the cataloger’s switch to recycled content:

* 4,400 fewer tons of wood consumed—the amount needed to produce a year’s worth of copy paper for 94,000 people.

* 20 billion BTUs of energy—saved enough to supply 190 households for a year;

* 11.7 million gallons of wastewater avoided—the annual discharges of 120 households.

And, says Smith, all of this was saved without burdening the cataloger with increased paper or printing costs. Nor did it relegate them to work with small specialty paper mills or printers. The recycled paper is bought from large mills such as International Paper, and the books are printed by Quebecor/World, the largest commercial printer in the world, and Quad Graphics.

The Product Mix

Another goal set early on was to replace products that include, for example, traditionally grown cotton, toxic chemicals and other environmentally suspect elements, with comparable, environmentally sound items. To meet that goal, Emrick and Jewett empowered their merchants (buyers) to search for alternative products.

Staff resistance was a bit heavier on this project than the paper program, Emrick admits. “Merchants told us, ‘I don’t have time to source environmentally friendly alternatives to my product mix,’” he recounts. “But we gently kept at them, until eventually they started looking for such products in the beginning of their search processes.”

The results, says Smith, have been mixed. “We’ve had large and small successes in this particular project.” For example, the Solutions catalog now offers non-toxic cleaning products and energy-efficient lighting items. The Norm Thompson catalog now offers—through partnership with a key vendor—a line of private-label slippers that are no longer made with PVC (a form of vinyl that’s particularly harsh on the environment). And the Early Winters catalog offers some products made of organic cotton blends.

“Many people don’t know that traditional cotton uses some of the harshest chemicals among all agricultural products,” says Smith. “In fact, it’s widely know that it’s one of the most destructive crops there is. So switching some percentage of that helps the environment a lot. And by using just a percentage to start and then increasing it slowly, we can respect our profit margins, as well.”

Jewett, a catalog industry veteran who started out feeling cautious about the sustainability programs, now speaks passionately of the organic cotton question. Recently, she and other Norm Thompson staffers toured cotton farms—and were shocked by what they saw. The traditional cotton farms, which they viewed right after the harvest, were “like moonscapes,” says Jewett. “No greenery, birds, bugs, or signs of life, nothing.”

She said the farm workers told her the aerial spraying of crop pesticides sometimes hit children walking home from school, and cancer rates in that particular region near San Francisco are increasing rapidly.

“It was shocking to me to see this in the United States,” says Jewett. “I had no idea this was happening.”

A trip to an organic cotton farm, however, revealed plenty of greenery, birds, and a visibly more porous and healthy-looking earth. “I’m not a scientist,” Jewett says, “but even I could see that the difference was like night and day.”

Other Programs

Back at headquarters, Norm Thompson employees established other creative and cost-efficient sustainability projects. Two in particular are helping the company reach its goal of 0 percent facility waste by 2006.

First, the company’s organic garden on the headquarters’ grounds is the repository for all employees’ food scraps. Employees work in the garden during their lunch hours and other personal time. “For some reason, we have a lot of computer staffers who volunteer for garden duty,” says Smith. “I guess sitting in front of screens all day prompts them to want to get out in the sunshine.”

Second, Smith established an extensive recycling program that includes the usual paper, plastic and glass, in addition to batteries, light bulbs, product samples, and computers and computer parts. Sometimes the latter items can be sold to outside vendors, thus generating additional income for the company.

The “Ship All Together” project was another idea generated by employees. When a customer calls to order multiple items and not all are immediately available, call center staffers ask the customer if it’s OK for the distribution center to hold the order and ship it when complete. If the customer says “no,” the order is shipped separately, as usual. But often, customers select the “Ship All Together” option. This simple operational change, says Jewett, saves the company a few thousand dollars a year in packaging and postage.

Even more cost savings were realized from another employee-generated idea: Stop using envelopes to send requested catalogs. What’s more, response from this particular test actually went up. The reduced cost of paper envelopes and the increased response, Smith says, has added about $100,000 a year to the company’s bottom line—just from this one initiative. Even small operational changes like this, he continues, can improve both the environment and profitability.

Jewett says these programs, coupled with the energy-cost savings from the building, saved Norm Thompson about $500,000 last year. Additionally, she set a five-year goal of $5 million in cost-savings from the sustainability projects. Results thus far indicate the company easily will hit that mark.

Morale-booster

All Norm Thompson principals agree that one of the biggest benefits to these environmental projects is improved employee morale—especially important in challenging times such as these.

Says Jewett, “Our employees tell us they love working here because they feel we really care about our community. These projects keep people focused, and they can take a lot of pride in their work. We’ve pushed the decision-making on the sustainability issues down the line. We’ve involved employees, so they feel pride in ownership and in their problem-solving skills. From an HR standpoint, that is very beneficial.”

To encourage idea-generation, Emrick and Jewett instituted a quarterly awards program, the Mobius Awards, to recognize employees who devise creative sustainability projects that also help improve the company’s bottom line. “Winning a Mobius is very prestigious in our company,” says Jewett.

These and other sustainability programs have not gone unnoticed in the business world. Norm Thompson was awarded the Robert Rodale Environmental Mailer of the Year in 2000 and 2001, presented by The Direct Marketing Association and administered by the U.S. Conference of Mayors. Also, the State of Oregon and City of Portland asked Emrick and his staff to consult with agencies such as the Port of Portland and the Portland Public School District to help administrators implement their own sustainability actions.

“We started out relatively alone in these endeavors,” says Emrick, “but we’re not standing alone anymore.”

Says Jewett, “Once you start looking at your business practices through an environmental lens, you’ll be surprised at what you see. Making even small changes will improve your bottom line, because you’re using your resources more wisely.

“Plus,” she continues, “it’s just the right thing to do.”

Number of titles: Four—Norm Thompson, Solutions, Early Winters and Waterfront Living
Headquarters: Hillsboro, OR
Employees: 650
Catalogs mailed in 2001: 80 million
Retail outlets: six stores in Oregon
Year 2000 revenues: $200 million
Products: Apparel, gifts, home furnishings

Norm Thompson catalog
749,178 12-month buyers
82 percent are women
Average household income: $62,000

Solutions
709,761 12-month buyers
85 percent are women
Average household income: $64,000

Early Winters
126,502 12-month buyers
61 percent are women
Average household income: $62,000

Waterfront Living
14,442 12-month buyers
62 percent are women
Average household income: $100,000

List manager: Millard Group
Contact: Donna Hamilton,
(619) 595-4801

For More Info

For a copy of “A New Norm in Catalogs,” Norm Thompson’s report on its recycled paper project, contact Derek Smith at dsmith@nortom.com, or call (503) 614-4402. You also can download a free copy of the report from: www.environmentaldefense.org/alliance.