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Timberland: Bold strides in transparent reporting

By Elaine Cohen (BeyondBusiness) on October 21, 2009 at 10:25am.

Content:

Timberland has to be one of the most impressive, innovative, transparent and visionary Companies in the world where sustainability and sustainability reporting is concerned. Their 2007-2008 report, released in October 2009, combines a range of transparency and reporting tools, which in my view surpasses most other reporting practices and puts them squarely in the Gold Standard league. Timberland turns over nearly USD1.4 Bn, and employs over 5,300 people in its footwear and apparel business. Timberland manufactures around 11% of its products at one factory in the Dominican Republic (1,900 employees) and the remainder is outsourced to factories across the globe in 38 countries by roughly 300 factories and approximately 247,000 workers.

Timberland’s reporting is structured around four pillars: Energy, Product, Workplaces (outsourced factories, mainly) and Community Service.  Supply chain reporting is particularly impressive and the Workplaces “Dig Deeper” paper (one of four supplement reports that correspond to pillars) gives good insight into the way Timberland’s team of 11 Factory Assessors go about their work of auditing and engaging outsourced manufacturers in more responsible practices, which Timberland calls Beyond Monitoring. This describes advanced approaches including encouragement of suppliers to get involved in community programs, Timberland’s efforts to define and implement a living wage, and a frank discussion of the challenges involved:  “How does one get to the truth?... The biggest challenge we face in establishing trust .... is .... gaining factory management’s buy-in and support”. The Workplaces supplement report provides an impressive array of case studies from different factories which show the evolution of Timberland’s relationship with manufacturers and actions taken, and Timberland’s development of Sustainable Living Environments at outsourced factories. Outstanding examples of responsible practice based on deep thought about true needs.

In other areas, Timberland reports strong performance with the establishment of a new Board CSR committee, good carbon footprint reporting and reduction in absolute emissions, Timberland’s Green Index score for environmental impacts of different footwear items (although still in its infancy with only 5% of total products indexed), and a very strong report on Timberland’s renowned Global Stewardship program, how it works and how it is assimilated throughout the organisation. This includes some good examples of outcomes of specific Stewards program activity in the Dominican Republic where Global Stewards have improved internal communication processes, and developed a Junior Stewards program for Timberland employees – a good example of expanding the scope of direct impacts to create greater leverage within the community.  Notwithstanding, I would like to see a higher level focus on overall impacts and outcomes – with over 70,000 hours of “service” time donated, a view of how and where this impacts communities on a broader scale beyond specific case studies would seem appropriate.

Despite my admiration for Timberland’s progress and reporting transparency, there are, in my view, some omissions. First, employee impacts: it is surprising that Timberland’s CSR strategy and reporting lacks attention to the way Timberland treats its own 5,373 employees (or temporary employees, of which Timberland employs an undisclosed number). Timberland’s corporate KPI’s contain no target area for internal workplace impacts. The 32 page CSR report includes one single page of employee data, which reveals little. For example, we are told that 38% of Timberland’s leadership in 2008 is female – this is defined as “Senior Managers at Grade 7 or above”.  What does this mean? What is Grade 7? How many Managers in this group? How many women are on the Top Team reporting directly to the CEO?  Safety numbers are obscure, lost workdays due to illness and injury are reported as one number and workplace accidents are not separately reported. Employee engagement and satisfaction? Employee training and development? Employee compensation and gender equality in compensation? Employee values assimilation? Recruitment and equal opportunity processes? Employee recognition? No disclosures at all. (To be fair, some references are made to Timberland employees in the Dominican Republic, in the context of living wage evaluation, and relating to internal engagement of these employees in the Global Stewards program).

Another gap in Timberland’s reporting, their relationship with retailers and resellers of Timberland products, is not discussed, though I suspect this is a material element in Timberland’s business especially given declining revenues over the past 5 years. Community contribution reporting is a little unorthodox – Timberland reports a community contribution of USD3.7 million as 6.31% of operating income, a commendable figure  (this represents 0.27% of total revenues). However, this figure includes almost 70% of product donations at retail value – best practice reports product donations at cost levels not at retail value. No commentary is provided on the fact that absolute contribution levels reduced by 25% in 2008 versus 2007. On the other hand, the cost value of 70,000 hours or so of paid community service is not calculated in the community contribution figure as far as I can tell. I believe it should be. 

Communication:

Timberland’s report is comprehensive but fragmented. To get the whole detailed CSR picture, you must perform 6 separate downloads (excluding the Annual Report). The core report is a 32 page PDF which is targeted at the general consumer, providing an easily digestible description of Timberland’s key impacts with just about enough data to satisfy the lay reader. Four separate supplements “dig deeper” into the key strategy areas of Timberland’s sustainability practices, and the GRI index is another separate download. A highlight of the Timberland’s reporting communication is the earthkeeper.com/csr website, which opens up all aspects of Timberland’s CSR performance for public debate, involving experts who interact and respond. Launched to synchronize with the report publication, it’s early days to say how much energy this will inspire, but it’s a fabulous platform and shows positive intention to engage. Similarly, Timberland’s stakeholder conference calls held periodically have demonstrated positive engagement, and these are referred to in the report. I hope the essence of the Earthkeeper dialogues and Timberland’s responses will be used to guide content in this Company’s next report. Quarterly reporting of metrics adds to Timberland’s overall ongoing transparency and demonstrates an embedded approach to CSR. 

Timberland’s online execution of this report is poor – the investment made in the Earthkeeper site could have been expanded to include more of the report content to enable a more interactive and integrated reading experience – working through  6 separate PDF’s is rather tiresome. 

Credibility:

This is a GRI self-declared level B non-assured report. It includes a GRI index against the core G3 indicators and the Apparel and Footwear supplement. Timberland’s ongoing engagement with AccountAbility and CERES and other leading sustainability partners, and overall transparency and engagement approach, might lead us to have a good deal of confidence in the numbers and stories that Timberland chooses to disclose  in this report. However, best reporting practice does include external verification and I would like to see Timberland’s disclosures audited for accuracy and materiality. Even the best of reporters make mistakes. Nonetheless, an earnest and credible, and impressive, reporting result.

Recommendations:

1. Assure the next report.
2. Improve online presentation of the report.
3. Report more transparently and comprehensively on internal workplace impacts.
4. Develop community reporting to include greater expression of outcomes.


Elaine Cohen is the Joint CEO of BeyondBusiness Ltd, www.b-yond.biz/en , a leading CSR reporting and consulting firm in Israel,  specializing in a wide range of consulting services for the development of social and environmental responsibility of businesses. Elaine Cohen is an independent reviewer and has no relationship with the reporting company.