Timberland CEO Jeffrey Swartz and CSR Strategy Manager Beth Holzman: The Truth About Transparency A Responsibility Revolution Extra
During the two years they spent writing The Responsibility Revolution, authors Jeffrey Hollender and Bill Breen conducted an intensive series of interviews at key companies on the leading edge of the corporate responsibility movement. In this bonus excerpt from Bill’s conversations with Timberland CEO Jeffrey Swartz and Timberland CSR Strategy Manager Beth Holzman, they share some of the additional insights and perspectives these encounters provided.
No company can claim to be authentically responsible if it doesn’t dare to get a little naked. Radical transparency—revealing your good, bad, and ugly impacts on society and the environment—is the first step toward turning critics into collaborators and collectively inventing aggressive ways to operate sustainably. As we show in The Responsibility Revolution, few publicly traded enterprises have done as much as the Timberland Company to innovate around transparency.
Along with Nike and Gap, Timberland was among the first big brands to reveal the locations of its suppliers’ factories and open them up to outside scrutiny. More recently, Timberland developed its Green Index, modeled on a nutrition label, which rates many of the company’s hiking boots and shoes on their environmental impact. There’s also the quarterly phone dialogs with CEO Jeffrey Swartz, in which callers query him about hot-button issues like eco-labeling and sustainable sourcing, and many more strategies for building a glass house.
When Bill Breen and I reviewed his interviews with Swartz , and other corporate-responsibility execs, we found that they’d dug into five essential truths about transparency. Each comes through hard-won experience.
Transparency is often irritating, difficult, and scary.
Swartz: Our efforts to be more transparent around our good and bad impacts on society and the environment started with the disingenuous discourse between activists and brands about where our factories are located. It was kind of a silly argument. It’s not hard to figure out where 300 million shoes are manufactured in China. Ten minutes with a phone book would give you the addresses. I didn’t want to have that conversation. And the best way to not have the conversation was to simply reveal the damn locations.
Holzman: When it came to releasing our factories’ locations, our biggest fear was that it might reveal secrets to our competitors, or they might learn of factories that they hadn’t considered sourcing from. But by 2005, the truth was inescapable: If we really are trying to improve the conditions in these factories and build trust with the stakeholders who are our biggest critics, we need to put it all out there.
Transparency starts conversations, which spurs collaboration.
Swartz: The important thing wasn’t the factories’ locations. The important question was the next question, Should [activists] see how these factories operate? That’s a good idea. Because once inside, they’d see that factories are dirty, smelly, noisy, and sometimes dangerous. I wouldn’t be in them unless I had made a judgment that I could defend to my kids. But the solutions to improving factory conditions are nowhere near as simple as we’d like them to be. Innovation can come from any seat in the orchestra, and by creating more of a three-dimensional dialogue with outside groups, we open up real opportunities for innovation that we wouldn’t otherwise capture.
Holzman: As it turned out, our competitors were in many of the very same factories that we were in. So we began to pool our resources to work collectively to improve conditions, instead of working individually on a one-off basis. For example, we’ve collaborated with Levi-Strauss and other brands on auditing the factories that we collectively source from. This frees up resources for our assessors and the factory management to focus on longer-range challenges, such as developing worker-training opportunities and upgrading management systems. The resulting improvements inevitably impact conditions on the factory floor.
Transparency depends on data.
Swartz: To be more transparent, you first need to gather lots of information. If you look at the environmental footprints we have in manufacturing only footwear, the volume of what we’ve learned—in an effort to go back to activists to say here’s what we know—has amazed us at almost every turn.
Gary Hirshberg first alerted us to the fact that we were wasting time looking inside our factories, that in terms of our environmental impact it’s all about the cows. Methane emissions from cows are our single biggest source of greenhouse gas, by far. The problem is, nobody slaughters a cow for its hide. They slaughter it for its meat. The hide and especially the leather that goes into our boots is a derivative product. But still, we have a derivative responsibility. Cows emitting methane might be only 20% of our problem, but we need to be accountable for our entire supply chain, from cows in the field to shipping the final product.
Timberland is not a cow company; it’s a shoe company. But it turns out that the best way for us to be a more sustainable company is to innovate around the cows—to find ways to use less leather.
Holzman: We had a lot of pressure from stakeholders on leather. So we needed to have a lot more transparency around where that leather comes from and how it’s procured and tanned, since there’s a lot of chemicals and processes involved. As a result, we are now working with several other brands through the Leather Working Group to establish better protocols and measurements. If you don’t have the data and you don’t have those deep partnerships, your transparency initiative won’t win much credibility.
Transparency promotes accountability.
Swartz: I got the idea for the design of our Green Index labels from the signage at Whole Foods. The signs were very simple in their assertions: Here’s where this produce comes from. Here’s why it’s organic. I thought, Why can’t we put some kind of signage or label on our products, as a way to show their environmental impact? All the regulatory folks at Timberland told me my idea was dumber than dirt. We’d be admitting that we pollute, that we aren’t good at what we do. They argued that we don’t have a legal requirement to disclose, so why do it? But I believe naively that if you tell the truth, most people will applaud.
Holzman: The Green Index is obviously an eco-label that communicates to the consumer, Here’s this product’s environmental footprint. But the Index is even more of a tool for our designers. By publicly scoring the environmental impact of our products, the Index pushes designers to choose raw materials that go into the product, such as organic cotton, that are less harmful. That visibility makes all of us at Timberland accountable; it’s a powerful incentive for promoting sustainability.
Transparency is a potent competitive weapon.
Swartz: When we say that 5% of our energy is renewable, we’re also admitting that 95% of our energy isn’t. So I asked our team, How does that 5% compare to Nike? Their answer: there’s no way to know. My reply: There’s one way to know, let’s put the number on a label, and if consumers decide that that’s important, Nike will have to tell them.
Now, Nike is competitive, and they won’t want to disclose their energy from renewables unless it’s at least 1% higher than ours. Putting the label on our products is not about the consumer. Because honestly, the amount of pushback from the consumer has been minimal. But as an action-forcing mechanism inside our industry, it’s been dramatic. If Nike gets to 6% renewable, we won’t have a problem as long as we get to 7%. In other words, transparency can force all of us to try to get from 5% to 15% to 50% renewable energy. That’s a conversation that couldn’t have been forced until the motivation was market-based.
At the end of the day, if the consumer doesn’t care about this, it won’t work. But the consumer is really a proxy to spur the industry to push the envelope on sustainability.
Jeffrey Hollender and Bill Breen are co-authors of the recently published book, The Responsibility Revolutihttp://www.jeffhollender.com/responsibility-revolution. Bill Breen is the Editorial Director, and Jeffrey Hollender is the Co-Founder and Executive Chair of Seventh Generation. Jeffrey is also the author of The Inspired Protagonist, a leading blog on corporate responsibility.