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What Is the Business Case for Doing Good? A Conversation with Timberland’s CEO, Jeffrey Swartz

| Friday May 29th, 2009 | 4 Comments

Jeffrey Swartz, CEO of TimberlandTimberland is a pioneer in corporate sustainability, corporate social responsibility or however you describe a business that cares about people and planet as well as profits. I spoke with Jeffrey Swartz, CEO of Timberland, to find out what he’s learned from his experience. You can hear the full interview at Green Business Innovators. But I ended our conversation with more questions than answers. Swartz is not convinced that doing good translates directly into doing well…yet. I discussed with him how he is trying to change that by connecting with consumers.

Swartz has been with Timberland for over 20 years and has served as President and CEO since 1998. Timberland has grown from a $156 million company in 1989 to a $1.4 billion company in 2007.
At the same time, Swartz has built some of the most impressive and inspiring programs I’ve seen at a public company. Timberland employees put in 40 hours of public service hours each year through Timberland’s Path of Service program and annual Servapalooza. Timberland is committed to going carbon neutral by 2010. Timberland’s shoe boxes display nutrition information, which includes information about the manufacturing plant and the impact on the climate and community. And Timberland is starting a green index for all of its products. Just to name a few initiatives. (For more, see http://earthkeeper.com/blog)

But what is the business strategy behind all of these initiatives?

Swartz did not convince me they are good for business, but he did convey to me how essential a passion for human rights and the environment are when running a business. “The locus of value in our company is the brand. It is not on the balance sheet…. And so for our consumer-facing company with a brand as its premise, I think that strategy has to be a reflection of deeply felt values and beliefs wrapped up in sustainable emotions,” Swartz explained. Fifteen years ago, when Timberland formalized its code of conduct, Timberland was ahead of its time. But “formalizing a code of conduct is exactly what a good brand builder with passion should do,” Swartz told me.

Timberland is actually ahead of its customers it would appear. Swartz is striving to engage the customers by providing more information than any other brand, such as where its factories are and the impact of the manufacturing process.

The food industry has been relatively revolutionary in getting the consumer to care. If I could succeed the same, then all the lonely efforts become scalable, sustainable, transformative. And so to me, the initiative that matters the most is…the label as a frontispiece that says I want to engage with the consumers. I do not want to comply with the law. I do not even want to exceed the law; I want to engage the consumer, because that is a gradient for pressure and for innovation that will be extraordinary. That is where the revolution is.

But to date, Swartz has not been satisfied by the consumer reaction.

To really build the business case for a values-driven brand, we need to make sustainability sexy.

And by sexy…I mean in the attractive, the desirable, the boy I want to be in that store, boy I want to be in that brand, boy I want to change the world and here is how I can do it. That is the business case, and we are halfway to heaven and just a mile out of hell in Bruce Springsteen’s terms in accomplishing that goal. We haven’t done it yet.

Swartz encourages consumers to vote at the cash register by supporting brands that embody their values. But shareholders have been skeptical about Timberland’s efforts. “The shareholder wants to hear the sustainability of earnings and a business strategy that works. They admire, appreciate, condone social justice as part of the conversation as long as it doesn’t have any impact on reducing earnings per share, cash flow, or return on investment capital,” Swartz relayed. But if the consumer responds to the Timberland story and votes with its wallet, then the shareholder will support the efforts.

What Swartz has found is that consumers will only really believe a friend or their own experience. And you need to talk to consumers on their own terms.

Swartz stressed the importance of connecting the dots among sustainability leaders in the business world. We have more leaders today than 20 years ago, but our problems have grown, so we are clearly not doing enough. “The real value conversations are: how can we strategically, conceptually, at the highest level, how can we collaborate to create a different pace of outcome?… How are going to transform the civic square?”
What do you think? How can Timberland make sustainability sexy? How can we make the business case for doing good?


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  • http://www.rbruer.com Rich Bruer

    Here’s the crux of the problem for Timberland and any public company, as I see and as stated by Swartz: “The shareholder wants to hear the sustainability of earnings and a business strategy that works. They admire, appreciate, condone social justice as part of the conversation as long as it doesn’t have any impact on reducing earnings per share, cash flow, or return on investment capital.”
    I am among the growing numbers out there who do not believe publicly traded companies beholden first to shareholder return can ever cross over into being sustainable. Corporate governance laws have to first change to enable officers of companies to manage to the triple bottom line without threat of shareholder lawsuits; the corporation must be seen as having social and environmental obligations every bit as essential as financial. Without such change, the publicly traded corporation like Timberland, with its need to show quarterly growth (and in doing so contribute to unsustainable global consumption), can only hope to be “less bad” through its CSR policies.
    The solution simply can’t be about making sustainability sexy among consumers. Many of us are both shareholders and consumers. For us, the solution to sustainability isn’t just about consuming more sustainable brands such as Timberland. It’s about us as shareholders not penalizing the Timberlands of the world for investing in sustainability even at the cost of reduced earnings. Quite the opposite, we should reward them. If we aren’t willing as investors to back off voluntarily from our purely financial demands of the public corporation, then governments must step in to stop us from preventing the Timberlands of the world from doing maximum good. Either that, or Timberland should take itself private.

  • http://www.changents.com Deron Triff

    Mr. Bruer,
    You may be interested in learning about B corporations (www.bcorporation.net) by B-Labs. They are developing and disseminating an emerging legal framework to institutionalize sustainable business practices in a manner that aligns with stakeholder interests.

  • Bill Maginn

    For-Profit corporations are in business to create value. This value has typically been understood to mean financial value, providing returns on capital invested. If shareholders want the corporation to sacrifice some economic value to gain more “environmental value”, wouldn’t shareholders who supported that view put their money where their morals are and invest in those companies that shared that view? And correspondingly they would not invest in companies that were not demonstrating sustainable policies. When enough investors share the belief that environmental value is good, companies that demonstrate sustainable policies will have more investors and will have more economic value as well.

  • Jordan Catapano

    Timberland has it right. An immediate family member worked for them for many years and never had a bad thing to say. It’s wonderful when a company can have so many positive effects in so many different areas.
    Jordan MGH