BOSTON – Timberland CEO Jeffrey Swartz has always walked the walk on corporate responsibility.

In fact, the 48-year-old steward of his family's footwear company has taken huge, mountain-climbing strides in the beat-up old Timberland boots he wears every day toward being more green and promoting social justice here in America and around the world.

The approach served the company well and in the 10 years it marched toward corporate responsibility its profits soared. Now the company's revenue has declined dramatically and Swartz is still not giving up on the idealism that he believes helped establish the brand, and that he believes passionately is the only way to do business.

The question is whether these beliefs will bring success for the company and if not whether shareholders will be as patient with corporate responsibility if the earnings are not there.

Swartz recently stopped by GlobalPost’s offices to talk about some new environmental initiatives his company is taking on, including using recycled rubber for the soles of shoes as a way to develop a brand that is environmentally conscious and sustainable. He also talked about some serious challenges the business is facing amid the global economic crisis.

He spoke about family and faith, and corporate ethics, and personal challenges and hard times in America — and the places where all those themes intersect in his life.

The first thing I noticed about him is that he doesn’t like to sit down, at least not for long.

Swartz prefers to be all over the place. Looking out the window onto Boston Harbor and taking in a dramatic day of swirling clouds and a frothy chop on the water. Right away we fell into a conversation that was fast and frenetic. Full of ideas and stories. An hour later, we realized we were still standing.

He has a lot to say about the global economy and about the social responsibility that he believes lies at the heart of the best of American companies.

I asked him how integral his efforts toward corporate responsibility are to the company and whether in some instances the self-imposed standards for being green and making sure working conditions are fair and safe has hurt the business?

"Short-term, sometimes, absolutely. Yes," he said. 

But he also insisted, "Not sticking to principles wouldn't just hurt business — it would tear the heart out of our collective chest. If our code insists that the right to assemble be available to workers, but a country won't honor this — we don't do business there. If a factory breaks the law, and illegally restrains workers from assembling we work to remediate with urgency, and then we withdraw if we can't effect changes," he explained.

"We left a factory in China — a big one — after 2+ years of relentless engagement to get them
to behave honorably. Our competitors swarmed in the back door the minute we withdrew our production orders. We spent real money to move the volume from this disreputable factory to other factories.  Real costs — and yet we believed then and we do now — we had to act," he added.

It's a philosophy that says business is not just about the bottom line, but also takes into account the balance of doing good in the world. As Swartz puts it, "We operate our business around the idea that commerce and justice do not have to be antithetical."

But there are many analysts who question how such standards are measured and what impact they truly have. Herman Leonard, a professor at Harvard Business School, wrote a case study on Timberland in 2004 titled "Timberland: Commerce and Justice."

The introduction to the study on  the  Harvard Business School website states that Timberland is a "well-developed, value-centric business" in which management faces a critical challenge: "How to measure the impact of its social justice activities?"

ON CORPORATE RESPONSIBILITY

Timberland has supported social justice initiatives for more than 20 years.

One of the first was City Year, a program that unites young people for a year of full-time service to make a difference in their communities. The organization, which Timberland has been the lead sponsor of since 1989, has grown from one chapter in Boston to 18 cities around the country, with international chapters as well, including South Africa.

Swartz has also supported non-profit organizations such as The Climate Group, which works to address climate change, and Share Our Strength, which fights hunger worldwide.

He has also insisted that the plants where he manufactures have decent working conditions in terms of hours and safety, as well as the right to assemble for collective bargaining. Those standards have cut him out of some cheap manufacturing deals in places like China and elsewhere, but even his harshest critics concede that he has held to his beliefs.

He also created the "Green Index," which audits the company's environmental impact for customers by measuring things like how much of a carbon footprint the shoe leaves and how many of its materials are recycled. He has a goal of making the company carbon neutral by 2010.

Swartz concedes that this is all good for the brand and part of the marketing of Timberland, and he is aware that consumers are increasingly willing to pay a premium on companies engaged in social change. But the question does not go away: will shareholders support it?

Swartz is in a unique position to aggressively pursue his idealism because the family effectively controls the publicly traded company through its ownership of Class B stock. But Swartz is self-effacing enough to concede that no company can accept a corporate leadership that does not deliver on making the company grow and be healthy. 

Swartz is the third generation of his family to run Timberland. And in the nearly 60 years it has been in business it has developed a strong global reach. More than 50 percent of Timberland’s annual revenue comes from the international market.

Like most other companies, the global economic meltdown has hit Timberland hard. But it comes as the company was already suffering a slowdown.

In 2007, the company reported $1.44 billion in revenue, a drop of 8.4 percent from 2006, its first year-on-year decline. Last year, the number slid to $1.36 billion. Timberland stock, meanwhile, is down more than 60 percent from its 2005 high.

But Swartz says there may be some good that comes out of these hard times.

"There was an over caffeinated and unfettered kind of consumerism," he said. He conceded that this excess drove revenue for Timberland which had become something of a hip brand, and one that carries an image as a high-end American label in Europe and other corners of the world. One of the things that has hurt the company's bottom line is that the boots, which were part of the hip-hop scene for almost a decade, suddenly fell out of fashion.

“But that kind of consumerism was worse than not sustainable. It was destructive,” he said.

“Limitlessness is dangerous, and we’ve been living it,” he said, seeing a connection between a new era of frugality and a need for companies like his to think about more sustainable approaches environmentally, socially and economically.

With the pacing and delivery of a great story teller, Swartz recounts how his grandfather founded and built the company in the early 1950s, an era of rough-hewn, homegrown American manufacturing.

There is a theatrical quality to Swartz. Interviewing him is physical. He stands up and just starts talking, without waiting for a question. Then he is looking out the window at Boston Harbor. And then he is kneeling in a catcher’s crouch telling another story. He is laughing one minute about a funny story, and then he is nodding his head seriously and intently listening to a question.

And as I watch him I begin thinking about how he moves almost musically, like dancing to klezmer music, the sweet, soulful and crazy sound that floats up out of America’s Jewish neighborhoods, and that seems to express all the energy and depth and humor, and sometimes a hint of sadness, that Jewish culture brings to the American experience.

He is wearing a Red Sox cap. He does this out of respect for the traditions of the faithful of the Holy Land. I don’t mean Fenway Park. Although clearly he sees that diamond-shaped patch of earth as something to revere. I mean that other Holy Land. Israel. Jeff’s Jewish faith is important to him and he wears a kippa as part of an observance of Jewish Law. The cap covering the kippa is something done by many young Israelis, or religious Jews in Paris and London, not to hide who they are but rather to avoid having it become a constant fixture of conversation.

But for all of his passion and engaging ideas, Swartz and his family’s company are about to face the moment when the rubber meets the road.

Literally.

As one of America’s most passionate prophets of corporate responsibility and global sustainability, Swartz is putting a lot of stock in the company's latest green plan.

This fall, it will incorporate recycled rubber from car tires into the soles of two lines of footwear — Timberland Mountain Athletics and Earthkeepers.

The shoes will be made of virgin rubber, and about 40 percent recycled rubber. The tire content comes from a Malaysian company called Green Rubber, which claims to have found an environmentally sound way to reprocess tires which are often laced with toxic chemicals.

Timberland will make an estimated 200,000 shoes the first year using recycled rubber, a fraction of the roughly 30 million shoes and boots the company produces annually.

Will it sell? Swartz is hoping the initiative will get his family’s business back in step with the extraordinary decade of growth it saw from 1995 to 2005.

“Our failures, our problems are ours. We created them and we have to fix them."

http://www.globalpost.com/passport/editors-brief/090423/where-the-rubber-meets-the-road