CEO Corner Jeff Swartz
Jeff Swartz wears many hats. In addition to his signature Boston Red Sox cap, he’s a self-described “third generation entrepreneur” at the helm of Timberland, maker of the iconic yellow boot and other outdoor wear; a “Prophet CEO” who blends capitalism with activism on the belief that “profit and purpose belong together”; and a social media enthusiast who actively shares his opinions on sustainability and accountability on Twitter.
In fact, AccountAbility Senior Research Fellow Bill Baue recently caught up with Jeff via Twitter to arrange this interview. Drawing on the case study of Timberland’s use of interactive technologies for stakeholder engagement in The Accountability Web, a report he co-wrote last year with fellow AccountAbility Senior Research Fellow Marcy Murninghan for Harvard’s Corporate Social Responsibility Initiative, Bill posed the following 10 questions.
1. Bill Baue: Timberland holds itself accountable for its impacts on people and planet in four areas (you call them “pillars”): Energy, Products, Workplaces, and Community Service. Why do you take this impacts-based approach?
Jeff Swartz: The pillars of energy, product, workplace, and service represent the four key areas that we’ve found are a) meaningful and useful when it comes to our decision making and b) meaningful and important to our stakeholders—consumers, NGOs, suppliers, shareholders and our own employees. We’re a global organization in a highly scrutinized industry, working with a complex network of factories, distributors, customers and consumers, and trying to operate consciously and responsibly. Given all that these pillars feel most relevant and “right” to us, in terms of understanding and impacting our social and environmental footprint and areas of influence.
2. Bill Baue: Timberland is among a handful of companies shifting to a quarterly sustainability reporting cycle – what was the rationale behind this enhanced transparency? Has your experience matched your aspirations?
Jeff Swartz: We made the shift to quarterly reporting in large part as a result of our stakeholders; as they became more sophisticated in their understanding of sustainability issues, they also started demanding greater information about our CSR initiatives. We talk a lot about being transparent and accountable, and quarterly reporting was an opportunity for us to put our money where our mouth was, by providing more accessible, relevant and timely information about how we’re measuring up in our CSR efforts.
We also made the change in order to give our CSR performance the same importance as our financial performance; we report our financial results every 90 days, and as a company that’s committed to creating social and environmental value in addition to financial value, we felt it was an important “signal” to our stakeholders for us to treat our CSR results the same way, with the same frequency.
3. Bill Baue: Timberland also introduced quarterly stakeholder calls hosted by you, giving stakeholders rare access to CEO. How does this input help Timberland with its sustainability strategy and practice?
Jeff Swartz: Hosting quarterly stakeholder calls focusing on critical issues for our company helps to reinforce the importance of the four pillars of our CSR strategy. We purposefully invite speakers with different opinions and target experts, employees, and other stakeholders to challenge and learn with us. We use the calls to discuss challenges we face as an individual company or as an industry, and we believe they can serve as a platform for both information sharing and improved strategy.
As for providing rare access to a CEO … my wife will tell you I’ll talk to anyone who will give me half an ear. As someone who’s been called a “CSR zealot,” NOT hosting these calls isn’t an option for me. The subject matter is something I take seriously and believe in passionately … I’d stay on the line all day, if they’d let me.
4. Bill Baue: Timberland launched the Voices of Challenge online stakeholder engagement platform, harnessing the power of social media for enhanced accountability. What are the challenges, benefits, and lessons of this new form of online engagement?
Jeff Swartz: Voices of Challenge gives us an opportunity to interact with more stakeholders in new ways, to learn, engage and ultimately enhance our CSR agenda from ideas that are presented or discussed. The benefits of the platform have been our ability to scale and broaden the conversation and also to have a two-way dialogue with thought leaders, practitioners, NGOs, investors, students, and even consumers.
We’ve been challenged by the typical things that social media presents—real time engagement, possible dominance on the site by one stakeholder over another, and the general nature of an open forum.
5. Bill Baue: Along these same lines, what consideration have you given to board-level or C-Suite digital engagement?
6. Bill Baue: To engage with consumers, Timberland introduced the Green Index to display the sustainability footprint of its products directly on the packaging. How has this shifted consumer behavior? What mechanisms are you using to gauge these changes?
Jeff Swartz: The Green Index hasn’t done much to influence consumer behavior, for two reasons: 1) No other footwear brand is using the Green Index to rate the environmental impact of its products, so there’s no “other” for consumers to compare our Green Index scores to, and 2) environmental impact is still a nice-to-know for the majority of consumers out there, not a factor in their purchasing decisions. All other things being equal – price, style, performance – consumers will choose a product with a better green story, yes – but it’s not the first factor at the top of their list. At least not yet.
7. Bill Baue: Timberland joins many other companies using their products to raise awareness on sustainability. How do the Green Index and other Timberland initiatives fit into this larger landscape – and what are you learning from others?
Jeff Swartz: The Green Index served as a great starting point for a bigger conversation with other like-minded brands that are interested in empowering consumers to make more conscious purchasing decisions. Timberland has been actively engaged with more than 100 other brands in the Outdoor Industry Association (OIA) to create an industry-wide “Eco-Index” for measuring the environmental impact of outdoor products. This OIA Eco-Index was unveiled last summer and is being beta tested as we speak. There is plenty that we can learn from our outdoor industry peers, and that we can share with them—and the OIA Eco-Index is a great example of the kind of positive outcome that can result from like-minded collaboration.
8. Bill Baue: You have lamented that analysts never raise questions in quarterly earnings calls about the impacts of environmental, social, and governance issues on financial performance. What will it take to broaden awareness on the bottom-line implications of sustainability issues?
Jeff Swartz: When investors begin to incorporate long-term value into their analysis and ratings, sustainability will be better understood and valued within our current capital markets. We’re beginning to see early signs of interest and education for the long-term (rather than only quarter-by-quarter) view – i.e. Bloomberg now puts ESG (environmental, social and governance) data on their terminals and the SEC recently mandated that climate risk disclosure be included in 10-K filings.
As an outdoor company, it’s easy for us to connect the dots between sustainability and business health … for example, we can’t be profitable if our environment or communities are threatened by global warming or poverty; if the places where we live, work, and play begin to disappear, consumers have nowhere to use our outdoor gear. We’re beginning to see consumer awareness of these issues grow, which will in turn help investors understand the value of sustainability.
We’re also working to underscore the bottom-line implications of sustainability issues ourselves; our Earthkeepers collection of products made using recycled and renewable materials is our fastest growing product line – and it’s helping to drive real bottom line results.
9. Bill Baue: The notion of “shared value” where companies create business and social value has gained credence with the recent Harvard Business Review article by Michael Porter and Mark Kramer. But long before this, Timberland has formulated strategy seeking to align business and social value. How do you do so?
Jeff Swartz: I don’t know that I’d go so far as to call it “strategy”—that makes us sound much smarter and more deliberate than we really are. The notion that a for-profit business can and should invest in creating social value is as much a part of the fabric of our organization as bootmaking. I’m a third generation CEO, and although “corporate responsibility” wouldn’t have been a familiar phrase during my grandfather’s days – nor even when my father was in charge – the idea that our business has an impact on people and communities and the environment is one they certainly understood in different terms—like taking care of your neighbor, or using your resources frugally. Business has such strengths to share – innovation and resources and expertise – that are useful and applicable far beyond creating a great service or product. We live in this world and whether we want to or not, we have an impact on it … why not try to make that impact as positive as we can, since we can?
10. Bill Baue: And how do you work beyond the boundaries of your own company, collaborating with other companies, NGOs, government, and others in collective action to promote broader systemic change toward a more sustainable economy?
Jeff Swartz: I don’t care how powerful or passionate they are—no one entity or organization can impact sustainable change as effectively as a group of entities or organizations. Collaborations bring greater leverage, a greater diversity of ideas and solutions, more resources … our experience as part of the OIA Eco-working Group is one example, and there are other groups and efforts like that in which we’ve been able to influence greater change as part of a larger effort than we’d be able to alone.