Posts Tagged ‘CSR’

The Evolution of CSR Reporting

Sustainability reporting is increasing at a fast pace here in the United States. Since the Global Reporting Initiative was launched in 1997, the number of reporting organizations in our country has increased tenfold. It’s true that multi-nationals reporting on environmental, social and governance (ESG) issues in the U.S. lag behind our global counterparts. However, it’s encouraging to see an increase in reporting uptake – not just because this allows stakeholders to better understand corporate impacts, but also because reporting in its best form should be a tool that aids strategy development, target setting, and business management.

Since the early days when standards were first created to guide corporations’ communication of ESG impacts and issues, the details, mediums, and audiences for sustainability reports have changed. What started out as backward-looking accountability statements primarily covering environmental impacts and corporate philanthropy has evolved into robust corporate evaluations of material impacts – which are now vetted through stakeholder bodies and include a balanced account of progress, challenges, and forward-looking and aspirational targets (in their best form).

Timberland has been experimenting with different mediums for some time. We issued our first CSR report back in 2000 – a short, printed document focused on community service, employee engagement, and overview information about our social and environmental programs. Fast forward to 2007 when we released our 2006 CSR report – our last annual, printed “accountability statement.” In today’s era of increasing information and stakeholder requests, I’m often asked “who’s reading these reports, and what are they accomplishing?”  One could argue that our 19-page report in 2000 was accessible, easy to understand, and inclusive of many stakeholder interests (although light on data by today’s standards). By comparison, our 2006 report (which was 180 pages long and won several awards for best-in-class disclosure) was full of possibly too much information for different audiences to easily access what they had specific interest in.

There’s continued debate about whether or not a single sustainability report can satisfy the needs of multiple stakeholders – that is, employees, NGOs, issue experts, critics, partners, peer companies, investors, analysts, consumers, communities, workers, media, governments … the list goes on!  Different stakeholders have different interests in EGS data, programs, and strategies.  Being accountable to all of these stakeholders requires engagement, partnership, and dialogue – much more than simply producing a report. Yet the reporting process can inform these audiences, and I encourage companies to start by determining which groups are core to their business success. Target your reporting approach for these key groups, and ensure others can easily find information so they aren’t left out.

So how does a company balance the need for more information, while also maintaining credibility and relevance? At Timberland, we’ve continued our experimentation with different reporting formats. Our evolving reporting and communication approach reflects an evolving and improved sustainability strategy for managing risk, creating value and increasing consumer relevance – components that are necessary for our entire business model to succeed.

Whether you are a first time reporter or have been at it for years, here are my top 5 tips for effectively leveraging reporting as a management and communication tool:

  1. Ensure your report reflects material impacts – GRI advises that “the information in a report should cover topics and indicators that reflect the organization’s significant economic, environmental, and social impacts, or that would substantively influence the assessments and decisions of stakeholders.”  A credible report should cover such impacts, and by engaging stakeholders in a materiality assessment process, you can prioritize resources and reporting topics. Ford Motor Company has been producing an excellent Materiality Matrix for years.
  2. Consider different stakeholders’ entry points and interests – different stakeholder groups read reports for different reasons. A detailed data set may appeal to a socially responsible investor, whereas a story about your program in action could be more relevant to an issue expert looking to understand supply chain management practices. Timberland issued our 2007-8 CSR report as a “suite” of communication tools – including a summary report (only 30 pages!), detailed “Dig Deeper” papers for those looking for more details, an online forum to engage stakeholders in dialogue on key issues, and a consumer-facing brochure.
  3. Tell the good and the bad – In today’s globalized society, if you’re not telling your own story in a truthful, credible, and engaging manner, others will simply tell it for you – and sometimes inaccurately! And yes, even if you are the most transparent company in the world, this still happens. But being open, honest and engaging can put you ahead of the curve when it comes to stakeholder engagement, campaigns, and trust-building. Dell has an open report, including discussion of tough issues like eliminating hazardous chemicals.
  4. Make it engaging – which will help attract different types of stakeholders, too. Timberland’s new Responsibility website aims to do just that. The site is much more than a report; it’s a comprehensive and interactive hub for all information about Timberland’s social and environmental activities. Viewers can read Featured Stories about topics such as our sustainable store design, work with tanneries to reduce their environmental impacts, efforts to empower factory workers, and community greening. It’s important to consider the best ways to reach targeted stakeholder audiences – as a footwear company, consumers are key and that’s why these stories are written in a news-editorial style and linked to CSR Stakeholder Calls, Voices of Challenge dialogue, blog and social media.
  5. A report is not the means to an end – Use the reporting process to build increased accountability for sustainability issues within your organization. Reporting efforts should be aimed at both internal and external audiences. And don’t forget to engage and share results with your own business units and internal leaders. It’s critical to build buy-in and ownership of ESG issues in order to successfully integrate sustainability into your business model.

This post also currently appears on the Boston College Center for Corporate Citizenship blog.  Thank you, BCCCC, for sharing content with us!

Will Sustainability Reach the Mainstream?

A key tenet of being a responsible company is to manage risk and create value for the long-term sustainability of the corporation. At Timberland, we believe the concepts of commerce (sustainable shareholder returns) and justice (operating sustainably, including social and environmental management) go hand in hand.  Our challenge is to not only demonstrate the business case for sustainability within our own company, but to ensure that others do too.

Earlier this year, former Timberland CEO Jeff Swartz and PPR Chief Sustainability Officer Jochen Zeitz engaged in spirited dialogue about PPR’s Puma brand initiating a new sustainability accounting measure: their Environmental Profit & Loss statement.  I am impressed with Puma’s effort to calculate and assign financial costs to environmental impacts – something that will help move the needle for mainstream analysts to incorporate “that type of sustainability” into financial valuations of companies.  We’ve seen few other companies proactively quantify sustainability impacts (Baxter Healthcare and SAP provide interesting examples; see also Timberland’s CSR Stakeholder Call from May 2011 – Reducing Environmental Impact & Improving Bottom Line Benefits), but clearly not a groundswell.

Could the needle be starting to move a little more? Last week Puma announced it would be taking its Environmental P&L to greater scale – the brand’s sustainability accounting work will be extended to other luxury brands owned by PPR, including Gucci, Stella McCartney, and Yves Saint Laurent.  Hopefully, this is an indicator of how one brands’ sustainability efforts can influence more than their individual operations and sustainability plans. (And before you ponder too much about the applicability of this point coming from an employee of a recently acquired brand, yes – we at Timberland are thinking about opportunities to scale our experience within a greater family of brands too. See more on that below).

Engaging the financial community

It’s not just corporations that need to push for greater inclusion of social and environmental issues in financial accounting. I believe the time has come for the financial community to explore the value of “non-financial performance” in meaningful ways.  There are many players working on such efforts. For example, Bloomberg now puts out ESG (environmental, social, and governance) data on its terminals, accessed by 300,000 customers – including Wall Street and other analysts. Last year, the SEC issued interpretive guidance for climate risk to be disclosed in financial filings. And a new reporting framework is being developed by the International Integrated Reporting Committee to bridge the gap between purely financial vs. purely sustainability reporting efforts. All of these efforts aim to put traditional ESG information in front of mainstream analysts. The argument is that if we can translate such issues into financial models, the “dual meaning” of sustainability may actually help drive investment decisions.  I agree with this sentiment – but there’s one player missing: the investors themselves. There’s too much talk of “us” (CSR practitioners) translating/ appropriating CSR data for “them.”  To truly drive the relevance of both financial and ESG information, we should be inviting analysts and investors to weigh in on sustainability accounting practices, standards development, and how to review issues like supply chain vulnerability (in the form of climate adaptation or labor unrest, e.g.) as components of a corporation’s short term and long term business viability.

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Timberland’s Quarterly CSR Update

Last month, Timberland announced its 2nd quarter CSR performance. Highlights from this quarter’s performance are as follows, organized by Timberland’s four CSR Pillars: climate, product, factories, and service:

Climate:
Our Greenhouse Gas emissions increased by 11% in Q2 2011 compared to performance in Q2 2010. This change is primarily due to increases in air travel as our business rebounds, as well as the fact that we are no longer purchasing offsets for our Smartwool operations. With forecasted business growth this year, we are targeting static emissions for our owned and operated facilities (and employee air travel) as compared with our year-end 2010 result. We have prioritized several energy efficiency projects and renewable energy purchases to meet this goal.

Product:
Timberland continues to prioritize the use of environmentally-preferred materials in our products. In Q2 2011, 28.75% of materials in our apparel production were recycled, organic, or renewable (ROR). This result is consistent with Q2 2010 ROR use at 29.1%. Timberland’s International Design Center continues to drive improved ROR use across our apparel production. We are also working with our Licensee partners to further incorporate these materials.

Factories:
34% of our suppliers had High Priority scores in Q2 2011, which is relatively the same as our Q1 2011 results. Controlling working hours and effective wage calculation/payment processes were issues for 85% of the High Priority factories. Our sourcing managers are increasing regular assessments of factories’ production capacities and making adjustments in orders (or securing additional suppliers).

Service:
Timberland employees served a total of 45,702 hours year to date, as of the end of Q2 2011. The Hours Utilization Rate (HUR – the percentage of employee service hours used compared to total available according to the Path of Service program) year to date at the end of Q2 2011 was 21%, which is slightly higher than our Q2 2010 result.

Additional Q2 2011 performance data and analysis can be found in the Goals & Progress section of Timberland’s new CSR website.

Sunshine is a State of Mind

Despite chilly temps and rainy skies, Team Timberland in New Hampshire still managed to pull on our boots (and out hats, and our waterproof jackets) for Serv-a-palooza yesterday.  Stories to come, pictures for now:

Congrats and gratitude to the hundreds of Timberland employees and partners whose spirit positively shined yesterday.  Dry off and rest up … the 15th annual Serv-a-palooza will be here before you know it!

Tune In: Timberland and IKEA Talk Responsible Business

We’re committed to the values of transparency and accountability. Part of that commitment is an ongoing dialogue with our stakeholders that serves to constantly challenge us to find better, more efficient means of building our products in a way that is less bad and hopefully, some day, more good for the environment.

Our Chief Executive Earthkeeper (and our CEO), Jeff Swartz, hosts regular stakeholder engagement calls to inform, inspire, and engage others about Timberland’s Corporate Social Responsibility initiatives. Stakeholder engagement calls allow Jeff to answer various questions, comments, and suggestions regarding Timberland policies and actions and they allow us to carry on our stakeholder dialogue in a public forum. Past calls have covered topics such as corporate climate strategy, responsible sourcing, eco-labeling, community greening, and the current state of corporate social responsibility.

Our next call:

Reducing Environmental Impact & Driving Bottom Line Results
May 24, 2011 from 11:00 am – 12:30 pm ET

Timberland CEO Jeff Swartz and IKEA Chief Sustainability Officer Steve Howard will discuss opportunities for driving business growth while simultaneously achieving environmental goals.  This call will include discussion about how carbon emissions reductions can fuel cost savings and financial gains.

Please register for the event by emailing csrinfo@timberland.com.  You’ll receive a response within 24 hours that confirms successful registration.

To listen to podcasts of previous stakeholder engagement calls, visit the Corporate Responsibility section of our website.

Timberland’s 2010 CSR Results and the Importance of Target Setting

It’s that time of year where people in my position are busy compiling year-end social and environmental performance which will eventually end up in our Corporate Social Responsibility report. Timberland has been reporting on our impacts since 2000, and we’re proud to share our accomplishments and how we got there. What’s equally as important is communicating our failure to meet certain targets, why that may have happened and what we’re doing about it. We call this balanced transparency – and it’s critical for building credibility as a responsible business.

Why would we publish targets that might be aspirational? As a public company, we strive to make responsible choices every day for our business, communities and the outdoors. We vet our targets internally with business units who are responsible for implementing programs to meet these goals, and also externally with issue experts, NGOs, and other stakeholders who push us to reduce our impact and improve the places we live and work. This process holds us to a higher standard. For example, we recently achieved a 38% GHG emissions reduction at the end of 2010 – a huge accomplishment by corporate standards. Sure, we didn’t meet our target last year – but we would never have reduced our footprint by as much as we did had we not set an extremely aggressive goal to in the first place.

And now we’re at it again… at the end of 2010, we collected data to see how we fared against other bold goals. Below, you can find a sampling of our year-end 2010 results, organized by Timberland’s four CSR “pillars,” which are also available for download at http://community.timberland.com/Corporate-Responsibility. By analyzing our current progress and challenges, we can now look to a longer-term horizon to consider new and different ways we will reduce our impact. For the last six months, we have been working on new targets that push us even further. We’ll publish these goals externally so that stakeholders can track our progress – look for our new CSR report late this summer!

2010 CSR Results

ENERGY:

  • As already noted, we achieved a 38% emissions reduction in 2010. This achievement is for our owned and operated footprint and employee air travel, over a 2006 baseline. Our recently released white paper gives all of the details.

PRODUCT:

  • Green Index® scores stayed relatively flat, which is an achievement because we scored a greater variety of products in 2010 (vs. mainly Earthkeeper product or “green” outdoor product in 2009), which included heavier leather styles that tend to score worse.  An increase in recycled content, our phase-out of PVC, and continued reduction in VOC consumption helped improve scores.
  • Of the cotton we purchased in 2010, 34% was organic. This is significantly higher than 2009 (18%), which is impressive given the sharp rise in the price of organic cotton and cotton as a whole.

WORKPLACES:

  • At the end of 2010, 32% of our suppliers had High Priority scores (compared to 32% at the end of 2009) primarily due to Wages and Working Hours issues. With the economic situation improving while labor shortages continued, working hours was a particularly challenging issue for many factories this year.  Our sourcing managers are increasing regular assessments of factories’ production capacities and making adjustments in orders (or securing additional suppliers).

SERVICE:

  • Timberland employees served a total of 75,859 hours in 2010, which represents an 8% decrease in hours served compared to 2009.  Continuing high demands on employees’ time at our manufacturing facility in the Dominican Republic along with our distribution centers in the U.S. contributed to a significant decrease in hours served as compared to last year.

Report Card: Timberland’s Social & Environmental Performance

Today, Timberland released our Q3 2010 CSR results. We issue quarterly reports about our social and environmental performance to be accountable for our impacts and progress towards forward-looking goals. As Timberland’s Strategy and Reporting Manager, it’s my job to collect all of this data and analyze its impact on the business. Are we on track to meet our goals? Are there areas we need to improve upon? We believe sharing both positive and (sometimes) negative results allows us to have a credible conversation with stakeholders – who in turn challenge and push us to reduce our impacts even further.

Here are some highlights from this quarter’s results, organized by Timberland’s Four CSR Pillars. Find the 1-page summary here, or check out the reports yourself by clicking on Reporting & Download tab of the new CSR page on Timberland’s online community.

ENERGY:

We achieved a 3% emissions reduction in Q3 2010 compared to Q3 2009. This achievement is due to energy efficiency improvements (LED lighting retrofits in our stores and energy efficiency improvements in our corporate headquarters) and additional stores in Europe purchasing renewable electricity. The continued decrease in emissions puts us close to our 50% emissions reduction goal.

PRODUCT:

We saw a slight increase in Green Index ® scores (7.28 in Q1 2010 vs. 6.61 in Q1 2009; higher scores demonstrate larger environmental impact) this quarter.  This is primarily due to scoring a greater range of products which include heavier, leather products that have a greater carbon footprint.  We are, however, happy to see a year-over-year improvement in chemicals and resources scores. This demonstrates our product teams’ increased focus on using water-based adhesives, as well as recycled, renewable, and organic materials, and reduced reliance on PVC.

WORKPLACES:

At the close of Q3 2010, 32% of our suppliers hold High Priority scores (compared with 27% of suppliers at the end of Q2 2010) primarily due to Wages and Working Hours.  With the economic situation improving (orders increasing) while labor shortages increase, we anticipate working hours to be a recurrent issue for many factories this year.  Our sourcing managers are working with more focus to regularly assess production capacities of their factories and make adjustments in orders or secure additional suppliers.

SERVICE:

Timberland employees served a total of 57,067 hours in the first three quarters of 2010, which represents a 5% decrease in hours served at the close of Q3 2009.  Continuing high demands on employees‘ time at our manufacturing facility in the Dominican Republic along with our distribution centers in Danville, KY and Ontario, CA led to a significant decrease in hours served as compared to this time last year.  However, in Q3 2010, employees in Europe, our Stratham headquarters, U.S. Retail and Asia posted gains in service hours.

How do you think we’re doing? Share your thoughts here on the blog or visit our online forum to share your thoughts on individual pillars.

Save the Date: Timberland Talks Tree Planting

Please join Timberland CEO Jeff Swartz and Trees for the Future Founder David Deppner as they discuss tree planting programs that aim to create sustainable agriculture, environmental restoration, and socio-economic development.

DATE: Tuesday September 28, 2010

TIME: 9:30 to 11:00 AM EST

To register for the event, email csrinfo@timberland.com. You’ll receive a response within 24 hours that confirms successful registration.

This is the latest in a series of quarterly calls Timberland hosts with stakeholders to discuss topics and issues that are key to our efforts to become a more responsible, sustainable business.   To listen to podcasts of previous calls, visit the stakeholder engagement calls page on Earthkeeper.com.

Save the Date: Timberland Talks Product Labeling

Since 2008, Timberland has hosted quarterly calls with our stakeholders to discuss topics and issues that are key to our efforts to become a more responsible, sustainable business.  Lend your voice to the discussion and share your feedback on our next quarterly call, focused on product labeling:

DATE: Tuesday August 3, 2010

TIME: 12:00 to 1:30 PM EST

SUBJECT: Enabling consumers to make responsible purchasing decisions by providing them with standard, comparable data about the  environmental impacts of the products they buy.

SPEAKERS: Jeff Swartz of Timberland and David Labistour of Mountain Equipment Co-op

Please register for the event by emailing csrinfo@timberland.com.You’ll receive a response within 24 hours that confirms successful registration.

Be sure to sign up by July 29 to receive additional information about the call and call-in details! These materials will be sent by July 30.

Can’t attend?  That’s okay – we’ll be posting the results of this call and continuing the discussion on our stakeholder calls web page.  And if you’re interested in learning more about Timberland’s social and environmental issues, activities and impacts, visit Earthkeeper.com.

Corporate Responsibility by the Numbers

Timberland just announced its corporate social responsibility (CSR) results for the first quarter of 2010.  A couple of Earthkeeping highlights:

  • We achieved a 2.5% emissions reduction in Q1 2010 compared to performance in Q1 2009.  This reduction is due to energy efficiency improvements, like LED lighting retrofits in our stores and energy efficiency improvements at our headquarters.  Several of our stores in Europe are now purchasing renewable electricity, which also contributed to reduced energy demand.
  • We continue to see improvement in our Green Index® scores — meaning that the environmental impact of our products is getting lighter, and better.  In our Green Index rated products, recycled and organic content has increased 15% year over year in Q1, and our average Green Index score is 5.87, compared to 6.52 in Q1 2009 (on a 10-point scale with 1 being very green and 10 being very … not).

To read more about our quarterly CSR performance in more detail, visit earthkeeper.com/csr.  Have thoughts about how we’re doing?  Please share them here.