This is “Sustainability Reporting at Timberland”, section 11.1 from the book Sustainable Business Cases (v. 1.0).
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As a publically traded company, Timberland was required to report on its financial performance and make disclosures about the business regularly to shareholders and the general public. However, this type of reporting traditionally does little to communicate to stakeholders the sustainability actions that the company undertakes.
Through its efforts in support of employee service and on other areas related to the social responsibility, Timberland developed a strong reputation and following in the national and global corporate social responsibility (CSR) leadership communities. This attracted the attention of the NGO Ceres, which was leading a national coalition of investors, environmental organizations, and other public interest groups working with companies to address sustainability challenges. Ceres’s mission is to “integrate sustainability into business practices for the health of the planet and its people.”
Ceres was one of the first organizations to formally introduce and advocate for the concept of sustainability reporting. Ceres believed that Timberland was a good candidate for publicly disclosing sustainability-related information specifically because of their unique employee service program. In addition to reporting metrics on employee service, the “beyond the traditional reporting” for Ceres also included the compliance area. This included reporting on the Timberland workplace and at the factories of their suppliers around the world, including issues such as child labor and unfair working conditions.
In 2001, Timberland released its first annual corporate social responsibility report. The nineteen-page report focused heavily on service related activities of the organization, including City Year. The following year, a second annual corporate social responsibility report was released. This was a more comprehensive thirty-eight-page report that included a more detailed discussion on environmental and social activities.
Starting in 2004, the annual CSR reports from Timberland began to feature the Global Reporting Initiative (GRI)A network-based organization that pioneered the world’s most widely used sustainability reporting framework. The reporting framework sets out the principles and performance indicators that organizations can use to measure and report their economic, environmental, and social performance. sustainability reporting guidelines and featured sustainable performance indicators (SPIs).A metric that measures an economic, social, or ecological performance area in a business. See Chapter 5 "Entrepreneurship, Innovation, and Sustainable Business" for a more detailed discussion. (See details on GRI and sustainability reporting in Chapter 5 "Entrepreneurship, Innovation, and Sustainable Business".) Sustainability reporting helped the company become a recognized industry leader on sustainability efforts, and this helped to strengthen the brand’s name, recognition, and value.
Beginning in 2008, Timberland started reporting on key CSR performance indicators on a quarterly basis. The main report is presented in a dashboard format, which contains SPIs in each of the four CSR strategy categories.
Sustainability reporting is a statement to stakeholders and the general public about an organization’s environmental and social impact and what the organization is doing to improve its impact. It is about being accountable for the ecological and social impacts that an entity has and also the solutions the entity develops around sustainability.
Timberland’s reporting and communications for sustainability includes the following:
Timberland also shares its social and environmental values and product attributes with consumers through retail messaging and product information. Their Green Index rating is intended to give consumers clear and easy to understand information about the impact their footwear choices have on the environment.
Source: Image courtesy of the authors.
The quarterly dashboard is organized around the four Timberland CSR pillar areas: energy, product, workplace, and service. For example, average grams of volatile organic compoundsChemicals that may have short- or long-term health effects. This includes paints, pesticides, and adhesives. per pair of footwear is a sustainable performance indicator in their product category. In each pillar area, there are three category measures and three to six total indicators reported. All together there are fifteen indicators measured between 2007 through the present.
The dashboard provides a consistent and cohesive way to engage internal and external stakeholders on CSR. It enables Timberland to be accountable for progress against stated goals. Internally, it also allows for prioritization of resource allocation against key sustainability initiatives.
In 2006, Timberland introduced an industry-first “nutrition label” on all of its footwear boxes in an effort to provide consumers with greater transparency about the company’s environmental and community footprint and the environmental impact of the specific Timberland products consumers are purchasing.
The Green Index program is the company’s primary mechanism for pursuing “cradle to cradle” product design. This index measures and communicates critical aspects of environmental performance in a format that allows Timberland to guide product design and help consumer choice. The Green Index measures three areas of product impact:
The data are compiled to give a product an index score from ten to zero, with ten being a high impact and zero being no impact at all.
Timberland has a team of employees dedicated to CSR in the company. It consists of a vice president of CSR, four managers, a team of fourteen code-of-conduct employees, and two community service employees. The CSR team works closely with senior management, including the CEO.
In December 2006, the company created a formal CSR committee within its board of directors. This group consists of four board members who are responsible for guiding all CSR strategy development. To accomplish this task, the committee meets regularly with the CSR leadership team to help set the strategic agenda and hold the team accountable for their actions.
Two members of the current CSR team are Beth Holzman, the company’s CSR strategy and reporting manager, and Betsy Blaisdell, the manager of environmental stewardship. Beth Holzman was a manager at Ceres before joining Timberland and interacted with Timberland in that capacity. Betsy Blaisdell had previous experience working in the New Hampshire state government and performing environmental research at the University of New Hampshire.
The CSR team’s responsibilities include developing the metrics to report and standardizing the reporting. It also includes collecting information, preparing reports, communicating information to senior management, and interacting with stakeholders.
A key objective is to ensure that the sustainability reports are used and integrated into the other departments at Timberland. As Betsy Blaisdell describes it, “Everybody wants to do the right thing at Timberland. And so for us, it’s taking something that can be a really complex environmental metric, like kilograms of CO2 for a pair of shoelaces, and translating it into: this is the best choice, this is a good choice, and we really discourage you from using this approach.”
Another key objective is to standardize the reporting method and information in order to make reporting easier and more cost effective within Timberland but also within the industry. The goal is to create standardized sustainability metrics and standardized measures of environmental performance for Timberland’s products. The goal of standardization being that instead of Timberland collecting the information through their own business systems, suppliers would provide the information into a registry that Timberland and other companies could access.
In many respects, former CEO Jeffrey Swartz was the leader on CSR reporting efforts and a driving principle of the company’s sustainability reporting efforts has been radical transparency. For Timberland, radical transparency is about talking about the bad as much as the good. It is about being provocative, sharing information with the intent of receiving a reaction and response from stakeholders. It includes communicating things that are material and important to the company.
For example, Jeffrey Swartz was the champion of Timberland’s “nutrition” labeling for shoes. His view was that if consumers could go into a supermarket and look at a couple different boxes of cereal and know what’s good or bad for them, why couldn’t they do that going into a footwear store or going into a large retailer and see similar information reported?
On their website “Voices of Challenge,” Timberland managers share very difficult challenges and concerns related to sustainability and ask for candid feedback through blogs and social media. And consumers and NGO organizations have asked challenging questions to Timberland through this resource.
As Betsy Blaisdell describes it, “I think we’re always pushed further ahead by external stakeholders. And I’d say we’re largely influenced by requests that we get externally for improving or shifting our reporting. We had a major issue with Greenpeace a couple years ago. It had to do with transparency in our leather supply chain in Brazil and it really pushed us to have an industry dialogue about how can we take our protocol for assessing the environmental performance of our tanneries, and push that further back down the supply chain. That led to more transparency. And that was purely an external push from Greenpeace that led to that.”
For Timberland consumers are always the most important stakeholder group to reach, but the reality, at least for now, is that very few consumers actually read, understand, and act on the sustainability reports.
According to Betsy Blaisdell, “There is evidence that significant numbers of consumers do read the nutrition label on the footwear. But very few probably fully understand what it means…it’s hard for them to really use it because it’s not relative to anything. It’s not like they can compare a Timberland product with a Nike product right now and say, OK, price, performance, and aesthetics alike, I’ll take this shoe over this shoe. So I think it’s nice to do for consumers, but it’s not necessarily impacting their purchasing decisions, which is where we would love to take it.”
Other stakeholder groups that are leading Timberland to expand its sustainability reporting are the investor community, peer businesses, and other companies, including stores and retail outlets that Timberland sells its product to.
Outside the United States, there is more governmental involvement around sustainability reporting. For example, in France the government is moving to pass legislation that would require the nation’s companies to begin measuring the environmental life cycle impacts of their products. France is leveraging what some industry groups in Europe have already developed. The French government recognizes that businesses have been ahead of government on sustainability reporting, and this is the case of Timberland in the United States.