Beyond Factory Walls 2009 Timberland Report

Responsibility Beyond Factory Walls: Engaging Factory Workers & Strengthening Communities
2009 REPORT
Table of Contents
EXeCUTIVe SUMMARY CEO LeTTeR I. TIMBeRlANDs CoDe oF CoNDUCT & FACToRY MoNIToRING PRoGRAM Why We Focus on Factory Conditions Management & Oversight of Code of Conduct Program Timberlands Sphere of Inuence on Social and Human Rights Issues Radical Shift in Practice Challenges We Face II. BeYoND MoNIToRING Engaging Workers Establishing Trust and Two-Way Dialogue Worker Code of Conduct Committees Engagement Outside of Assessments Strengthening Communities Worker-Engaged Community Service III. SUsTAINABle LIVING ENVIRoNMeNTs Living Wage Overview Alternative Approach: Sustainable Living Environments Scaling the Sustainable Living Environment Approach Case Study: Improving Health Services & Providing Access to Micronance in Bangladesh Case Study: Improving Womens Health in China and Vietnam IV. CoNClUsIoN 1 3 4 4 4 5 5 6 6 7 7 8 10 10 11 13 13 14 15 17 20 21
The Timberland Company has permission of all factories and workers mentioned in this paper to publish the information herein.
EARTHKEEPER.COM/CSR
EXECUTIVE SUMMARY
Timberland is committed to ensuring that the workers who produce our products are provided with fair, safe and nondiscriminatory workplaces. Our products are produced in factories across the globein 38 countries by roughly 300 factories and approximately 247,000 workers.1 One of these factories, located in the Dominican Republic, is owned and operated by Timberland. Our Code of Conduct team is made up of 11 Assessors and two contractors who each have different numbers of factories they must assess. In countries where we dont have a local assessor, we employ an external monitoring rm to assess factories producing Timberland product.
FACTORY LOCATIONS (YEAR END 2008)1
Whether we are focusing on our own factory or on our third-party contract manufacturers, we work to ensure that all factories comply with our Code of Conduct. But we also seek to do more. We dene Earthkeeping as our mission to put commerce and justice at the center of our business platform. In the spirit of Earthkeeping, we believe it is important to go beyond factory walls by protecting the environment in which we operate and the individual workers who produce our products. By engaging workers directly in our factory assessment process, we believe it is possible to establish trust and a two-way dialogue that ensures factory workers voices are heard. Weve helped train workers and cultivated support from factory management so workers can establish their
own Code of Conduct Committees. This enables them to participate in the process of identifying improvement areas and to take part in initiatives to achieve positive change. Weve also encouraged factory owners and workers to establish and promote home-grown training programs that encourage workers to share ideas and implement improvements. And weve learned that seeking input from community members, local NGOs, government, industry organizations, other area factories, and other brands that source from the same factories is integral to ensuring sustainable improvements. We seek to engage workers in the communities where they live and work so that they too may create better quality-of-life conditions for themselves and their communities. We aim to ensure that workers live
1. Timberlands factory list is updated quarterly at www.earthkeeper.com/csr.
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and work in Sustainable Living Environments, an approach that considers the fact that paying higher wages may not always help workers realize improved access to basic needs or opportunities for betterment. We believe that while minimum wages in many places may not be sufcient, wages alone will not guarantee that every worker has food that meets universal nutritional standards, affordable and accessible health care, or educational opportunities. As a result, we have increased the focus of our work beyond assessments to nding practical solutions that aim to improve available infrastructure so that Timberlands presence creates fair, safe, and nondiscriminatory conditions inside and outside of work.
resources to see measurable results. Weve also continued to include environmental aspects as a priority in focus our Code of Conduct program and have seen measurable improvements based on factories implementing Environmental Management Systems. Our commitment to improve environmental conditions in tanneries is also on track, whereby we seek to have all tanneries achieve a Silver rating according to the standards of the Leather Working Group by 2010; weve already seen this program have signicant impacts, reducing tanneries overall environmental footprints. While weve partnered with factories to improve their assessment scores, their status within our Code of Conduct assessment process, and the conditions in which workers perform their jobs, weve also experienced challenges. We did not meet our 2008 target for improving our average Code of Conduct Assessment Score, as this metric incorporates the scores of new suppliers who are often unaccustomed to the rigor and high standards that Timberland demands. Nonetheless, we have increased our 2010 target assessment score because we expect that increased remediation assistance at our lowest-scoring factories and continued improvement of assessment scores for our long-term business partners will drive year-over-year improvements. Increasing direct remediation assistance, engaging workers, and strengthening communities are objectives that support the tangible performance improvements we seek.
CURRENT PROGRESS & NEXT STEPS

Over the course of 2007 and 2008, we have worked toward measurable factory improvements to scale the lessons learned through various pilot programs instituted during those years. The results from our remediation efforts also support our belief that going beyond monitoring and beyond factory walls is critical to addressing workers needs. For example, we have nearly eliminated high risk issues from our footwear sourcing channels, and weve seen our continued business partners achieve higher scores on our Code of Conduct assessments, demonstrating that improved working conditions is a long-term journey that requires both time and
WORKPlACE KEY PERFORMANCE METRICS

WOrKPLACES Purchasing Practices Scoring Improvement INDiCATOr Percentage of Footwear Production in High Risk Factories Percentage of High Priority Factories Average Assessment Score Average Environmental Score (not including tanneries) Average Environmental Score (including tanneries) Percentage of Continued Factory Partners with Improved Score 2007 34% 38% 61.9 1.88 2.53 51% RESULTS 2008 1% 38% 62.0 2.1 3.17 69%
One voice can and must make a difference. We believe that speaking up for a courageous idea or voicing a grievance strengthens and builds a community. This premise is the foundation for our approach of placing workers at the center of our monitoring process, empowering them with the knowledge and skills to better their lives inside and outside the factory walls. We present this paper as a stand-alone report that explains our commitment to improving the lives of workers. We believe that the accomplishments and challenges we face are not unique to our brand and that collaboration and engaging stakeholders are necessary
to scale our efforts. This document discusses our current programs and complements our 20072008 printed CSR report as an in-depth look at our Workplace pillar. While we have included key performance metrics here, you can also learn more about our performance by reading the printed CSR report. Finally, we hope this paper presents ideas for future innovationfor Timberland, for our industry, and for other stakeholdersthat can help us build more sustainable working environments that allow all of us to participate in a universal Earthkeeping agenda.
2 EARTHKEEPER.COM/CSR
CEO LETTER
As a third-generation CEO, Im reminded often of my grandfather, who was a craftsman and role modelsomeone I looked up to while growing up in Timberlands original New Hampshire factory. In 1994, we published our Code of Conduct to ofcially formalize the pursuit of human dignity in the manufacturing process. We have never questioned whether or not to invest in the lives of workers making our shoes, apparel, and accessories. Instead, the question is how best to serve our various stakeholdersfrom a demanding shareholder or discerning customer to an employee who wants to make a living with purpose. Timberland is only successful if we maintain our license to operatethat is, our contract with various vendors, suppliers, customers, and local communities to create our products. We must do much more than adhere to environmental and human rights laws. As a result, our Code of Conduct requires much more than the minimum industry-standard requirements. For example, we dene child labor as 16 (which is higher than the law in some countries where our products are manufactured today), and we insist on environmental standards that go beyond compliance. We also require overtime be paid at a premium despite local laws that may say otherwise, and we have zero tolerance for working hours over 60 hours per week. While our Code of Conduct is strong, good enough is never good enough. And so, Timberland listens to stakeholder voices and constantly works to improve our assessment and human rights programs. In 2005, we made a radical shift away from generating lists of violations for factory owners to resolve (which we then checked back to verify improvements). Instead, we challenged ourselves to work more closely with factory management to solve the root causes of problems occurring in factories. In other words, we have taken on the challenge of helping factories build new and different management systems and improves staff knowledge about corporate social responsibility issues. Timberland has also incorporated items that often fall beyond factory walls into our assessment program. Basic things like nutritious food, medical services, housing, child care, schooling, and transportation are all taken into account during our evaluation. We try to ensure that there are ways for workers to learn and grow, such as opportunities for recreation, skills development, and savings or creditall essential for ensuring the dignity of workers in the global supply chain. Without question, factory workers face extremely complex social challenges, especially in developing economies. We must strive to use our inuence and buying power to help improve their lives as a consequence of Timberlands doing business with them.
Jeffrey Swartz President and CEO
I. TIMBERlANDS CODE OF CONDUCT & FACTORY MONITORING PROGRAM

WHY WE FOCUS ON FACTORY CONDITIONS
Timberland is an organization driven by belief. One of our principal guiding beliefs is that business can and must emerge as a force for positive change in society. Commerce and Justice. Doing Well and Doing Good. One justice is ensuring that the workers who produce our products, no matter how big the order or where they are made, are provided with fair, safe, and non-discriminatory workplaces. We respect and promote the Universal Declaration of Human Rights and the International Labor Organization (ILO) Conventions that establish international human and labor rights. We seek to apply both the letter and the spirit of all applicable laws and to promote continuous improvement in our operations. We also believe that companies must provide opportunities for employee development. We actively seek business partners who share our beliefs, as we hold them to the same high standards to which we hold ourselves accountable. To formalize these beliefs, we issued our ofcial Code of Conduct in our factories. In 2002, we expanded the view of our accountability in the value chain to include environmental matters, beginning with legal compliance and now including proactive efforts to manage scarce natural resources and to eliminate toxins from the manufacturing process. While we are acutely focused on factory compliance, remediation to improve working conditions, and an approach that goes beyond factory walls to provide opportunities for workers betterment, we also recognize that brands contribute to issues in our supply chain. As a result, we ask that our own design, development, and value chain teams consider ramications down the line if the need arises to place fast-tracked orders and/or request samples with tight turnaround times. In fact, we even published another white paper on the topic of Working Hours to demonstrate how seriously we take these issues and consider the complexity of brand responsibility.3 There are many complexities in the eld of human rights, and Timberland believes brands, factories, and individual workers share in the power to make a difference in the world.
Ceo AND eXeCUTIVe CoMMITTee
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are managed on a day-to-day basis by Timberlands Corporate Social Responsibility team. Our Code of Conduct program is focused on promoting and creating fair, safe, and non-discriminatory workplaces. We take an impacts-driven approach, measuring factory conditions, working to go beyond compliance, and setting targets as part of the long-range plans of Timberland business units, including Licensing. Ownership of these targets is spread throughout the organization and carried up to the CEO level. The backbone of Timberlands Code of Conduct program is the 11 Code of Conduct Specialists and two contractors (together making up our group of Assessors) who work in the eld conducting assessments for all of our factories worldwide. Our Assessors are responsible for 10-40 factories in their regions. Managed by corporate CSR staff, we rely on these champions to execute our strategy within Timberlands global supply chain. As a part of their formal annual performance review process, Assessors are expected to have a minimum of 30% of their factories showing improvement from the prior year. We also expect that, in at least 50% of their factories, they will engage workers during the assessment process beyond interviews. Finally, their performance reviews are also tied to managing at least one community service event with at least one factory by end of 2009. In countries where we dont have a local assessor, we employ Specialty Technology Resources (STR),5 an external monitoring rm, to assess factories producing Timberland products. This external monitoring accounts for less than 20% of our factories. Our independent contractors and STR monitoring staff receives the same training as Timberland Assessors and are expected to execute our factory monitoring and remediation process in accordance with Timberlands global procedures.
to our supply chain vendors in 1994. Today, it is available online and posted
{ TIMberLAND csr MANAGeMeNt }

BOARD OF DIRECTORS
MANAGEMENT & OVERSIGHT OF CODE OF CONDUCT PROGRAM

Timberlands Code of Conduct and Global Human Rights program is one of the four pillars of Timberlands corporate social responsibility (CSR) strategy.4 This strategy was developed over a year-long process of footprint mapping, internal and external stakeholder engagement, and executive and Board of Director-level evaluation. The CSR Committee within the Board of Directors oversees all CSR strategy and execution. All four pillars
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CoRpoRATe soCIAl RespoNsIBIlITY
pRoDUCT
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2. http://www.timberland.com/corp/index.jsp?page=codeOfConduct 3. http://www.timberland.com/include/csr_reports/Make_It_Better_Brief-Working_Hours.pdf 4. F or more information on our comprehensive CSR strategy and four pillars, please see http://www.timberland.com/csr. 5. S pecialized Technology Resources is an external monitoring rm that works to help ensure the safety, quality, and social responsibility of clients products at every stage of the supply chain. www.strquality.com.
TIMBERlANDS SPHERE OF INFlUENCE ON SOCIAl AND HUMAN RIGHTS ISSUES

Timberland products are produced in factories across the globein 38 countries by roughly 300 factories and approximately 247,000 workers.6 We have published the factory names and addresses where our products are made on our website since 2005 (and we were among the rst companies in our industry to do so). One of these factories, located in the Dominican Republic, is owned and operated by Timberland. Whether the product is produced in our own facility or in contract factories, we live by the same beliefs. We know rsthand that we can make high-quality products in a way that respects the basic human rights of the craftspeople who work on the factory line. As we work with third-party contract manufacturers, our Code of Conduct is just as important as our product specications and our quality requirements. From the beginning of the process, we only work with factories that commit to the standards our Code insists onno matter how challenging those standards appear to be. We assess and work on remediation plans with all factories that produce our products, regardless of order volume, value, or factory size. Not only do we require our nished product manufacturers to abide by our Code, but we also require their subcontractors and material suppliers to do the same. All Tier 1 suppliers (nished good manufacturers) are assessed by our Code of Conduct team for compliance with our Code, as well as Tier 2 material suppliers such as tanneries, major subcontractors, and global contract non-leather suppliers.7 Additionally, our suppliers are required by contract to ensure that Timberlands Code of Conduct is applied to their suppliers and subcontractors that we do not assess. All workers deserve to work and live with dignity. Whenever and wherever Timberland can inuence and drive improved working and living conditions, we will seek opportunities to do so.
We also consider our sphere of inuence beyond Timberlands supply chain and the success of our program linked to other brands. We actively seek to engage and work collaboratively with brands that share factories. We engage with multi-brand working groups to employ best practices and sustainable solutions industry-wide. Consistent messaging to suppliers by brands is critical for sustainable and scaled impacts.
RADICAl SHIFT IN PRACTICE

In 2005, partly because stakeholders pushed us, we made a radical shift in practicefrom the posture of compliance police, with audits and checklists, to a different posture. Instead of leaving a list of violations for factory owners to resolve and then checking back to verify improvements, we challenged ourselves to work more closely with factory management to understand the root cause of workplace issues in our factories. This commitment further involved helping factories take responsibility for workers experiences, building new and different factory management systems and increasing staff awareness, from oor supervisors to top management. Our collaborative approach positions all sides working together for the same goal. Rather than relying on documents and factory managers/ supervisors to tell us the conditions of the factory, we put the workers themselves at the center of the process. Instead of compliance being the goal, the worker as stakeholder has become our goal. This is a radical shift, which necessitates increased engagements with factory workers to obtain their opinions, feedback, ideas, and input. Since 2005, we have engaged workers as a primary and critical aspect of the assessment process and we now work with factories to establish formal worker committees to monitor issues and identify solutions alongside factory management (see Section II for more information).
GOAL Of SHIftING COMPLIANce-bAseD AUDItING tO COLLAbOrAtIVe AssessMeNts (AND tHe PrOGressIONs ALONG tHe wAY):
AUDIt fOr COMPLIANce

a. Manager focused b. Snapshot visit by company/external auditing team to verify Code compliance c. Focus on documentation, physical inspection, responses of managers d. Audit checklists, corrective action plans
INfOrM & CONsULt

a. Managers + Workers b. Informing and consulting with managers and workers to i) raise awareness of obligations, rights, and Code auditing processes; and ii) improve the breadth, depth, and quality of Code audit data c. A core focus remains on managers, but workers are involved too d. Semi-structured interviews, focus group discussions with workers
INVOLVe, ENAbLe, COLLAbOrAte

a. Managers, Workers + External Stakeholders/Community b. Go beyond Code checklist to active involvement, capacity building, and partnering to: 1) enable workers to identify the rights and problems they see as important; 2) ensure managers have knowledge and resources to address workers rights; 3) draw on external stakeholders expertise for capacity building and problem solving c. Increased focus on worker support and involvement
DeLeGAte & EMPOwer

a. Managers, Workers + External Stakeholders/Community b. Ongoing, day-to-day process where workers are empowered to articulate their needs, engage with managers, and monitor workplace conditions c. Core focus on workers and on permanent activities for skills building and worker-management dialogue d. Where appropriate, multi-stakeholder initiatives raise worker/supplier capacity and improve workplace and community living
6. These statistics are based on our Q2 2009 factory list. Our factory list is updated quarterly at www.earthkeeper.com/csr. 7. We include tanneries as key suppliers given the volume of leather that we utilize in our products and the environmental risks associated with the tanning process. We include subcontractors when they are the primary manufacturer of the product. We include footwear component suppliers for which Timberland at a corporate level has determined their selection.
Through the collaborative assessment process, Timberland assessors forge positive and powerful relationships with both factory management and workersa partnership that continues after the assessment is completed. During the remediation process, assessors assist factory management in analyzing root causes, identifying system gaps, and developing action plans that dont simply address the ndings but also aim to prevent the recurrence of the same or similar issues. Our action-planning process is comprehensive and includes consideration of those impacted by the changes, how to overcome obstacles or potential resistance, how to communicate change, and how to measure and celebrate success along the way. We embed project management and change management methodologies in the actionplanning tools our assessors provide to the factory, and the assessors further assist factory management in developing action plans. Our Assessors then continue to partner with the factory through the completion of the remediation process; they assist in capacity building based on an analysis of management knowledge and skill levelsensuring adequate awareness, desire, knowledge, ability, and reinforcement. As a result of this shift, Timberlands Code of Conduct Specialists (Assessors) are now called on as capacity builders, rather than compliance police. This approach requires a new and different set of skills and training for our team. Our investment in these skills has resulted in the teams ability to create a collaborative and worker-engaged approach and improved relationships/rapport. We have immediately seen a return on investment. For example, in 2008, we saw 69% of continued business partners showing improved assessment scores from 2007, a direct result of our assessors ability to partner with factories and focus on sustained improvements. Over time, weve seen our continued business partners begin to embrace our new approachalthough it is more intensive and time consuming (2-5 days)as demonstrated by their trust, transparency, and shift in mindset by seeing the process as an added value to their overall business. However, with new suppliers we often begin with a thick, high wall of distrust and lack of transparency, which initial visits often cannot overcome. Another challenge we continue to face is unauthorized subcontracting; whether intentionally or not, we do nd that it happens from time to time as factories seek to meet production needs during peak seasons. To help mitigate the occurrence and/or compliance risks of unauthorized subcontracting, we have increased our messaging to business units internally and vendors to assist them in establishing their own supply chain social compliance monitoring program using Social Accountability Internationals Supplier Toolkit as the recommended approach.8 We also ask that our own design, development, and various value chain teams consider ramications for the factory production schedule should they need to place fast-tracked orders and/or request samples with tight turnaround times, etc.
CHAllENGES WE FACE
II. BEYOND MONITORING

Timberlands Code of Conduct mission is a bold goal and something that monitoring alone can only partially accomplish. In full pursuit of our mission, we have incorporated additional elements both within and outside of the monitoring process to emphasize our focus on engaging workers and strengthening communities. These elements include: Formal engagements with workers during the assessment process on a global basis. Based on pilot projects in 20062007 initiated with Verit9 in select factories in China, these formal engagements empower workers with the knowledge, skills, and tools to self-monitor their factory for basic rights and continuous improvement. (See pages 8-9 for more information.) Expanding our assessment program to include civic engagement. In 2007, we added questions to our assessment process regarding suppliers community investment and service activities. Through this dialogue with factory management and workers, we believe were creating an opportunity to inform, inspire, and engage each other. Were able to recognize and acknowledge factory partners who share our passion to make a difference in their communities. We can also identify opportunities to further civic engagement worldwide by offering Timberlands rsthand knowledge and experience in engaging in community service. (See pages 11-12 for more information.) Analysis of the adequacy of workers wages in meeting their basic needs (including opportunities to better their lives). This component of our assessment process enables us to determine whether or not workers can address their basic needs such as food, shelter, child care, etc. and development needs, such as recreation and education, given the wages they are paid. (See Section III for more information.) As we pursue our mission to its fullest, we face many challenges from limited resources, to the fears of factory management that workers will strike or organize should they hold more knowledge of human rights, or that workers might quit as they develop new skills and knowledge. With
TIMBERlANDS CODE OF CONDUCT

To create measurable and sustainable impact in the lives of our workers, the communities where we live and work, and the environment we cherish through strategic relationships and investments that unleash civic potential, build capabilities, and convene stakeholders in common purpose.
8. Timberland is a member of Social Accountability International. One of our member benets is access to best practice trainings and tools such as the Supplier Toolkit. www.sa-intl.org 9. Verit is an independent nonprot organization monitoring international labor rights with which Timberland has worked on various factory-based projects throughout the years. www.verite.org
this document, we share the accomplishments of our approach as well as the challenges, gaps, and opportunities for collaboration. We look forward to dialoguing with you, our stakeholders, as we continue to push for improved working conditions globally.
O pening and Closing Meetings. With each assessment, Timberland Assessors hold an Opening and Closing meeting to outline the goals and objectives of the assessment process, ensure understanding and agreement of the assessment process and methodology, and set clear expectations regarding outcomes and next steps. In the past, only factory management and supervisors were asked to attend these meetings (and, where applicable, the union representative). However, beginning in 2008, we started inviting oor workers to these meetingsrecognizing them as a key stakeholder in the process. Group Discussions. Generally speaking, there is safety (and comfort) in numbers. Rather than one-on-one interviews with workers, we choose to gather information from workers via group sessions. Timberland Assessors take various approaches to build rapport and trust with the workers, create two-way sharing of information, and uncover workers perceptions, aspirations, and needs. They use specially designed techniques such as participatory discussions and free-owing chat to facilitate openended dialogue, rather than prescribed question-and-answer sessions with predetermined ends. We have adapted these techniques from the participatory methodologies developed by the Institute of Development Studies at the University of Sussex in the United Kingdom.10 Designed to enhance the awareness and condence of workers and to empower them to take action, this approach positions workers as creative, capable change-makers. With these techniques, the Assessors role is that of catalyst and facilitator, as opposed to interviewer. Code Trainings. Whether during the onsite assessment or at another convenient time for the factory and/or Assessor, we also provide formal trainings for workers (full workforce or subsets within) outlining the detailed elements of Timberlands Code of Conduct to ensure full and widespread understanding of workers rights and their role/responsibility in identifying, addressing, and seeking resolution. We believe these trainings generate knowledge for action and empowerment. The biggest challenge we face in establishing trust through these mechanisms is overcoming or gaining factory managements buy-in and support. Our assessors are constantly working to change factory managers mindset from seeing worker knowledge and empowerment as a negative, to instead considering informed workers as assets and a business advantage. For some factories, persistent persuasion is needed for their management team to see how these engagements can be an opportunity to improve their business. Additionally, we can face challenges in gaining the trust of workers so they feel safe and free to truly open up. It is also important to note that once trust is established, it requires ongoing care to maintain.
ENGAGING WORKERS
We believe the people who best understand the issues and troubles faced by factory workers are the workers themselves. Thats why Timberland is committed to engaging workers in the assessment process. This belief is not new. Even with our previous compliance-only approach to monitoring, workers have always played a part in the process, as one source of data (via interviews). However, as Timberland and other brands have found, the information workers share in interviews is not always truly reective of factory conditions. Workers were often coached by factory management to provide the right answers, coerced by factory management not to disclose anything negative, and/or were fearful that a negative image of the factory would result in the brand pulling its orders and thus risking the nancial stability of the factory and their jobs. So the question became, how do we engage workers more effectively? And how does one get to the truth? Truth is not black and white. Rather, it is complexa blend of perspective, knowledge, and understanding that is generally only volunteered in situations of trust and comfort. To better engage workers to uncover true factory conditions (whether perceived or real), we must address the formula of truth by looking to comprehend workers perspectives, ensure adequate knowledge and understanding, and establish trust and comfort. While we seek to engage workers as much as possible, Timberland only engages with workers based on their own free will. We work hard to ensure participants do not experience retribution for doing so, and we purposefully engage multiple subsets from different departments (with a diversity of characteristics, such as gender, tenure, job functions, pregnancies, shifts, etc.) to mask specic data points or feedback.
Establishing Trust and Two-Way Dialogue

Because they are key stakeholders in our collaborative monitoring process, we want to ensure factory workers understand the goals and objectives of the process, of the subjects the process covers, and of their role in it. We also want workers to feel rsthand that their input, issues, and concerns their voiceis important and valued. In treating workers as the key stakeholder, our Assessors create a greater level of two-way information sharing, which develops a level of mutual respect, understanding, and trust. To engage workers as stakeholders, Timberland has incorporated the following steps into the assessment process:
10. www.ids.ac.uk/ids/particip
INVOlVING WORKERS IN THE ASSESSMENT PROCESS AT STEllA INTERNATIONAl

Stella International, a footwear factory in Dong Guan, China, employing roughly 6,300 workers, has been producing Timberland footwear since 1995. Stella presents an interesting case of involving workers more actively in the assessment process. Over the years, our Code of Conduct assessments found typical issues with respect to remuneration, excessive hours, and overall health and safety management. While we had engaged workers in the assessment process in the past via interviews and limited static trainings, we felt that with more formal and active engagement, the short-lived improvements that we had been seeing might become sustainable. During the factorys annual assessment in 2008, Timberlands China Assessor engaged the workers more formally. First, she randomly selected workers from each department to attend the Opening/Closing meetings to hear rsthand the purpose of the assessment and its importance to Timberland. After the Opening Meeting, the Timberland Assessor asked participants to provide feedback about what they learned and whether or not they had beneted from the meeting. One worker indicated that he now had more awareness of the importance of environmental issues in the factory; another stated that she now knew of the importance of Timberlands social responsibility program and how she might strive to exercise or enforce her rights in the factory in a deeper way. All of the workers that attended indicated their willingness to pass what they had learned from this meeting on to their workmates. In addition to these meetings, on the third day of the assessment, the Timberland Assessor organized a formal training for 25 workers who were selected from different oors and different sections. During this training, workers took an active part in group discussions on a series of topics (translated from Chinese): What factors do you think will promote a harmonious interpersonal relationship in a factory? What are your top three concerns when choosing a job? Why do you choose this factory as your employer? To what extent do you have knowledge about human rights? Are there any aspects with which you feel quite satisfied with your factory? What do you think the factory should do to become better in some aspects? Workers put forward many valuable suggestions, ideas, and thoughts about these topics. They reported being satised with the content, timing, and frequency of the factorys Health, Safety, and Environmental course and the fact that timely pay could be guaranteed. They also found convenience in several automats but that had been installed inside the factory and a library that provides opportunity for enhancing recreational reading, knowledge, and self-improvement. Workers also reported being pleased about receiving coupons for public holidays and gifts on their birthdays. Workers openly shared and discussed their thoughts on areas where they felt there was room for improvement. By sharing these perceptions in an open format, the workers determined they could solve some issues themselves based on new learnings and shared experiences. Coming together as a group also enabled the workers to present a united front for the few things they did want to ask management to improve. For example, workers were looking for increased communication, supervisor and worker training on interpersonal skills and team building, and some improvements to the canteen and entertainment facilities. Workers also had suggestions for improvements in the overtime scheduling process and the medical services process. While some of these perceived issues and suggestions for improvement may have been uncovered during an audit, the impacts of the 25 workers learning, understanding, and brainstorming together will more likely result in long-term improvements because they have been a part of the process for identifying issues and seeking solutions. To thank the workers for their active participation in the training and discussions, Timberlands Assessor gave the participants a small token of appreciation (Timberland key chains made from leftover leather scraps). Our nal feedback report stated that all participants expressed interest in attending trainings in future assessments, and they would encourage their workmates to attend as well.
Worker Code of Conduct Committees

In July 2006, in collaboration with Verit, Timberland launched a pilot project in two large Chinese factories designed to create a mechanism for factory workers to conduct ongoing Code of Conduct assessments themselves. The premise of this project was that involving workers in identifying and solving Code of Conduct issues will ultimately improve workplace labor conditions, worker morale, and in turn improved worker retention and lower absenteeism. We forecast that these improvements could lead to increased quality and productivity.
The process of creating the Worker Code of Conduct Committees consists of three phases: 1. Surveys. Surveys are given to factory management and supervisors to ascertain their perceptions in three areas: organizational culture, CSR management systems, and communication practices. Additional surveys are given to workers to ascertain their level of awareness of Code of Conduct topics and their perceptions of key issues. The committee then uses the information gathered from these surveys to identify the baseline for implementing improvements customized to the needs of the individual factory.
2. Worker Elections & Trainings. Elections are held for workers to select which of their peers they want representing them on the Code of Conduct Worker Committee. Factory managers, supervisors, and the newly elected committee members then take part in a series of training sessions. The goal of these courses is to equip participants with a solid understanding of Code of Conduct matters, as well as the leadership and interpersonal skills necessary for participants to conduct social compliance assessments effectively. 3. Plan, Do, Check, Act. The worker committee then uses a set of tools, such as guidance and reference materials, audit checklists, corrective action tracking, and follow up procedures, to conduct social compliance assessments of the factory. They also establish management systems for ongoing oversight of the process, including a mechanism for adding workers to the process and revisiting its effectiveness for continuous improvement.
From the lessons learned through the pilots in three factories in China, Timberlands Code of Conduct team now aims to apply this program to factories globally. Each of our Assessors is expected to implement worker committees and/or otherwise increase worker engagement in the assessment process in at least 50% of their factories in 2009, aiming for 100% of continued business partners in 2010. One challenge identied in establishing such committees is overcoming the fears of factory management that workers will strike or organize should they hold more knowledge of human rights or even quit as they develop new skills and knowledge. Additionally, ongoing support from factory management often depends on a return on investment, which can be difcult to quantify or directly link to the efforts/activities of the committee.
POU YUENS WORKER CODE OF CONDUCT COMMITTEE

Pou Yuen Manufacturing Company (PY) is a footwear factory located in Guangdong, China with roughly 6,600 workers. Timberland has sourced from this factory for over nine years. Timberland selected PY as a participant for the Verit pilot project because over the years we found limited sustainable improvements with respect to issues related to wages, hours, and health & safety management (emergency preparedness, procedures for properly maintaining personal protective equipment, and chemical storage/handling). Following surveys, worker elections, and a series of trainings, Timberlands China Assessors worked with the newly formed Worker Committee to implement the following Plan/Do/Check/Act steps: 1. Chats with Workers. As a routine, PYs Worker Committee collected workers opinions once or twice per month regarding the factory and surrounding community. This helped the committee and factory management better understand workers needs, issues, and stressesreal or perceived. 2. Monthly health and safety checks. Each month a rotating group of committee members reviewed the health and safety issues of the factory with department-specic audit checklists. 3. Discussions about ndings and action plan. The factorys CSR department met with committee representatives to review information gathered by the checking and chatting routines every 1-2 months. The CSR department then reviewed this feedback with 4. Worker activities. The committee also assisted the factorys CSR department to organize activities for improving worker morale and CSR understanding. Feedback from workers, the Committee, and the CSR department at PY indicated that the pilot project was successful, as it increased workers knowledge and active engagement. The result is an improved relationship between workers and factory management, as well as an increased interest in proactively suggesting solutions to issues. The factorys CSR department also reported that absenteeism and turnover had improved and that employee surveys demonstrated improved morale. They attribute this improvement in part to the increased involvement of workers and the demonstration that workers voices are desired and valued. Given these indicators of success and impact, the Worker Committee continues to this day. factory management and reported back to the worker committee on actions taken, planned, and/or reasons for not being able to address issues. The worker committee then communicated this information to their workmates.
Engagement Outside of Assessments

Knowing that information dissemination, heightened awareness, and training should take place in many forms and more frequently than once per year (via annual assessments), Timberlands Code of Conduct Assessors encourage factories to take ownership of disseminating information by assisting them in identifying new and different ways of capturing workers attention throughout the course of the year. A Code poster hanging in the workplace is not enough. We have found worker-led training courses to be quite successfulwhether they occur via a worker committee established and trained to monitor compliance throughout the year (as described earlier) or through peer training. Experience has shown that workers tend to trust their co-workers more easily than management and are thus more willing to share their views and opinions with their peers. It can be difcult, however, for factory management to balance the time and resource demands they face in day-to-day production to allow for regular, frequent opportunities for workers to engage in trainings and focused discussions. These time demands can often result in managements falling back on relying on brands to be the impetus and source for such training, as opposed to ensuring ongoing trainings proactively themselves. The result is less frequent trainings and engagements, as well as a failure to discuss issues as they occur. At a minimum, Timberlands assessors ask factories to incorporate Code of Conduct training into their new-hire training modules. We encourage factories to conduct condential annual employee surveys to conrm perceived workplace conditions and treatment of workers. Additionally, we encourage factories to seek input from outside parties such as community members, local NGOs, other area factories, and governmental or industry organizations regarding their factory, worker needs, and training expertise. It is not enough to sit passively and presume that all is well because there are no suggestions or complaints in a suggestion box or being received via managements open-door policy. We believe that worker understanding must be conrmed and validated; and, as one would imagine, the larger the factory, the more challenging the task of sharing information throughout the entire workforce and efciently collecting feedback/input from the workforce in full. A continuing stream of ideas and awareness of issues requires ongoing solicitation from multiple sources.
POU YUENS CSR CARNIVAl
Timberlands engagement at the Pou Yuen factory also provides an example of creative engagement outside of the assessment process. In 2008, one of the ideas generated by discussions with the Worker Code of Conduct Committee was to hold a CSR Carnival for the workers as part of the factorys plans to honor the 10th anniversary of CSR programs. The goal of the Carnival was to exhibit PYs commitment to and evolution of their CSR program, increase interaction between the CSR department staff and workers, raise awareness of CSR topics, enhance workers sense of belonging, honor, and accountability, and promote CSR impact. The CSR department carefully selected different methods of teaching, disseminating information, and engaging workers in informative and entertaining ways. They organized 25 different activities, including a competition to develop a creative way to convey the environmental message of Reduce, Reuse, Recycle. For example, one group of female workers created dresses out of newspapers. The Carnival was attended by nearly 50% of PYs workforce (3,000 workers), which was higher than anticipated given the rainy weather on the day it took place. Survey results indicated that the top three topics of interest were Individual and Worker Rights; Environmental, Health & Safety knowledge; and general information about daily health. Additionally, Timberlands assessors received important input from interviews with PYs management team, in which management stated that having good labor relationships is important because they believe it results in increased productivity. PYs factory management also conveyed that improving workers leisure life with more activities was important to the factorys productivity because it would help reduce workers stress levels.
STRENGTHENING COMMUNITIES
At Timberland, community service has always been a part of our heritage. In 1992, inspired by our relationship with City Year11, Timberland formalized that value and launched the Path of Service program to ensure all employees were afforded time and opportunities to serve in the community.12 We believe that if employees have one positive and powerful service experience, they will be more likely to serve and engage in their communitiesperhaps even on their own time. As a company, we encourage employees to be active citizens and civic leaders. Engaging as a company in community service over the years has produced a variety of benets, including the following: Augmented employee development. Our service projects are employeeorganized and led. Employees who step up to lead service projects receive training in project management, team motivation, and presentation skills, which they can transfer from their service roles into a professional capacity.
11. C ity Year is a nonprot organization dedicated to building a stronger democracy by engaging diverse groups of 17- to 24-year olds in national service: www.cityyear.org 12. Timberlands Path of Service program benet gives full-time Timberland employees 40 paid community service hours per year. For more information about our community service program, objectives, implementation, and employee engagement, see www.timberland.com/csr.
Increased employee attraction and retention. Responses to our global employee survey consistently indicate that the Path of Service program benet is a factor in our employees decision to work for and stay at Timberland. Strengthened business partnerships. Since we are a relatively small company, we encourage employees to share our service ethos with business partners, vendors, and customers, to increase the impact we can make in communities. Sharing in service experiences provides insight into our company culture and valuesan asset in building ongoing business relationships. Reinforced commitment to community building and goodwill. We have seen positive and lasting impacts in the communities in which we serve, as our contributions linger long after the specic service event. As weve found great benets from community service for our own company and the communities in which we operate, we realize that Timberlands inuence and footprint extends beyond our owned and operated facilities. Our contract factories are important stakeholders. We seek opportunities not only to engage factory workers in factories producing Timberland products, but also to engage them in the communities where they live, so that they too may create better quality-of-life conditions for themselves and their communities.
Worker-Engaged Community Service

In 2007, following the third year of our new collaborative approach to assessing factories, Timberland proved that our assessment process could be effective in creating measurable and sustainable impact. With positive factory worker/Assessor partnerships being formed and workplace improvements realized, we began focusing on the last piece of Timberlands Code of Conduct missioncivic potential. We felt that many suppliers had shifted their mindset regarding the value of improving conditions within the factory, and therefore the time was right to bring what Timberland had learned from community service to dialogue with our factories globally. We added questions to Timberlands assessment questionnaire to gather information regarding factories community investment and service activities. By inquiring in this way, we create an opportunity to inform, inspire, and engage each other; to recognize and acknowledge those factory partners that share our passion to make a difference in their communities, and to identify opportunities to further civic engagement worldwide. With this addition, Timberlands Code of Conduct assessment process has evolved to an overall CSR assessmentencouraging factories to improve conditions both inside and outside their walls. Our goal for 2009 is for each Assessor to engage at least one factory in a community service event by year end. In doing so, our Assessors will gather feedback, lessons learned, and understanding of factory and community impacts so we can then create a collection of factory service experiences worldwide. We aim to use these learnings to scale our program going forward.
HEART & MIND COMMUNITY ENGAGEMENT

Heart & Mind is a childrens-wear garment factory located in Nakhonpathom, Thailand, with roughly 220 workers. Timberland has sourced from this factory for over nine years in partnership with our long-term licensee, Childrens Worldwide Fashions (CWF). While Heart & Mind has kept its compliance status at an acceptable level, it struggled over the years with employee morale, high turnover, and high absenteeism. With encouragement and guidance from our local Code of Conduct Specialist, Heart & Mind agreed to engage the workforce in service activities to try to improve worker relations. The workers brought their environmental message to a community improvement project in their own facility. Heart & Mind has an outdoor recreation and relaxation space intended for workers to use as a place of congregation and enjoyment before or after work and during lunch and breaks. This space was unappealing and not in good condition. As a result, few workers used it. In an effort to improve this space, the worker committee worked with management to establish a budget and planned a community service project. Supported by management, the committee members arranged for tools, materials, food, and time both on and off the clockto re-green the space. Together, factory workers, community members, supervisors, and management lent a hand to create a space that both factory workers and the community could be proud of and enjoy. The improved space is a living testament to the power and passion of everyones heart & mind. And the outcome goes beyond just re-
BEFOrE
AFTEr
greening this outdoor space. As found at Timberland, the factory realized improved employee morale, retention, productivity, and loyalty as a result of civic participation. Turnover, for instance, went from over 9% to less than 5% from 2007 to 2008, and survey results demonstrate that 81% of workers were pleased with the factorys efforts to engage them on environmental and service initiatives. Seeing that factory management cares about the community translates into knowing that they care about the workers. Workers understand there is a genuine interest in their needs and in seeking solutions for improved quality of life.
Heart & Mind established a worker committee to monitor workplace conditions, ensure worker grievances were managed properly, and identify creative means of disseminating Code of Conduct information and training to workers. The committee identied many creative ideas for community engagement, such as taking scrap fabric material and making bags that displayed messages about using re-usable bags as opposed to paper or plastic bags. The workers, now armed with the bags and a strong understanding of the issue, spread the message in the community. And they didnt stop there.
Community service engagements can also serve as another means of creatively engaging workers on issues and demonstrating that their ideas, thoughts, cares, and concerns matter. Grassroots ideas coming from passionate and invested workers can lead to greater community benets, through which workers can build an ongoing interest in serving and staying involved. The biggest challenge in establishing factory or worker-owned community service events is the time and nancial resources required. However, with creative thinking, solutions can be foundeven in times of
economic downturn and increased nancial stress. Just this year, weve seen workers at the Heart & Mind factory in Nakhonpathm, Thailand, creatively recycle waste and use funds from its sale to budget and execute a community service project to plant 1,000 trees on Earth Day 2009. Their efforts reect previous community engagement success stories in other parts of our supply chain. See page 11 and the sidebar below for stories about additional community service performed at Heart & Mind and our own factory in the Dominican Republic.
COMMUNITY ENGAGEMENT AT TIMBERlANDS OwN FACTORY

felt passionately about changing the local educational environment and established a low-cost school in her garage for those who were not able to send their children away to school. After two years of meetings and contacts with different government agencies, the government donated funds for material and labor to construct the foundation for a school to be built in a donated lot. With community support and service, the school was no longer in a garage. It now had its own land, rst-oor walls and a canvas ceilinga strong start for the 112 students of the Escuela Basica Emmanuel School. With more building work to be accomplished and a growing need in the community, Josefa enlisted RFC co-workers, neighbors, family, and friends to further increase community awareness, support, and funding to nish At Timberlands owned manufacturing plant in the Dominican Republic (The Recreational Footwear Company or RFC), we have approximately 1,900 workers, 1,400 of whom work on the production oor. Like our other employees around the world, our workers in the Dominican Republic take great pride in Timberlands values and aim to provide benets to their local communities through civic engagement. Since 1996, the factory has executed many service events and partnered with local organizations to benet thousands in Santiagos local population, particularly children. Many ideas for service projects are sparked by individual employees. One example is a project that provides affordable and good-quality education for young children. In 1998, Josefa Rodriguez, a RFC employee since 1985, recognized a problem in her community. Having personally struggled to nd a local school for her young children without solution, Josefa ultimately sent them great distances for quality education. She construction and staff the school. The RFC provided modest nancial support ($15,000 USD) and 400 employee service hours. As of 2009, the two-story building is now almost complete, with nine classrooms, two bathrooms, a directors room, and a cafeteria servicing its current enrollment of 524 students. The Emmanuel School, passionately created by one and now adopted and supported by many, will continue to be one of RFCs dedicated service sites in 2009 and beyond. I feel a great satisfaction and pride that Timberland, the company where Ive been working half of my life, has persistently helped to solve a great education problem in my community, says Josefa. Very poor parents are constantly preoccupied by the education of their little children. Thanks to the support of Timberland, this urgent need is almost covered. I take pride in belonging to this family and working for a company that is translating employee aspirations into community benets.
II. SUSTAINABlE LIVING ENVIRONMENTS

Ensuring workers are paid a wage that at least allows them to meet basic needs is a complex subject, especially given the local economies in which they live. Timberland upholds all minimum wages in countries where we operate, but we also recognize that minimum wage in many places is not sufcient to meet workers basic needs or opportunities for betterment. We believe that higher wages alone do not necessarily create improved living conditions. It is within this context that we have dened our approach to support and facilitate sustainable living by addressing the environment (societal infrastructure) that workers live within rather than focus on wages alone. LIVING WAGE OVERVIEw
To understand Timberlands focus on sustainable living environments, it is useful to understand the concept of a living wage. The International Labor Organizations Minimum Wage Fixing Convention 131 (1970)13 species in Article 3 (a) and (b) that the following two elements are to be taken into consideration when establishing a legal minimum wage: 1) the needs of workers and their families taking into account the general level of wages in the country, the cost of living, social security benets, and the relative living standards of other social groups; and 2) economic factors, including the requirements of economic development, levels of productivity, and the desirability of attaining and maintaining a high level of employment. Convention 131 aims to address the fact that, oftentimes, to attract foreign investment and international buyers, countries emphasize economic growth and development. Minimum wages are often set to compete with low-cost suppliers in other countries, as opposed to promoting workers interests. It is for this reason that many countries have minimum-wage levels that do not meet the basic needs of workers and their families. These wages frequently do not reect ination and other factors that affect actual standards of living.
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their families, but also provide for setting aside money for participation in culturally required activities and planning for future bettermenttermed a Sustainable Living Wage.16 Critics argue that basic economic theory suggests that a mandated minimum price for labor (such as a living wage) is harmful to low-wage workers and increases unemployment. Articially xing a price for labor above the market price causes a decrease in the overall demand for labor, leading to increased unemployment and deadweight loss.17 Workers who lose their jobs would not receive the living wage. Furthermore, such wage increases can cause ination, increasing the cost of living and decreasing the relative buying power of the living wage, which leaves the minimum wage earner no better off. Critics of living wage ordinances further assert that the government should not intervene in the marketplace, because well-intentioned interventions are usually detrimental to the economy as a whole. Rather, the society-wide benet of reducing poverty becomes the responsibility of those who hire the least educated, least experienced, least skilled, and most vulnerable workers.18 We know that the cost of living varies within and among countries, and controversy exists about the denition of a living wage and how best to calculate it. Questions arise about whether a single wage earner should be expected to support the entire family, how many dependents would be supported, whether income from other sources should be considered, how to include non-wage benets, and how to deal with regional differences in costs of living. Questions also arise regarding how living wage is assessed
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As opposed to minimum wage, living wage is the minimum hourly wage necessary for a person to achieve some specic standard of living. Social Accountability International (SAI) denes a Basic Needs Wage as a living wage that enables workers to support half the average-sized family above the poverty line, based on local prices near the workplace. The Center for Reection, Education, and Action (CREA) goes further, calling for wages that not only meet the basic needs of the workers and
for example, use of a food/needs baskets, purchasing power parities, and trade unions negotiated wages, all of which may be subjective.
13. Available at http://www.ilo.org/ilolex/cgi-lex/pdconv.pl?host=status01&textbase=iloeng&document=132&chapter=1&query=%23status%3D01&highlight=on&querytype=bool&context=0 14. As discussed in Social Accountability Internationals Guidance Document for SA8000 (www.sa-intl.org) and by CREA at www.crea-inc.org 15. According to SAI, basic needs include essential expenses such as food, clean water, clothing, shelter, transportation, education, and a discretionary income beyond any legally mandated social benets as discussed in Social Accountability Internationals Guidance Document for SA8000. www.sa-intl.org 16. www.crea-inc.org 17. As discussed in Dening and Measuring a Global Living Wage: Theoretical and Conceptual Issues by Mark Brenner, April 2002, and Wages in the Apparel Industry: What Constitutes a Decent Standard by Gustavo Setrini and Richard Locke, July 2005. 18. As discussed in Dening and Measuring a Global Living Wage: Theoretical and Conceptual Issues by Mark Brenner, April 2002, and Wages in the Apparel Industry: What Constitutes a Decent Standard by Gustavo Setrini and Richard Locke, July 2005.
AlTERNATIVE APPROACH: SUSTAINABlE LIVING ENVIRONMENTS

Timberland agrees that every person is entitled to food that meets universal nutritional standards, clothing that reects the persons innate dignity, housing that allows privacy as well as shelter, affordable and accessible health care, and education that cultivates innate gifts and talents and enables the person to contribute to his or her community. We also agree that all factory workers should be paid a fair wage; we uphold the minimum legal wage in every country we operate in, and we also require that overtime be paid at a premium rate even when not legally required. While we recognize that in some countries or regions the legal minimum wage is insufcient to support sustainable living, what we dont know is whether simply raising wages for workers will ensure that their basic needs are met. What if the issue involves more complex questions, such as the cost and accessibility of basic human services like health care or education? In our experience, we have seen these specic limitations in the real world, from monopolistic control of basic foodstuffs in developing economies, causing food prices to be articially high, to lack of access to kindergarten
or affordable and accessible health care. These are real-life examples of problems that are simply not addressed by raising a workers wage rate. At our own manufacturing plant in the Dominican Republic, the Recreational Footwear Company (RFC), weve seen rsthand that paying the workers higher wages does not necessarily change their lives. From talking with workers, we have learned that many wouldnt necessarily spend the additional money on better food or housing or seek education, as access to these services has not been easily or readily available. But if these services were available, workers indicated that they would likely take part in programs aimed at improving their livesif within their means of affordability. As a result, the RFC began a Literacy Program in 1999, which continues today, and also worked collaboratively with its trade zone association to establish a co-op program to provide goodquality and affordable food, prescription drugs, and appliances to all trade zone workers. Similarly, weve learned from workers at White House, a childrens-wear apparel factory located in Chennai, India, that some of their most basic needs were not being met, regardless of the wages paid. Through persistent discussions with factory management, workers made the business case for establishing an on-site facility to meet their needs.
TIMBERlAND RFC EDUCATION AND COOP PROGRAMS

these students graduated with their high school degree in 2007. As of December 2008, 120 employees were participating, of which 52 were at high school level and nine at intermediate level. In addition to programs targeting increased literacy, the RFC listened to workers feedback about the lack of affordable, good-quality, healthy food available to them. In 2004, the RFC worked with its trade zone association to establish a co-op program with discounted prices for all trade zone workers. At that time, ination was high in the Dominican Republic, and food prices were rising considerably. The Co-op purchased food stuff in high quantities at a discount and offered workers the opportunity to purchase food supplies at an affordable price. The program was initially funded by fees paid by the Based on worker feedback, management at Timberlands factory in the Dominican Republic (the RFC) knew that if services were offered to workers in an accessible fashion, workers would utilize such services as a means to better their lives. So, in 1999, Timberlands RFC ofce staff introduced a literacy program to 45 employees and their families. That initial effort has since developed into a program of basic education courses for which employees can receive government certication in grades 1- 12. With RFC funding, teachers from local schools provide classes to employees at the factory after work. As a natural evolution of the literacy program, the RFC funded the creation of a high school equivalency course in 2005. This program enables employees to form study groups after work to prepare for their general education diploma (GED). In 2006, the RFC increased the number of employees participating in this program to 116, and 18 of RFC and other companies in the Pisano Industrial Park. The Co-op program then expanded to include offerings of good-quality, affordable prescription drugs and also appliances (as these, too, were identied as lacking availability in the area). To allow more exibility and increase participation, the RFC established a process with the Co-op that now allows workers to borrow funds from the RFC for their personal Co-op purchases. Workers pay back the RFC through payroll deductions in four-week increments based on the amount purchased. In 2008, an average of 366 RFC workers participated in the program. As of March 2009, roughly 500 workers were participating. The RFC hopes to increase participation in 2009 to more than 600 workers (roughly 40% of the workforce) to further drive down prices; the more participants, the more purchases, the higher quantities purchased from wholesalers, providing lower prices for all.
WHITE HOUSE DAY CARE FACIlITY

White House is a childrens-wear apparel factory located in Chennai, India, with roughly 525 workers. Ninety-nine percent of these workers are women from interior villages of Tamil Nadu, and Timberland has sourced from the factory since 2001. Through the course of Timberlands Code of Conduct assessments, discussions with workers, and interviews with management, Timberland Assessors understood that most of the workers left their children at home to be tended to by the elders otherwise they would have to leave work if they wanted to raise a family, as there was not adequate or affordable child care in the area. While elder care was traditionally the preferred means of child care, that alternative was increasingly a struggle for workers. Through patient and persistent discussions with factory management, the business case for the factory to establish a day-care facility on the premises was agreed to, and an onsite crche was established in 2008. M. Amsa, a female factory worker, nds this benet valuable: I leave my child daily in the company crche. Looking after my child by the staff of the company crche has become very useful to me. My child is being given milk, biscuits, and midday meals. I am permitted to visit the crche and see my child at any time I want, she says. Enrollment at this initial stage has been low, but is expected to increase as workers are gaining condence in the quality of care provided by the center. Management has taken many steps to encourage the use of the center and believes the return on investment will be a dedicated, loyal workforce committed to higher performance for the company, with lower turnover and lower absenteeism.
Our experiences at the RFC in the Dominican Republic and White House in India demonstrate our ability to help improve the lives of workers beyond wage increases; they also show that paying higher wages is not necessarily the answer. After seeing rsthand the value in understanding and addressing the infrastructure available to workers, we wanted to expand the model of thinking to our contract supply chain globally. Rather than asking factories to pay a living wage, we began working with them to understand the infrastructure available to their workersinside and outside the factoryto determine whether or not the infrastructure provided a sustainable living environment for workers. Where such infrastructure is lacking, we look to work with the factory for a sustainable solution to address the missing link. In challenging economic times, this can be a difcult sell to factory management; however, as with community service events, creative solutions can be found for addressing limited resources and funding. The key to securing factory buy-in and nancial support is to demonstrate to factory management that a return on their investment is inherent.
TIMBERlAND ASSESSMENT QUESTIONS FOR SUSTAINABlE LIVING ENVIRONMENTS

A. BAsIc NeeDs
Do workers have access to adequate medical facilities/services at no cost to workers for workplace illness/injuries and at affordable rates for personal needs? Are workers well-aware of HIV/AIDs risks and precautions, and do they have access to related medical services? Do workers have access to adequate and affordable nutrition/food both in and out of work? Do workers have access to adequate and affordable housing? Do workers have access to adequate and affordable means of transportation (if applicable)? Do workers have access to adequate and affordable child-care options?
SCAlING THE SUSTAINABlE LIVING ENVIRONMENT APPROACH

Based on our experience and using SAI and CREAs denitions of what constitutes a basic needs wage and a living wage, we have added questions to our assessment process in 2008 that drive to a greater understanding of workers basic needs and opportunities for a better life. Determining the adequacy of the options and infrastructure available to workers is subjective, requiring input from multiple sources and an understanding of the cultural norms. Our Assessors start by discussing these issues with workers to gain rst-person understanding of their perspectives. The Assessors not only speak with workers, but they also
B. BetterMeNt Of LIfe
Are workers in need of and do they have options for low- or no- cost means of developing life skills? Do workers have access to adequate savings/credit services? Are affordable opportunities for leisure activities available to workers?
research and analyze the local infrastructure with factory management, community members and organizations, trade unions (where applicable), other brands producing in the area, and local NGO organizations to validate what workers convey. We might nd that the disparity of perceived versus real needs is a result of workers not being well-informed, or the disparity may very well be conrmedaffordable, adequate options or services are not readily available. In either case, action is neededthe former clearly having a simpler solution than the latter. While solutions to the latter are complex and multi-faceted, requiring long-term investments and the involvement of multiple stakeholders, this is not cause for ignoring the needs of workers. And to address disparities sustainably, the solution must be one similar to that of the notion of monetary donations versus community service. As the old adage goes, teaching a hungry man to sh is of greater value than simply giving the hungry man sh to eat. Easier said than done, as this requires a multi-stakeholder approach with a universal commitment to establish solutions with nancial and resource independence to create long-term sustainability.
Timberland has engaged in various projects to help promote Sustainable Living Environments. Where possible, weve partnered with local organizations as an opportunity to drive relevant information and training. We have seen that it is indeed possible to leverage Timberlands business inuence to help create positive improvements for the lives of workers who produce our products. These projects have also helped to demonstrate that a living wage is not always what workers need most. The case studies in the following pages illustrate Timberlands approach to Sustainable Living Environments in depth: 1. Improving Health Services & Providing Access to Micronance in Bangladesh 2. Improving Womens Health in China and Vietnam Whereas the case study about our work in Bangladesh highlights a public-private partnership that we think can be a model for creating Sustainable Living Environments in the future, the case study about our work in China and Vietnam shows that collaboration can further efforts and impacts beyond Timberlands reach alone, and it can also deliver a sizable return on a relatively small investment.
CAse StUDY: IMPrOVING HeALtH SerVIces & PrOVIDING Access tO MIcrOfINANce IN BANGLADesH
The YoungOne Corporation is a garment manufacturer located in Bangladesh that operates 14 garment factories in the Chittagong Export Processing Zone (CEPZ). Timberland has sourced from one of their factories, Karnaphuli Sportswear Ltd. (KSL), since 2000. Through the course of our annual assessments, it became evident that workers at KSL (roughly 5,600 workers, 85% of whom are migrant women from rural areas of southern Bangladesh, 35% of those hail from Barisal and its surrounding districts), as well as other workers in the CEPZ, lacked health awareness and services and saw no means of bettering their lives through increased education or employment opportunities. As a result of detailed discussions with and support from factory management (which solidied the need and the business case for seeking an infrastructure solution), in 2003 Timberland began work with CARE19, a nonprot partner that could help us address these issues and create a sustainable solution. To fully implement the project, CARE partnered with a local NGO, MAMATA.
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was to transfer ownership to the beneciaries themselves and build capacity, so that YoungOne factory management and the local partner organization MAMATA could continue all project activities independent of support from Timberland or CARE.
AwARENESS BUIlDING AND ADVOCACY

In CAREs research and experience, despite government attempts to promote and enforce womens rights, women in Bangladesh routinely endure household violence, harassment, rape, and tortureas well as economic discrimination and abuse.22 CARE has found that, in too many cases, victims are unaware of their rights and how to take action to protect them. To that extent, CARE designed this program to build awareness and advocacy by establishing training sessions, counseling, and legal aid services, as well as a support network among workers, law enforcement ofcials, and other agencies to protect female workers from exploitation and abuse.
With initial funding from Timberland21, CARE and MAMATA embarked on the development of a project to address the lack of infrastructure available in or near the trade zone and improve the lives of the 24,000 YoungOne garment workers in the entire CEPZ area by: (1) Enhancing awareness of legal rights, labor laws, and family laws, (2) Increasing workers capacity to read and write, raising workers self-esteem, and learning what is required for and has immediate application in their daily work lives, (3) Improving nutritional intake practices among the workers, (4) Enhancing awareness of common diseases and available referral services, (5) Improving health-seeking behaviors, related especially to STD/HIV, and (6) Providing access to exible micro savings and credit facilities to promote savings behavior and provide credit for emergency and betterment opportunities. To meet these objectives, the project focused on building awareness and advocacy, establishing a medical revolving fund, and building a micronance program. The nal goal of the project
Sultanan yasmin Kohinoor helps her colleagues take advantage of opportunities through the CEPZ project.
I come from a poor family in Raujan. In my early childhood, I lost my parents. My grandmother and uncle provided remarkable support for my education, and I studied hard to do well in school. This helped me to earn a position on the Workers Representation and Welfare Committee at YoungOne. My colleagues elected me, and this made me very proud. With support from CEPZ project staff, I developed my skills for facilitation and negotiation and am becoming a better leader. There are 14 members of my committee, and we work to raise awareness about womens rights. I negotiate with my colleagues, managers, and authorities regarding welfare issues like nutrition, transportation, health care, and violence. I enjoy teaching others and helping them learn about their rights.
19. CARE is a private international humanitarian organization with expertise in creating community-based efforts to improve basic education, prevent the spread of HIV, increase access to clean water and sanitation, expand economic opportunity, and protect natural resources with a network of local nonprots globally. www.care.org 20. MAMATA was established in 1983 with the initiative and drive of a group of dedicated social workers of the Chittagong City of Bangladesh to establish and ensure health, family-welfare services, poverty alleviation, socio-economic development, and gender and human rights. MAMATA believes that Family is the focal point of social uplifting, and it attaches top priority to capacity building toward better livelihood of the poor and disadvantaged segment of population. The mission of MAMATA is to upgrade the socio-economic condition of the disadvantaged groups of the society and establish rights guaranteed by the constitution of Bangladesh, as well as International Charters where Bangladesh is one of the signatories. MAMATAs operational area includes Chittagong City Corporation, Sitakund, Boalkhali, Patiya, Anowara, and Chandanish in Chittagong District. 21. Our initial annual commitment was $81,000, with contributions decreasing as the project realized self-funding sustainability. Over the course of 7 years, Timberland has contributed over $480,000. 22. Internal memo from CARE to Timberland, p. 2, November 2007.
Pictures and translated quotes provided by CARE.
The YoungOne workers formed a Workers Representation and Welfare Committee (made up of community volunteers and worker-elected representatives) who learned participatory and social mapping techniques from CARE and MAMATA staff. These tools equipped the Committee to conduct outreach to factory workers and community members to help spread awareness and generate participation in and advocacy for training and services. During 2008, 4,739 new participants attended one-on-one sessions, group meetings, and lm screenings on topics such as labor law, health and hygiene, gender rights, abuse, trafcking, HIV/AIDS, inheritance law, and reproductive health. Women attended these sessions at a ratio of four to one, as compared to men. After these communications, the committee conducted a project survey and found that more than half of the participants (55%) gained a better understanding of overtime calculation, maternal and sick leave, safety, security, basic hygiene, reproductive rights, marriage registration, and joint family decision making.
Roughly 560 patients received treatment in 2008, with 55% being YoungOne workers and their family members, and 45% from the community or other garment factory workers. Almost 81% of clinic patients are women. With an increase in fees per visit (from roughly three cents to seven cents) and continuing logistical support from the factory, the program is on track to be self-sustaining, including the addition of new services such as a Hepatitis-B vaccination program and the refurbishment of a mother-and-child health center for factory employees and community members.
MEDICAl REVOlVING FUND

To help low-income workers and community members afford the medicines and medical services they need, CARE, Timberland, and MAMATA created a program to provide them with discounted services and medicines. With initial funding from Timberland, factory-based clinics were staffed, and affordable medications stocked. Participants (trade zone workers and community members) pay modest fees that enable CARE to restock medications and continue stafng the factory-based clinics. Immunization Days have reached over 3,000 children with polio vaccines, vitamin supplements, and de-worming medicines.
MICRO-FINANCE PROGRAM
In order to make savings and credit opportunities more available to factory workers, CARE created a exible program specically for YoungOne employees. In response to complaints of robbery on paydays, the program provided savings booths inside the factory, where employees can make deposits and withdrawals during their breaks and in the safety of the workplace. In addition, the program allowed workers access to small loans for health care, education, or income-generating activities to improve living conditions for themselves and their families. The average loan amount is $95 USD, and borrowers receive a favorable rate of interest (over 10% lower than other credit options in the area), which is paid back into the savings plan to ensure sustainability of the fund. As of the end of 2008, the micro-nance program has had more than 17,500 participants and granted over $2.6 USD million in loans with a 99% payback rate.
Although she is not a YoungOne employee, Shapna (pictured here with her child receiving care at the clinic) is an example of how the CEPZ project benets the larger community.
Because of the CEPZ project in our community, we now have regular health care. Whenever my children are sick, I can take them easily to a doctor nearbyand the fees are half the price of other clinics. The drop-in clinics are convenient, too. I work during the day, but the clinic is open at night. I do not have to lose income to take my child to the doctor, Shapna says.
18 EARTHKEEPER.COM/CSR Pictures and translated quotes provided by CARE.
Lutfa and Golam Sorowar are a happy couple with an eight-yearold and an eight-month-old. They moved to Chittagong more than 14 years ago. The family was living on Luftas income as a YoungOne employee, but was having trouble making ends meet before the micro-nance program was available.
I took three loans from the project so my husband and I could start a refreshment stand to earn more money, Lufta says. With the prots, we had extra money to buy some agricultural lands in my familys home district. Now we grow rice and vegetables that we sell and feed to our family. I am learning more about the business through the project and am looking into other areas for investment. But best of all, I am now working as a peer educator at YoungOne. I teach my colleagues how to take advantage of opportunities, and I learn from them too.
With the program now in its seventh year, Timberland, CARE, and MAMATA have seen it successfully grow to be selfsustaining and self-funding. The project partners have controlled overhead expenses within a budget that is less than that of the revenues received from the medical revolving fund and interest earned on savings and credit facilities. The project has exceeded our expectations; it not only achieved its goals of beneting the workers of YoungOne, but it also reached local community members and workers home districts. While the program will no longer require funding support from Timberland, CARE will continue to actively manage the project for 8-12 more months to ensure full capability of the local NGO MAMATA to self-manage in the future. Going forward, Timberland and CARE are eager to apply this model of success to facilitate the creation of Sustainable Living Environments in other regions of need. CARE Executive Director Monte Allen found that there were several key elements to the sustainability of the program: By gathering input from the workers who were to be the projects beneciaries, we were able to ensure the project addressed real
and ongoing needs. We also know the projects success drew from the fact that we created a role for the workers, factory management, and local partner organizations in implementing and ensuring the successful ongoing operation of the project. In order to be completely sustainable, the project also had to be designed so that it could be self-funding. Some of the projects activities depend on volunteer involvement of the workers and community members, so we needed to provide training for volunteers. And those parts of the project that require actual cash ow were designed to become self-funding through interest charged on loans and through a modest rate structure for participation in the health-care delivery system. The fact that Timberland was broad-minded enough to open the project to workers from other factorieseven if they did not produce Timberland productsdramatically magnied the benets of the program. With respect to scalability, Allen also stated that, while every project needs to be culturally appropriate in its particular setting, CARE has learned important lessons that can be adapted for implementation in other settings.
Pictures and translated quotes provided by CARE.
CAse StUDY: IMPrOVING wOMeNs HeALtH IN cHINA AND VIetNAM

Through the course of our Code of Conduct assessments in 20072008, our Assessors found a consistent lack of health and well-being awareness and related services in China and Vietnam. While true of other countries such as India as well, we found it signicantly prevalent in China and Vietnam. As a result, we began researching cost-effective and sustainable means of addressing this disparity. Fortuitously, we discovered the work of Business for Social Responsibilitys (BSR).23 BSRs Health Enables Return project (HERproject) was launched in 2007 with partial support from the Packard Foundation that afforded brands and factories the opportunity to participate for minimal cost. The goal of the project is to improve health awareness among female factory workers, enhance access to and the quality of health services, and increase worker engagement. The project also strives to demonstrate the quantitative return on investment and the qualitative benets for dollars spent on workers health programs. At the end of 2008, Timberland launched three HERproject pilots at two factories in China and one factory in Vietnam. Typically, BSR HERprojects are implemented over 12 months with the goal that they will continue after the pilot phase ends under sole support of the factory. Program components include: Needs Assessment: Randomized survey of workers to determine health knowledge and dene critical needs Peer Health Educator Training: Two-day training courses for 3-5 percent of female workers, with half-day refreshers every 3 months Onsite Health Services Improvements: Initial assessment, training of clinic staff in womens health needs, augmentation of clinic staff, and creation of a new clinic or a mobile clinic system Exit Survey: The programs impact on employees health education, access to services, and overall workplace satisfaction Optional Male Worker Training: Peer health education trainings for male workers on womens health issues Optional ROI Study: Review of factory records, such as absenteeism and turnover, to determine whether health activities have improved factory productivity Timberland decided to participate in the HERproject based on early indicators of its success. For example, BSR reports that three out of four participating factory managers in their initial HERproject pilots in China felt the womens health-training program had made a positive impact on worker-management relations and workers leadership skills. These factory managers state that they would continue the program with their own funding. Additionally, a study conducted at the BSR HERproject pilot in Bangladesh showed that for every $1 USD invested in womens health, a return of $3 USD was realized through higher productivity, lower turnover, and reduced absenteeism.24 The HERprojects that Timberland is deploying will include the programs optional aspects of male worker training in addition to its main components. At the pilot factory in Vietnam, we have asked for a return-on-investment study to demonstrate the factoryspecic business case. We plan to report the progress and results of these programs following the 12-18 month HERproject deployment, impact analysis, and sustainability traction. Anticipating success and proven return on investment, we are already looking to deploy the program to more factories and more countries in 2010.
23. Business for Social Responsibility (BSR) works with its global network of more than 250 member companies to develop sustainable business strategies and solutions through consulting, research, and cross-sector collaboration. Timberland has been a member BSR sinceto 1998. See www.bsr.org for more strategies information. 23. B usiness for Social Responsibility (BSR) works with its global network of more than 250 memberof companies develop sustainable business and solutions through 24. Study conducted by HERproject partner, Extending Services Delivery of theof U.S. AID consulting, research, and cross-sector collaboration. Timberland has been a member BSR since 1998. See www.bsr.org for more information. 24. Study conducted by HERproject partner, Extending Services Delivery of U.S. AID.
IV. CONClUSION
Sustainable solutions are complex, requiring multiple voices, many commitments, patience and resolve. The breadth and diversity of our contract factories, their cultural differences, and varying social disparities all add to the complexity and the fact that there cannot be one simple solution. With limited funds available to all stakeholders to address such issues, we nd that collaboration and creativity are even more imperative. Despite these challenges and realities, Timberland is committed to ensuring human rights and the dignity of workers in our global supply chain. We believe this process starts with open, honest dialogue. Involving multiple stakeholders in the process is necessary to promote values beyond compliance, and our ultimate goal is to strengthen communities and workers lives. As a consequence of conducting our business in this manner, we end up in conversations of social policy that we never imagined as a simple boot maker from New England. Yet here we are. Our goal is to advance these dialogues toward scalable quality-of-life improvements and opportunities for betterment for all factory workersnot only for those who produce Timberland products, but also for the people who live in their communities. This is what Earthkeeping is all about: taking part not only maintains our license to operate, but also helps improve the lives of workers and their communities in tangible and concrete ways. We have bold goals to improve and scale our efforts to engage, inform, and empower workers at 100% of our factories by end of 2010, and we are committed to engaging, encouraging, and assisting at least 15% of our factories in community service in the same time period. To expand our reach to have the greatest impact possible, we must seek to collaborate with other brands and factories, nd partners with multi-stakeholder approaches (such as BSRs HERproject), and continue to engage with on-the-ground local organizations with programs designed for capacity building and sustainability (as experienced with the CARE/MAMATA project in Bangladesh). Although Timberland is a small company and we are challenged to nd and leverage resources for these activities, we believe this work is crucial for our business to help create positive change. One voiceyour voicecan make a difference. We invite you to join us in dialogue online, where well be engaging key practitioners, other brands, NGOs, activists, consumers, and other stakeholders on topics featured in this paper. Well kick off the discussion with this question: Is focusing on improving available services for factory workers the best way to improve their quality of life and opportunities for benet? Visit www.earthkeeper.com/voicesofchallenge to participate.
Timberland,
and Path of Service are trademarks of The Timberland Company or its afliates. All other trademarks or logos used in this copy are the property of their respective owners. 2009 The Timberland Company. All rights reserved. COR36980

Beyond Factory Walls 2009 Timberland Report

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Beyond Factory Walls 2009 Timberland Report

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Responsibility Beyond Factory Walls: Engaging Factory Workers & Strengthening Communities

FACTORY LOCATIONS (YEAR END 2008)1

1. Timberlands factory list is updated quarterly at www.earthkeeper.com/csr.

CURRENT PROGRESS & NEXT STEPS

WORKPlACE KEY PERFORMANCE METRICS

Jeffrey Swartz President and CEO

I. TIMBERlANDS CODE OF CONDUCT & FACTORY MONITORING PROGRAM

{ TIMberLAND csr MANAGeMeNt }

MANAGEMENT & OVERSIGHT OF CODE OF CONDUCT PROGRAM

CoRpoRATe soCIAl RespoNsIBIlITY

TIMBERlANDS SPHERE OF INFlUENCE ON SOCIAl AND HUMAN RIGHTS ISSUES

RADICAl SHIFT IN PRACTICE

AUDIt fOr COMPLIANce

INfOrM & CONsULt

INVOLVe, ENAbLe, COLLAbOrAte

DeLeGAte & EMPOwer

II. BEYOND MONITORING

TIMBERlANDS CODE OF CONDUCT

Establishing Trust and Two-Way Dialogue

INVOlVING WORKERS IN THE ASSESSMENT PROCESS AT STEllA INTERNATIONAl

Worker Code of Conduct Committees

POU YUENS WORKER CODE OF CONDUCT COMMITTEE

Engagement Outside of Assessments

POU YUENS CSR CARNIVAl

Worker-Engaged Community Service

HEART & MIND COMMUNITY ENGAGEMENT

COMMUNITY ENGAGEMENT AT TIMBERlANDS OwN FACTORY

II. SUSTAINABlE LIVING ENVIRONMENTS

AlTERNATIVE APPROACH: SUSTAINABlE LIVING ENVIRONMENTS

TIMBERlAND RFC EDUCATION AND COOP PROGRAMS

WHITE HOUSE DAY CARE FACIlITY

TIMBERlAND ASSESSMENT QUESTIONS FOR SUSTAINABlE LIVING ENVIRONMENTS

SCAlING THE SUSTAINABlE LIVING ENVIRONMENT APPROACH

AwARENESS BUIlDING AND ADVOCACY

Pictures and translated quotes provided by CARE.

MEDICAl REVOlVING FUND

18 EARTHKEEPER.COM/CSR Pictures and translated quotes provided by CARE.

Pictures and translated quotes provided by CARE.

CAse StUDY: IMPrOVING wOMeNs HeALtH IN cHINA AND VIetNAM

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I. TIMBERlANDS CODE OF CONDUCT & FACTORY MONITORING PROGRAM