According to Timberland’s CEO, Jeff Swartz, the company is “dedicated to making the world a better place” through its deep commitment to sustainable business practices that include a focus on improved labor conditions, environmental stewardship and service (community that is). Swartz, the third generation of his family to be working at TBL, rails against Milton Friedman’s idea that the sole “business of business is business”. He strongly believes that human rights and social justice also belong on the factory floor. [In fact: “Timberland’s code of conduct is based on the Universal Declaration of Human Rights and the International Labour Organization (ILO).”]This concept originated from his time spent learning how to make shoes from his grandfather when he was a kid.

“He was a craftsman,” he recalls. “He could do things with his hands” [the whole poetry of how he said this statement is totally lost in print. When he said “do things with his hands”, he tone meant “create magic from the raw materials around him”. It’s pretty clear that he thought his grandpa was an alchemist].

His grandfather had six and a half fingers. “As a kid, it wasn’t frightening. It was just grandpa”. A week before his parents’ wedding, his granddad’s hand got caught in a machine at the factory. His dad had yank him free and put a tourniquet around his own father’s arm to keep him from bleeding to death.

The idea behind TBL’s policies are based on the notion of his grandfather’s hands. “If you bring 10 fingers to work, it’s not to much to ask to get home with them attached at night.” For example, in TBL’s factories in the Dominican Republic, work hours are limited. Why? “If you work overlong hours, you get tired, you slip, your fingers get cut off in the machine”. For TBL, it doesn’t matter that OSHA standards are not required or are way above local standards at their factories. They’ll push for them anyway. He also boasted of the biodiesel buses that took employees at the DR factory to work, other examples of renewable energy systems being used by the company, the 40 hours a year of paid leave TBL offered its workers to do volunteer service projects.

[FYI: Timberland unveiled its first facility-level sustainability report last November. They chose their DR Facility. Read it here. Their Commerce and Justice timeline on page 6-7 is worth a peek.

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Even though TBL is majority family-owned, they are a public company. So how is Swartz getting away with all this goody-goodyness while - here comes my least favorite group of words - fulfilling his fiduciary responsibility to shareholders. Unlike one of their competitors, Patagonia, Swartz can’t pull an Yvon and say “who cares if we make a profit”.

[Incidentally, Yvon Chouinard, founder of Patagonia (sometimes affectionately called Patagucci), was on the cover of Fortune magazine recently [via Treehugger]. Swartz says “They’re the ‘coolest company on the planet’. It kills me”.

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So how does TBL do it? Among other things, by being an innovator. [And it doesn’t hurt that they have one of the best supply chains in the industry, either.]

On innovation

My friends, Frans Johannson and Sweet Joy Hachuela Johannson, run a workshop that helps people/companies figure out how to break their tired habits and innovate. One thing companies can do is take their base assumptions about themselves and turn them on their head. For example: Assumption: Do not tell the consumers too much about how/where their stuff is made or the activists will get ya. Reversal: Put an ingredients label on the box. TBL pioneered that manoeuver just last year. The label even tells you which factory your shoes are made in.

Swartz notes that your typical fashion label tells you what country, but you don’t know about fair wages. You don’t know if the working conditions are safe. He’s fairly open in saying that half the time TBL factories miss their self-imposed standards [but they’re working on it. TBL’s general council was none too thrilled about Schwartz releasing that info willy nilly.]

He contends that if a customer sees a label, they’ll look at the competitor’s box and say “Where is that shoe made?”. “People will say ‘I want to look good and feel good’ which won’t just be about the threadcount, but about human rights and bringing sustainable social change.” He’s noticing earlier that a lot of other companies that people are choosing based on their personal values. He gives the example of Imus [of ‘nappy headed hos’ fame]. “Imus got fired not because of the vile language, but because the vile language didn’t sell anymore.” Folks are saying enough of this, more of that. [Read what World Changing thought about the ingredients label idea. Gist: Nice work at throwing down the gauntlet at other companies. TBL is an industry leader in corporate social responsibility. “But as a “nutritional” label, Timberland’s leaves me — well, hungry for more.”]

What Swartz has done is make social justice part of the TBL brand and is using this to differentiate his company in the marketplace. Not a bad way to compete against Nike in this day and age, if you ask me.

Cutting costs by being green

Another part of TBL’s underlying magic is finding ways for to be green that will also save them money. TBL has factory is located in Stratham, NH, for example. Previously, they were dumping the large corrugated boxes that their gear came in into the landfill. Problem was that the landfill at 03885 was reaching capacity. When searching for a solution (and they had to come up with one sharpish), they discovered that corrugated could be recycled. Bonus. So, instead of having to pay to get the stuff to the landfill, there was someone who wanted to pay them to take it away. “Ha, I’m an environmentalist,” he laughs. “I’m getting paid to be an environmentalist.”

In this situation, “[t]hey had an incentive, a penalty incentive. You know what happens when you incentivize the private sector? Things get done or the company perishes. Their incentive was that the landfill was full. There was pressure to be innovative.”

He didn’t start out trying to be an environmentalist. He just saw ways [actively looked for ways] to make the quarter and do good at the same time. Note: it’s not “do no harm”, it’s do good. Whatever the secret, it appears to be working. In the last few years, TBL has grown into a $1.6 billion company proving (or as Swartz says more conservatively “providing a valuable data point”) that commerce and justice do not need to be antithetical notions.

Consumer Power

At this point in the talk, Swartz moves away from speaking about what TBL is doing and begins talking about the untapped power of the consumer. Consumer can use their purchasing power to harness “the generative forces that exist in the private sector to create positive social change”. The trick is getting them to understand that power and to see that buying is like voting. After that mental leap is made, “When you hold your credit card, you will see an ink stained finger saying I vote for the social agenda of the brand I just bought.”

The conscious consumer debunks Friedman’s argument. Saying that the “Biz of biz is biz” is like saying that the earth is flat. Many companies are starting to see that delivering a social good can be a VERY effective business strategy. Swartz points to the fastest growing sector in the US, organic foods. He talks about how Whole Foods managed to convince people that a funny looking apple was better than a perfectly round shiny factory-farmed apple. So much better that folks were also willing to pay more for it. He mentions Lee Scott, the head of Walmart, getting the company to go organic. This,he stresses is a very important change. Walmart doesn’t want to sell you anything that you don’t want to buy. They are just seeing the writing on the wall and responding.

More examples of companies starting to get their green on (either independently or in response to criticism). Home depot is putting a green label on their forestry products. Tesco is putting carbon footprint labels on their products. Consumers are demanding and the industry responding.

Other interesting tidbits:
He mentioned how he and his wife moved their money out of Fidelity, the nation’s biggest mutual fund company, (despite it being a good company with great people), because it has some of its cash wrapped up in PetroChina and Sinopec. These two Chinese oil companies are funding the economic development of the Khartoum regime that is inculcated in the genocide currently happening in Darfur.

For more info:

Fast Company’s Walking the Walk. Tagline: Is it possible to run a billion-dollar public company and save the world at the same time? Timberland’s CEO Jeffrey Swartz is trying to find out.

If you want to know where all TBL’s active factories are as of May 2006 (including the name, address and business unit for each location), click here. They’re in Argentina, Bangladesh, Brazil, Canada, China, DR, Egypt, El Salvador, Germany, Honduras, Hong Kong, India, Italy, South Korea, Mexico, Peru, Philippines, Portugal, Taiwan, Thailand, Turkey and Tunisia.

For fun:

Jeff Swartz on the Colbert Report

Of interest:

Firms of Endearment: How first class companies profit from passion and purpose

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