the timberland company

Our 2005 Footprint

Financial

Global Revenues ($ in millions) $1,565.70

Earnings Per Share $2.43

Global Human Rights

Approximate Number of Factory 120,000 Workers Worldwide

Assessment Coverage of Factories 94.3%

Environmental Stewardship

Total Metric Tons of Carbon Emissions 26,854

Renewable Energy as a Percent 6% of Total Energy Used

Community Involvement

Total Hours Enlisted to Enact Social Change 123,000

Percent of Employees Using at Least 68% One Hour of Service

THE TIMBERLAND COMPANY 2005 CORPORATE SOCIAL RESPONSIBILITY REPORT

the timberland company make it better™ 2005 csr report 2

Table of Contents

1.0 Letter from the CEO 2

2.0 The Timberland Footprint 3

2.1 Our Business Operations 3

2.2 Our Approach to Corporate Social Responsibility 4

csr defined 4

the importance of csr 4

our Focus on csr 4

key performance indicators 5

2.3 Our Stakeholders 6

Who our stakeholders are 6

how our report Was developed 7

our stakeholder summit 2006 7

3.0 Timberland Profile 8

3.1 Who We Are 8

how We sell our products 8

our plans for the Future 8

making social responsibility part of our culture 9

Financial performance 9

the difficult decision to close a Factory 10

3.2 Growing the Business 11

a new specialty line: mion™ aquatic Footwear 11

borrowing from the past: timberland boot company™ 11

our recent acquisition: smartWool 11

3.3 What We Stand For 12

responding to issues 12

responding to World events 12

3.4 Social Responsibility: It Matters to Customers 13

timberland in the news 13

Voices of Challenge: Seventh Generation, Inc. 14

4.0 Global Human Rights 15

4.1 Protecting Workers’ Rights in our Supply Chain 15

our code of conduct 15

our influence in the supply chain 16

4.2 How We Assess Our Suppliers 17

Why We assess instead of audit 17

changes to the process 17

how the assessing process has Gone so Far 18


4.3 Assessment Results 18

taking immediate action 19

how our assessments Were scored 20

4.4 Analyzing the Results 21

assessing our assessors 21

looking for patterns 22

4.5 After Assessments—Partners in Remediation 23

4.6 Our Factories Around the World 25

4.7 How We Tackle Global Issues 26

Finding local partners Worldwide 26

a Focus on Working hours 28

a special Focus on china 28

4.8 Working Together to Tackle Tough Issues 29

sharing and collaborating through the Fair Factory clearinghouse 29

4.9 Looking Forward 30

our Goals for 2006 30

Voices of Challenge: Levi Strauss & Co. 31

5.0 Environmental Stewardship 32

5.1 Our Relationship to the Environment 32

5.2 How We’re Coping with Climate Change 33

our Greenhouse Gas inventory 33

how We measure Greenhouse Gas emissions 33

What We plan to do about Greenhouse Gas 34

a Focus on renewable energy 35

impact of transportation 37

5.3 Collaborating to Minimize Chemical Use 38

plans to eliminate pVc 38

reconciling commerce and Justice: Water-based adhesives 39

restricting substances from our products 39

5.4 Resource Consumption 40

recycled materials 40

the case for organic cotton 40

Working to save our Forests 41

sourcing leather 42

5.5 Identifying the Ingredients for Social Responsibility 44

about the ecoFacts label on mion™ Footwear 44

introducing “nutritional labels” on Footwear 44

5.6 How We Measure Environmental Performance in Our Supply Chain 45

keeping score of our environmental impact 45


Table of Contents (continued)


Voices of Challenge: Patagonia, Inc. 46

6.0 Community Involvement 47

6.1 Working Together for a Strong Community 47

making it better in 2005 47

6.2 Our Approach to Community Service 47

the case for “themed” service events 47

the results for 2005 48

spotlight on earth day 2005 50

spotlight on serv-a-palooza 2005 51

spotlight on our hurricane katrina efforts 52

6.3 Measuring the Impact of Community Service 55

6.4 Investing in the Community 56

our community investments 56


Voices of Challenge: The Home Depot 58

7.0 Timberland Employees 59

7.1 Our People Philosophy 59

our employees 59

key Workforce statistics 59

7.2 How We Manage Our Talented Staff 60

7.3 Employee Satisfaction 62

7.4 Diversity 63

7.5 What We’re Doing to Improve Health & Safety 64

new health & safety initiatives for 2005 64

addressing health-related lost Work days 64

Voices of Challenge: Harlem Children’s Zone 65

8.0 Report Scope 66

8.1 The Scope of this Report 66

the basis of this report 66

how this report Was Verified 66

9.0 GRI Index 67

Table of Contents (continued)

“There are a lot of voices speaking

out about corporate social responsibility

today.”

Corporate social responsibility has become such an integral part of

business, in fact, that we’ve all got it down to a science. We know which

standards we’re supposed to follow and what codes we must adhere to

in order to earn our label as a “good corporate citizen.” What was once

foreign territory, creating partnerships and developing programs to meet

the needs that exist beyond our business walls, is a place we’ve grown

quite comfortable.

And there’s the challenge. Too often, with comfort comes complacency.

And while we’re busy being comfortable and complacent, the world

is spinning by us at full throttle with issues that aren’t addressed in

our standards and needs that haven’t yet made it onto our radar screen.

And so, where it was once a great risk for business to step up and engage

in matters of social justice, environmental stewardship and global

human rights, it’s time to take a greater risk—to step outside our comfort

zones and work to make our impact in these areas in ways that are

stronger, deeper, more powerful and more thoughtful. It’s incumbent

upon us to do this for two reasons:

• We have the ability. If we, as businesses, applied the same level of

innovation, passion and determination to corporate social responsibility

as we do to product development, sales and marketing, the results

would be phenomenal. And why shouldn’t we? In the business world,

“good enough” rarely is; we’re always working to make it better. There’s

no reason why the standards should be any less for our CSR efforts.

• The world desperately needs it. Never before has the notion of

sustainability been so prevalent—the idea that we must consider the

consequences of our actions not on tomorrow, but on the world we

leave behind for generations to come. And while making a conscious

effort to reduce our negative impact on the environment and our

communities is a good first step, doing “less bad” isn’t enough. We’ve

got to start doing more good—to try to repair some of the damage that

has already been done and invest in positive, sustainable change.

In the pages of this report, you’ll hear Timberland’s voice, including

information about some of the ways we’re working to take greater risks

and make a greater impact in our social responsibility efforts. Taking a

risk can either result in success or failure, and I’m happy to report we’ve

experienced both in our efforts over the past year. Why does this make

me happy? Success, obviously, means we’re making good progress in our

quest to Make it better, and we’ll continue to build on that progress

year over year. Failure tells me we’re not being complacent, that we are

stepping out of our comfort zone and applying our innovation and passion

to issues and areas of our world where it’s needed most. With every

failure comes an opportunity, and you’ll see we’ve identified plenty of

opportunities which we’ll pursue in earnest as we move forward.

To provide greater perspective

on the challenges we face—or

should be facing—as socially

responsible businesses, we’ve

asked five leaders to lend their

voices and insight to our report.

We asked them simply to provide

their unfiltered, unedited point

of view on the state of CSR—the

results of which you’ll see in the

“Voices of Challenge” sections

of the report. Their thoughts are

meant to provide just that—a challenge—and to provoke action and

accountability among those of us who call ourselves good corporate citizens.

Your voice matters just as much. If you’d like to weigh in on this CSR

discussion, comment on Timberland’s efforts or present your own

challenge to us, please email me at [email protected].

Sincerely,

Jeffrey Swartz

President and CEO

The Timberland Company

Letter from the CEO

There are a lot of voices speaking out about corporate social responsibility today. That’s a

good thing; it indicates a growing awareness of business’s ability to create impact—both

positive and negative—in our world. More good news is the fact that behind the voices there

are real, measurable, laudable efforts being made by companies around the globe to be

better citizens, to increase their positive impact, mitigate the negative and help solve the

problems that plague our society and environment.

IN THE BUSINESS WORLD, “GOOD ENOUGH” RARELY IS; WE’RE ALWAYS WORkING TO MAkE IT BETTER.

mailto:[email protected]


[2.1] Our Business Operations

2.0 The Timberland Footprint

Global Human Rights



Employees

tablE of ContEntS: REpoRt HIGHlIGHtSThis table connects

the work that we do

in corporate social

responsibility to where

it occurs in our supply

chain. Think of it as

a graphic table of

contents for our 2005

CSR report.

tImbERland Supply CHaIn

RESouRCE SupplIERS manufaCtuRInG dIStRIbutIon CuStomERS CoRpoRatE

ExtRaCtIon faCIlItIES CEntERS

factory assessment Results pg. 18–22

list of factories Worldwide pg. 25

Working Hours pg. 28

Environmental assessments pg. 45

use of Recycled materials pg. 40 nutritional label pg. 44 Recycled material pg. 40

organic Cotton pg. 40–41 Climate Change pg. 33–37

Wood procurement pg. 41 pVC pg. 38 Wood procurement pg. 41

Wbas pg. 39 Hybrid Vehicles pg. 34

Sourcing leather pg. 42 Renewable Energy pg. 35

Impact of transportation pg. 37

Community Service Statistics pg. 48–51

Service Highlights: Serv-a-palooza, Earth day and Hurricane Katrina pg. 50–54

Community Investments pg. 56–57

Employee Statistics pg. 59

talent management pg. 60

Employee Satisfaction pg. 62

leadership diversity pg. 63

Health & Safety pg. 64

tanneries

small non-leather

major non-leather

footwear

apparel

licensed products

distribution centers

retail facilities

wholesale

franchisee

e-commerce

distributor

consumer


CSR Defined

To understand Corporate Social Responsibility at Timberland, it’s important

to understand first how we define it. We think that the Boston College

Center for Corporate Citizenship did a good job of explaining the term.

Here is our four-part definition loosely based on the Boston College

description1 of what a responsible corporate citizen will do:

1. minimize Risk: Reduce negative consequences of business

operations to stakeholders.

2. maximize benefits: Contribute to societal and economic well-being.

3. be accountable to Stakeholders: Build relationships with stakeholders

and be responsive to their concerns.2

4. Incorporate CSR into decision-making: Integrate values into all

operational decisions.

The Importance of CSR

Our efforts to be socially accountable do not exist in a vacuum. Social

accountability is an issue industry-wide…and worldwide. The emerging

importance of CSR in recent years can be seen in these factors:

• Communications: In an interconnected global community, information

is instantly available to every corner of the globe. Information technology

also demands that a company be transparent and accountable in every

region in which it operates or sells products.

• organizational power: In this day of multinational corporations,

business can often have a greater impact than even local or national

government. With this power—and scrutiny—comes an ethical

responsibility to pursue profits in ways that don’t do harm.

• Complex Global needs: Poverty. National disaster. Global conflict.

Issues like these demand action. And accountability.

• Regulation: Corporate scandal and increased legislative and financial

oversight are having a profound effect on corporate behavior and

pushing companies to adopt a policy on corporate social responsibility.

• legacy: The very survival of humanity and our planet will depend on

the ethical actions of individuals and corporations. That awareness

drives us to act responsibly every day.

Our Focus on CSR

Using our view of CSR as a foundation—and keeping in mind all the

reasons why CSR is important—we are currently in the process of

refining our focus for our efforts in corporate social responsibility. After

internal planning sessions and consultation with our stakeholders, we

have settled on these areas to concentrate our efforts to make positive

environmental and social change:

1. business: Model Sustainability.

2. Community: Build Capacity for Sustained Social Change.

3. Global: Advocate to Improve the Human Condition.

Our ultimate goal is to not only

limit our footprint as an organization,

but also “Make it better” in places

we directly touch…and beyond.

And because we’re not the largest

organization in the marketplace,

we rely on our partnerships with

other organizations to amplify

our efforts.

This strategy provides a focus

for our work. In local communities.

In the environment. In our supply

chain. Even in our own offices.

It is a compass that guides our resources in a way that has the greatest

impact wherever we do business. We’ll continue to focus on these areas

as we chart our path towards corporate responsibility.

2.0 The Timberland Footprint (continued)

[2.2] Our Approach to Corporate Social Responsibility

Humanity. Humility. Integrity. Excellence. Everything we aspire to, everything we work toward each day is rooted in

our deep commitment to these four core values. They form the cornerstones of our beliefs and inform our strategic

approach to our platforms of Corporate Social Responsibility (CSR): global human rights, environmental stewardship,

community involvement, and employees. But we know that values and passion aren’t enough. Other commitments are

also essential to our mission to create sustained positive change around the world: strategic intent, integrated operating

systems, transparent measurement and industry collaboration. This report will discuss how we use these concepts in

our CSR efforts. But first, let’s begin with a basic understanding of how we see CSR at Timberland.

1 http://www.bcccc.net/index.cfm?fuseaction=page.viewpage&pageid=567&parentid=473

2 timberland stakeholders are defined in section 2.3.

THE VERY SURVIVAL OF HUMANITY AND OUR PLANET WILL DEPEND ON THE ETHICAL ACTIONS OF INDIVIDUALS AND CORPORATIONS.



3 We are still working to develop more material metrics for our Global human rights key performance indicators.

4 We are in the process of verifying a baseline for our greenhouse gas inventory. in the interim, we will report on absolute carbon emissions. For more information, see the section entitled “our Greenhouse Gas inventory”.

Key Performance Indicators

Visualize your dashboard. There are several gauges that tell you how fast you’re going. How much gas you have left.

Whether there’s a problem in the electrical system. Whether you’ve left the trunk open. Our Key Performance Indicators

are designed to give us exactly that kind of quick picture of how we’re doing in each of the four major functional

CSR areas: Global Human Rights, Environmental Stewardship, Community Involvement and Timberland Employees.

Some of these metrics may change as we further refine our system of CSR reporting. But we have tried to hit on the

indicators that best record Timberland’s efforts to “Make it better.” Explanations for these results are included in the

different sections within the report.

2005 KEy pERfoRmanCE IndICatoRS

IndICatoR ExplanatIon 2004 2005 2006 taRGEt

Global Human RIGHtS3

factory Coverage Percent of Factories Assessed 94% 94.3% 100%

EnVIRonmEntal StEWaRdSHIp

Climate Change Total Metric Tons of Carbon Emissions4 25,084 26,854 Verify baseline

Resources Organic Cotton as a Percent of Total Cotton Purchases 2.1% 2.1% 5%

Renewable Energy Percent of Energy Purchased from a Renewable Source 4.3% 6% 10%

CommunIty InVolVEmEnt

Benefit Utilization Rate (BUR): Percentage of employees 69.7% 68% 70%

who use at least one hour of service

Hours Utilization Rate (HUR): The percentage of hours 28.8% 31.1% 34%

used for service compared to hours available

tImbERland EmployEES

Employee Satisfaction Percent of Employees Satisfied with Position at Timberland 76% 74% 77%

Gender Inclusivity Percent of Women in Management Roles 31% 35% 42%

development Hours Average Number of Training Hours per Employee 39 38 39

path of Service™program



[2.3] Our Stakeholders

Timberland has a passionate commitment to engagement as a means of building sustainable, transparent and authentic

relationships that inform and enable sustainable social and environmental change. We believe in the power of this type

of engagement as a true vehicle of transformative change and industry leadership.

Who Our Stakeholders Are

Our stakeholders include groups or individuals who either can affect the achievement of Timberland’s business objectives…or are affected by them.

The chart below lists these stakeholders and describes how we work together on our CSR efforts.

Stakeholder Group Engagement Report Reference Section

• The Global Employee Survey

Employees • Civic engagement: Path of Service™ program and Service Sabbatical

• Integrity Line (a 24-hour anonymous hotline)

• Surveys and focus groups

• Nutritional labels Environmental Stewardship

• Civic engagement: Serv-a-palooza, Community Builders Tour, Community Involvement

PRO Skills Tour

• Civic engagement: Community Builders Tour, Earth Day Environmental Stewardship

Communities • Employee membership on non-profit boards Community Involvement

• Corporate investment Global Human Rights

• Annual and quarterly reports

Shareholders • Annual shareholder meetings Timberland Profile

• Quarterly analyst calls, conferences, and regular meetings

• Factory assessments and capacity building

Suppliers and factory Workers • Human rights initiatives Global Human Rights

• Annual supplier summit

• Direct collaboration or joint programs on CSR objectives

• Annual planning and review

• Focused feedback on CSR activities

• Meetings and conferences

• Press releases

• Meetings and briefings

• Engagement on regulatory issues

• Adherence to laws where we operate

• Industry alliances and associations

business Colleagues • CSR ventures (consumer and community) Voices of Challenge

• Conferences and trainings

Customers

non-Governmental organizations

Government Entities Timberland Profile


Global Human Rights



Timberland Employees

media Timberland Profile


How Our Report Was Developed

Stakeholder input was invaluable in determining the content and focus

of Timberland’s 2005 CSR report. Immediately following the release of

our 2004 report, we reached out to our employees to gather feedback

about the report and how it could be improved. The key advice we

heard was that they wanted a report that was interesting to read with

more data. At the same time, we also invited others to provide us

with feedback. Business partners. Non-governmental organizations.

Customers. Local communities. Here’s what these stakeholders wanted:

• A better explanation of Timberland’s business model,

• Information on our public policies, and

• The link between CSR and our bottom line.

Timberland also pursued more formal reviews, through our membership

in Ceres—a national coalition of investors, environmental groups and

other public interest organizations who work with companies to address

such challenges as global climate change. (For more information, visit

www.ceres.org.) For our 2005 CSR report, a Ceres stakeholder group

reviewed both an outline and several drafts of the report. The critical

issues they identified as needing to be addressed included:

• Our work in Tanneries,

• Forward-looking goals, and

• Clarification of our assessment results.

Through these various methods, we have developed a report that we

hope meets all of these criteria. We’ll continue to refine our reporting

process—and we hope you’ll be a part of that effort. We invite you to

tell us how we can “Make it better” in our reporting by sending your

comments to [email protected].

Our Stakeholder Summit 2006

In the fall of 2006, we plan to host a one-day stakeholder summit,

bringing 20 to 30 stakeholders together to tell us how we can “Make it

better.” We’ll invite these credible, independent and recognized leaders

to join in a candid and informed dialogue based on our 2005 CSR report.

Our goal is to provide an environment that exemplifies Timberland’s

values. Builds community. Provides valuable feedback. Produces new

insights. Fosters innovation. And strengthens Timberland’s social and

environmental accountability, civic leadership and Bold Goal aspirations.


http://www.ceres.org



How We Sell Our Products

Our products are sold throughout the United States, Canada, Europe,

Asia, Latin America and the Middle East. How? Through independent

retailers, better-grade department stores, athletic stores, licensees

and distributors. We carefully select national retailers we believe can

reinforce the high level of quality, performance and service that we want

consumers to associate with Timberland.

We also do some of our own retailing through Timberland® specialty

stores, Timberland® factory outlet stores, timberland.com and franchisees

in Europe. All are dedicated exclusively to selling Timberland® products.

At the end of 2005, we had 21 specialty stores and 57 factory outlet

stores in the United States and 117 specialty stores and shops and

28 factory outlet stores in Europe and Asia. In 2005, we also launched

the Timberland® brand in China and established a new subsidiary

in Switzerland to offer products directly to customers. Overall, U.S.

Wholesale5 represented 42.1% of 2005 revenue, U.S. Consumer Direct6

represented 13.6%, and International7 was 44.3%.

Our Plans for the Future

We want to become the brand of outdoor footwear, apparel and accesso-

ries that men, women and children around the world who are inspired by

the outdoors choose first. Quite simply, that’s our primary goal. We have

a simple strategy for achieving it:

1. Target our consumers more specifically and enhance our technology

worldwide to strengthen our core footwear business.

2. Increase our worldwide market share in the apparel business by

taking advantage of our rugged heritage and continuing to work to

earn our customers’ trust.

3. Develop new brands such as SmartWool®, Timberland Boot

Company™ and Mion™.

4. Expand our geographical reach.

5. Drive operational and financial excellence.

6. Set the standard for service in the communities in which we live

and work.

7. Be a global employer of choice.

3.0 Timberland Profile

5 includes independent retailers, better-grade department stores, outdoor specialty stores, national athletic accounts, general sporting goods retailers and other national accounts

6 includes timberland® specialty stores, timberland® outlet stores and timberland.com

7 We sell our products internationally through operating divisions in the United kingdom, italy, France, Germany, switzerland, spain, Japan, hong kong, singapore, taiwan, malaysia and canada. timberland® products are sold elsewhere

internationally by distributors, franchisees and commissioned agents, some of which also may operate timberland® specialty and factory outlet stores located in their respective countries.

3.1 Who We Are

Timberland designs, develops, engineers, markets

and distributes premium quality footwear, apparel and

accessories products for men, women and children

under these brand names:

• Timberland®

• Timberland PRO®

• SmartWool®

• Timberland Boot Company™

• Mion™

Functional performance. Classic styling. Lasting protection from the

elements. We believe these features make our products an outstanding

value. We also think they distinguish us from the competition.


Making Social Responsibility Part of Our Culture

Stakeholders who read our 2004 Corporate Social Responsibility report

wanted to know just what we were doing to integrate corporate social

responsibility into our culture at Timberland. A successful CSR strategy

can’t operate at the fringes of the organization. It needs to be part of

every decision we make. And it needs to continuously evolve to keep up

with the changing business landscape.

At Timberland, we think a top-down, bottom-up approach is the best

way to integrate social and environmental awareness into all levels of the

company. At the top of our organization, we have a CEO who is deeply

committed to the concept of “Commerce and Justice”—that is, a

responsibility to generate revenue while at the same time making positive

changes in the communities and environment where employees live and

work. This set of values naturally trickles down to influence all company

decisions—major and minor.

And from the bottom up? We do everything we can to make sure that

every employee we hire is passionate about corporate social responsibility.

Soon after they’re hired, every new employee at our corporate office

performs a day of service so that right away they can understand how

we partner with local communities to “Make it better.” In addition, these

new employees are exposed to our values in the form of employee-initiated

charity drives, volunteer service fairs, environmental “lunch and learns”

and the Community Impact Center which highlights recent CSR activities

in our cafeteria. We strive to be the Employer of Choice by attracting

people who want to do well while they are doing good. For the company.

For the community. And for the environment.

Financial Performance

Our principal strategic goal is to become the authentic outdoor brand of

choice globally. To deliver against our long-term goals, we are focused

on driving progress on key strategic fronts. These include enhancing our

leadership position in our core footwear business, capturing the opportunity

that we see for outdoor-inspired apparel, extending enterprise reach

through development of new brand platforms and brand building licensing

arrangements, expanding geographically and driving operational and

financial excellence while setting the standard for commitment to the

community and striving to be a global employer of choice. Some high

level views of our financial performance in 2005 are included in the

graphs below. Please see our 2005 annual and 10K report for more

details on our financial performance.

3.0 Timberland Profile (continued)

0.0

0.5

1.0

1.5

2.0

2.5

0

50,000

100,000

150,000

200,000

0

500

1000

1500

2000

0.0

0.5

1.0

1.5

2.0

2.5

0

50,000

100,000

150,000

200,000

0

500

1000

1500

2000

0.0

0.5

1.0

1.5

2.0

2.5

0

50,000

100,000

150,000

200,000

0

500

1000

1500

2000

Revenue

$2,000

1,500

1,000

500

02001 2002 2003 2004 2005

1,184 1,1911,342

1,5011,566

net Income

$200,000

150,000

100,000

50,000

02001 2002 2003 2004 2005

106,74195,113

117,879

152,693164,624

DIluteD ePS*

$2.5

2.0

1.5

1.0

0.5

0.02001 2002 2003 2004 2005

1.331.18**

1.62

2.14

2.47***

* eps have been restated to reflect 2-for-1 stock split in may 2005.

** before cumulative effect of accounting change of $0.07.

*** excludes restructuring charge of $0.04.

publIC RECoGnItIon

• Eighth consecutive year on Fortune magazine’s “100 Best Companies

to Work For” list, ranked #38 and placed in their first Hall of Fame.

• One of the inaugural recipients of Winslow Management’s “Green2”

Award for making a positive contribution to the environment as well

as to shareholders.

• Seventh consecutive year as one of Forbes magazine’s “Best Big

Companies in America.”

• Named one of Business Ethics magazine’s “100 Best Corporate

Citizens” for sixth consecutive year.

• Listed as one of Industry Week magazine’s “50 Best-Managed

Manufacturing Companies” for the second consecutive year.

• Second consecutive year on list of “100 Best Companies for Working

Mothers” by Working Mother magazine.

• Selected as one of New Hampshire’s “Best Companies to Work For”

by Business NH magazine.

• Received Clean Air—Cool Planet 2005 Climate Champion Award.

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The Difficult Decision to Close a Factory

At Timberland, we believe it’s possible to do well and do good—that is,

create a profit for our shareholders and have a positive impact on local

communities. Sometimes, though, those concepts get out of balance.

When they do, it’s simply impossible to avoid making a painful choice.

That’s exactly what happened at our facility in Isabela, Puerto Rico. For

24 years, the plant had manufactured Timberland® shoes. But when

a tax benefit expired, our Puerto Rico production costs were no longer

competitive. A strategic decision was made to consolidate operations in

our Dominican Republic-based facility. It was a decision that left 316

hard-working, dedicated members of our team in Isabela without jobs.

For them, the decision was profound, painful and life-changing.

Supporting those Who Were Impacted

Timberland’s CEO, COO, board members and employees made the trip

to Puerto Rico for the plant closing in December 2005. We did our best

to cushion the impact of the facility closure by providing affected members

of the Timberland family with a generous severance package that

included retirement enhancements for those near retirement age, skills

retraining and access to outplacement and career counseling. While

we’re humbled that other organizations have asked for assistance in

modeling their programs after our benefits package, we deeply regret

that such a package was necessary.

Continuing our Commitment to the Community

Outstanding craftsmanship. Service. And dedication. Our Isabela factory

workers provided that to Timberland for 24 years. In recognition of these

gifts, we have committed ourselves to providing a lasting civic tribute to

our former employees. In 2006, a gift of $250,000 will be used to address

one of the community’s critical needs: childhood athletics.

making the link: Corporate Social Responsibility and the Bottom Line

Doing well. Doing good. Can both be done at

the same time? In other words, is it possible

to run a profitable business and still be

responsible? To the environment. To employees.

To the local community. To the whole notion

of human rights.

At Timberland, we believe the answer is yes.

In fact, the foundation of our entire operations

strategy is based on this premise. Commerce

and Justice. Well and good. And we’re not the

only ones who believe in the viability of doing

business in this manner. Innovest Strategic

Value Advisors, a New York-based multinational

investment research and advisory firm, recently

conducted a study of the financial performance

of what they called the 2006 Global 100 Most

Sustainable Corporations in the World. Using

the MSCI World Index, which gathers data

from around the world, Innovest discovered

something interesting. Over a five-year period,

the socially responsible companies didn’t

just measure up financially. They actually

outperformed the World Index by 7.11%.

As you can imagine, at Timberland we’re happy

whenever we can do both. Well. And good.



A New Specialty Line: Mion™ Aquatic Footwear

Sailing. Rafting. Fishing. Wet/dry adventures of all natures. That’s what

the Mion™ brand is all about. This new and distinct brand of footwear is

focused on people who play on and around water.

At the same time, Mion™ strives to set an

example as a steward of our planet’s

limited resources. By offsetting

100% of the energy used for

manufacturing with Green-E certified

renewable energy. By using a distribution center 60% powered by the

sun. By pursuing innovative clean materials in manufacturing. By

leveraging recycled materials in its marketing and selling tools. And

by launching the first EcoFacts label, so that you’ll know exactly how

Mion™ works to protect the environment.

did we pique your interest? If so, go to www.mionfootwear.com

for more information.

Borrowing from the Past: Timberland Boot Company™

Quality. Authenticity. Attention to detail. Classic design that evolves with

the seasons. Think that’s all part of days gone by? Not at Timberland.

A philosophy of remembering our history while keeping an eye on the

future plays an important role in everything we do.

Take, for example, a new

brand that we launched called

Timberland Boot Company™—

a line of workwear-inspired

footwear and apparel for younger,

more style-conscious consumers

in London. In developing the

Timberland Boot Company™

brand, our goal was to blend the

best traditions of the post-industrial age with earlier ideals of craftsmanship.

All wrapped up in a culture of strengthening the local community. How?

Through targeted civic activities and programs at our London store. It’s just

one of the ways that we’re trying to “Make it better” wherever we operate.

learn more about this new brand from timberland:

www.timberlandbootcompany.co.uk

Our Recent Acquisition: SmartWool

A focus on making positive change in the world. Brands built on

authentic products. Communities organized around worthwhile missions.

Timberland and SmartWool. They fit together like, well, boots and socks.

There’s a lot more to our recent acquisition than the natural match-up of

our products, though. We wanted to grow with a company whose values

fit with us, too.

Founded only eleven years ago by a couple of ski

instructors struggling to keep their feet warm on

New England’s chilly slopes, SmartWool

today designs, develops and distrib-

utes socks, apparel and acces-

sories to more than 2,000 better

outdoor specialty stores throughout

the U.S., and to international distributors. First, we began carrying some

of their products. Then we partnered with them to develop Timberland®

performance footwear with SmartWool® linings. Along the way, we got to

know their ethic. We liked what we saw. A lot. For example, 10% of every

sale on SmartWool’s Web site goes to the SmartPrint Advocacy Fund

which gives to organizations that promote environmental stewardship, healthy

lifestyle choices for youth, and responsible outdoor activity participation.

This is just one of many initiatives to effect positive change in the world

which they live, play and do business. Together, we think we can do

even more toward sharing a vision of sustainable living.

did we “sock” you in? learn more at www.smartwool.com.

[3.2] Growing the Business

The job of any business is to grow. With this as a goal, we think 2005 was a pretty solid year for Timberland. We

delivered record revenue of nearly $1.6 billion, record earnings, strong cash generation and improved returns for our

shareholders. But these are not the only metrics by which we measure ourselves. When the Timberland team speaks to

customers, employees, analysts and NGOs, we never just talk about Commerce. It is always accompanied by Justice.

Commerce and Justice. Meaning that in addition to revenue growth, Timberland has a parallel goal, and that is to

continually “Make it better.” For our employees. For our customers. And for the world we all share.

That’s why, when we start a new business venture, making money is not the sole condition we require. We want to

make sure our partners fit into our social strategy, too. In 2005, we launched three new business ventures we’re pretty

excited about.

http://www.mionfootwear.com

http://www.timberlandbootcompany.co.uk

http://www.smartwool.com


Responding to Issues

Our commitment to integrating social responsibility into our business

seems to attract employees who have a passion for making things better.

We encourage our people to take a stand on the issues that matter. That

affect their lives, here and around the world.

Timberland does not make contributions, directly or

indirectly, to any political party or candidate, in any

country, even if such contributions are legal in

that country. In addition, we

do not give contributions to

lobbyists or political action

committees (PACs). We

are members of many trade

associations, such as the

Outdoor Industry Association

(OIA), the Federation of Euro-

pean Sports Industries (FESI)

and others.

We neither encourage nor

discourage our employees

from contributing personal

financial support or personal

service to any domestic

or international political

nominee, candidate, party

or non-profit organization.

However, we will not, under

any circumstances, reimburse

employees for personal political

contributions.

But all that doesn’t mean we’re not politically active. We do

take a stand on political issues that might impact our business.

For example, in 2005 we became active in the European Community’s

leather footwear anti-dumping investigation. While we are disappointed

by the decision of the European Commission to impose provisional duties

on leather upper footwear imported into Europe from China and Vietnam,

we will continue to work with the Commission to put forth our position

with a view to finding a constructive solution.

Responding to World Events

President John F. Kennedy once said that, when we’re judged by history,

it will be looking at “whether in our brief span of service we fulfilled our

responsibilities.” We believe that there’s no better test of our sense of

responsibility than a time of crisis. We’re proud of the Timberland employees

who have stepped up to try to “Make it better” for people in need.

Helping Stem the Genocide in darfur

Rwanda. Armenia. The Holocaust. History continues to repeat

itself. In Darfur, a region of western Sudan, a tragedy is occurring

that very few people know about. Genocide. Systematic killing on

the basis of race. More than a million people have been driven

from their homes. Their crops ravaged. Their water supplies

poisoned. Their people raped, terrorized and murdered.

Although we don’t make or sell our products in this region,

we felt compelled to take action as a member of the global

community. At Timberland, we’re passionate about making

positive changes…and nowhere is the need for change

more urgent than in Darfur. In this spirit, a dedicated

team of our employees spearheaded an effort to:

• Design a boot—“Stomp Out

Genocide”—as a vehicle to

communicate urgency

and compassion for

our brothers and

sisters in Darfur.

• Develop a tee-shirt

and hang tag to

raise awareness

and funds for Darfur.

• Lead a product seeding

effort to raise awareness and activism

regarding this issue among policymakers, elected officials, journalists

and socially active entertainers.

Through actions like these, we hope to mobilize citizens and offer hope

for the oppressed people of Darfur.

for a daily monitor of news and opportunities to affect change,

please visit www.savedarfur.org.


[3.3] What We Stand For

Current events. Public policy. How we interface with the world around us. The way that we deal with political issues is

important for your understanding of who we are. In a nutshell, we always try to do the right thing and be honest about

who we are and where we stand.

http://www.savedarfur.org



Serving the Victims of Katrina

Sometimes, emergencies strike closer to home. In 2005, no crisis

facing the U.S. was greater than Hurricane Katrina, which slammed

into the Gulf coast in August. Across the country and around the world,

the response was far-reaching and immediate. We’re proud of the 11

Timberland employees who traveled to the Gulf coast to help others

in need.

As a result of this experience, we have established mini-sabbaticals

in partnership with the Red Cross, to identify opportunities to support

on-site recovery, clean-up, relocation and long-term efforts through

community service. Mobilizing product on behalf of AmeriCares.

And working together to help heal those in need.

How We are Coping with Climate Change

Climate change is real and alarming. We don’t like it, but we know we

contribute to greenhouse gas emissions, too. That’s why we’re working to

reduce these emissions wherever we can by improving energy efficiency

and increasing the use of renewable energy. We are streamlining the

Timberland transportation network for more environmentally friendly

performance. We also launched a cash incentive program to encourage

employees to use a low-emissions hybrid vehicle when they commute.

[3.4] Social Responsibility: It Matters to Customers

How important is social and environmental responsibility to the consumer? The Natural Marketing Institute recently

conducted a study measuring just that. They found that almost 90% of American consumers agreed that it’s important for

a company to look beyond profits, to consider its impact on the environment and society, too. Just over 70% indicated

that knowing a company is mindful of that impact makes them more likely to buy its products or services. And nearly

half stated that they’re more likely to buy stock in a company that’s responsible than in one that’s not. This research

supports what we’re experiencing in our own business and in our industry: namely, public awareness of—and expectation

for—corporate social responsibility is on the rise. The media has reacted accordingly. With increased coverage of

Corporate Social Responsibility (CSR) leaders, programs and issues.

Timberland in the News

Environmental stewardship. Community investment. Global human

rights. In 2005, roughly 75% of Timberland’s total corporate coverage

was focused on these CSR efforts. The “story” of CSR has long had its

place in niche media and special interest publications. Recently, though,

the story of our commitment to being a good corporate citizen was told

in global outlets, such as:

• TIME magazine

• The Wall Street Journal

• U.S. News & World Report

• CBS TV

• Fast Company

It’s a story that clearly is resound-

ing with business partners and

consumers alike. The fact that

more mainstream media outlets are

telling the story demonstrates how

much the notion of corporate social

responsibility is finally catching on.

Of course, at Timberland, we don’t

conduct our business responsibly

and ethically just to earn plaudits

from the press. We made a commit-

ment to doing well and doing good

long before the national media

began covering the phenomenon.

It’s as much a part of our business

and our heritage as building boots.

We are mentioning it here because we’re glad

to see that CSR is an idea whose time has come.

In the media. And in the marketplace. We’re

hoping that this level of attention will help us

develop a dialogue with our consumers. One

based on shared values and a mutual interest in

the well-being of the world around us.

Voices of Challenge: SEVENTH GENERATION, INC.

Creating New PossibilitiesPeople often ask me what I think a “responsible business” should be. I have a simple

answer: I think it should be about believing in endless possibility and embracing the fact

that tomorrow doesn’t have to be the same as today.

That’s how I lead my own company: With a

belief that anything is possible when we are

thoughtful and inspired.

With our planet at greater risk today than ever

before, I know that we can harness this attitude

to seize the opportunities to create a better

future than we’re capable of imagining today.

We must. Because while companies celebrate reduced CO2 emissions

in an effort to slow global warming, reduce reliance on sweatshops, use

a smaller number of toxic chemicals in our products, pay less obscene

wages to CEO’s, or keep retail giants in check—that’s just less of the

same. And quite frankly the world is way too screwed up and in too

much danger for us to aspire to simply do less damage.

We need a vision of the world we want to create after we reverse global

warming, eliminate toxic chemicals and transform Wal-Mart into the world’s

leading creator of lower class wealth. We need to pursue possibilities

that fulfill our highest potential and ensure forever a sane, safe and

decent place for our children and grandchildren to play. We need to

envision a world yet to be.

Why would anyone want to do anything less?

As I survey the landscape of well-meaning organizations from land

conservation and global warming groups to animal rights, health care

reform, hunger, and poverty non-profits, I see everyone working from

their own disconnected bunker. No common vision unites us. To help

create that common vision, business needs to get clear that being

responsible requires three things:

1. A commitment to redefining the purpose of business and thinking

about the next 100 years, not the next 100 days.

2. Engaging directly in progressive public policy. Sustainable development

is not just about eliminating environmental impacts. It’s about systemically

ensuring that social justice and equity are made to work for all people.

To accomplish this, progressive businesses must engage directly in

public policy, something they’ve traditionally left to traditional “old

economy” companies. No more. We must lobby aggressively for publicly

financed elections, a health care system that is a right and not a privilege,

a tax code that reverses the flow of wealth from the poor to the rich,

and full cost accounting that stops the externalization of health and

environmental costs. Without progress in these areas there will be no

future in which any company can claim it is “responsible.”

3. Ensuring that everyone who works is provided the opportunity to

reach their highest potential as a human being. This is not about

developing skills or advancement opportunities. This is about creating

a corporate culture that thinks systemically, believes there are no limits,

and educates its team members to see that 99% of what’s possible lies

outside the patterns, systems, and thinking that have gotten us where

we are today. We must foster a culture where everyone is actively

engaged in a process of discovery and growing all the time. For it is

only by making who we were yesterday less important than who we

will become tomorrow that we can we hope to be the change the

world needs us to be.

Jeffrey Hollender,

President & Chief Inspiration Officer

Seventh Generation, Inc.

And quite frankly the world is way too screwed up and in too much danger for us to aspire to simply do less damage.


[4.1] Protecting Workers’ Rights in our Supply Chain

Fair. Safe. Non-discriminatory. We strongly believe people everywhere deserve those basic rights in the workplace. It’s

not always easy to accomplish—especially when you’re dealing with more than 120,000 workers in 33 countries worldwide.

Because we own only one of the approximately 227 factories that manufacture Timberland® products, we don’t always

have direct control over the practices of our vendors and suppliers. But we do work hard to choose business partners

who share our beliefs, then work with them to operate under the standards set forth by our Code of Conduct. Protecting

the rights of workers. Improving working conditions. And collaborating with non-governmental organizations and agencies,

to help raise labor standards, one community at a time.

The goals for our Code of Conduct team in 2005 were to (1) Improve lives through innovation, (2) Drive workplace

quality and make sure it can be sustained and (3) Broaden industry collaboration.

Our Code of Conduct

Timberland is known for its casual boots, shoes, clothes and gear. But

there is something we’re very formal about: our Code of Conduct. About

a decade ago, we decided that we needed a Code of Conduct written

into all legal agreements, to make sure our vendors, tanneries and major

suppliers “Make it better” for all workers, by offering employment that:

• Is voluntary and free of harassment and abuse,

• Prohibits child labor, and

• Meets standards for free association, labor hours, compensation,

health and safety, and environmental compliance.

We also monitor our business partners, agents, licensees and distributors

to make sure these standards are being upheld. Language is no barrier.

Our Code of Conduct has been translated into more than 20 languages

and is provided to factories in their local language.

4.0 Global Human Rights


Our Influence in the Supply Chain

Our stakeholders told us they want Timberland to be more transparent

with regard to our supply chain, and to describe the level of influence our

brand and others have within that channel. We’re using this Corporate

Social Responsibility report to do just that. It’s helpful to understand that

we have three types of relationships in the supply chain: the factory we

own, direct influence and indirect influence. The graphics to the right

illustrate these relationships as they are found in our Footwear,

Apparel and Licensee/Distributor supply chains.

our own factory

The only factory in our supply chain that we own and control is our

footwear factory in the Dominican Republic. The rest of the factories

are contract facilities that have a written agreement with us (or an

intermediary) to manufacture products based on Timberland specifications.

In these relationships, Timberland influences the environmental and

social impacts of the factories through different methods, either directly

or indirectly.

direct Influence

Direct influence means that we perform periodic assessments and

remediation on site to determine workplace safety and environmental

performance.

Indirect Influence

Indirect influence means that Timberland does not perform an assessment

on the factory, but can influence it through other means. This relationship

often occurs with suppliers to our manufacturing facilities. In this situation,

our contract stipulates that we have the ability to refuse product from any

organization that is supplied by a company that violates the global human

rights or environmental standards set by our Code of Conduct. Through this

agreement, we can influence the behavior of our suppliers.

Supply CHaIn: SpHERE of InfluEnCE

Supply CHaIn: appaREl

Supply CHaIn: footWEaR

Supply CHaIn: lICEnSEE and dIStRIbutoRS

timberland owns this facility and has control of decision making

direct influence through assessments and remediation

indirect influence through on-site visits (no official assessments performed)

indirect influence through dialogue and purchasing decisions

distribution

center, then on

to consumer

4.0 Global Human Rights (continued)

distribution

center, then on

to consumer

smallnon-leather

tanneries

major non-leather

dr footwear

all other footwear

RESOURCE ExTRACTION SUPPLIERS MANUFACTURING FACILITIES

distribution

center, then on

to consumer

small suppliers

major suppliers

apparel

all suppliers licensee and

distributor factories





[4.2] How We Assess Our Suppliers

What do degrees in sociology, public relations, law, mechanical engineering and chemical engineering have in common?

Or what about the ability to speak English, French, Japanese, Turkish, Cantonese, Mandarin, Spanish and Thai?

They’re all part of the skills, talents and experience of the assessor team at Timberland. We believe it is important for

us to structure an assessment process that taps into this endless well of talent. This is one reason why we changed

our audit process in 2005 to engage our workers in a more meaningful way. But it wasn’t the only reason.

Why We Assess Instead of Audit

In 2005, we decided that we wanted to take a new approach to

monitoring our factories. While our process was making improvements

for our workers, we were finding that sometimes the improvements

wouldn’t last. Upon reflection, we realized that nothing necessarily

changes in a factory when an audit takes place—change occurs during

the remediation process. Lasting change was happening when the

factory took ownership of the situation and addressed the root cause of

the problems, not just the symptoms. The best way to create a lasting

impact was through collaboration. So we made that the focus of our

process. Consulting and partnering with our suppliers, rather than

policing them. Working together with factories to improve workplace

quality. Making sweeping, systemic changes. From the ground up.

That’s why we’ve moved from audits to assessments. Assessments are

about collaboration, worker involvement and providing remedies instead

of just asking for compliance. We believe our new assessment process is

a much more effective tool for creating positive, sustainable change.

Changes to the Process

To do this, we had to take a step back and redesign our monitoring

process. We’ve revamped our factory evaluation to focus on the root

cause of whatever the issue might be. This means our assessors group

individual findings into larger root causes and focus their remediation

efforts on these larger systematic problems at the factory.

In addition, we have employed the “participatory approach” to the interviews

we conduct with factory workers during the assessment process. Using

the participatory approach, our sessions are facilitated, free-flowing

conversations as opposed to formal question and answer interviews.

Whether in groups or with individuals, facilitation tools/methods are

used to create a non-interview atmosphere and spark active dialogue/

participation of the workers. Participatory methods involve sets of tools

used for different purposes: issue identification; ranking; causal analysis and

action planning. Such tools engage the workers by having them participate

in role playing or in exercises of mapping, sequencing, listing, comparing,

counting, scoring, sorting and linking matters of concern/interest.

The shift to assessments has also introduced the concept of “Immediate

Actions.” When specific violations are found, such as forced labor,

harassment, or pregnancy testing, factories are immediately given the

“high priority” designation and an immediate response is required. Ad-

ditional detail about Immediate Actions is included later in this section.

We’ve also formalized the corrective action plan for managers (known

as the Management Action Plan [MAP]). Called “Action Planning,” the

process provides assessors with step-by-step instructions for working

with factory managers to achieve lasting improvement. (The chart below

has further details.)

Whatever changes we make in these processes, though, you may be

sure that the foundation of our global human rights work remains rooted

in our Code of Conduct.

ACTION PLANNING

Assessment

AS

SE

SS

OR

FAC

TOR

Y

Finding List

Root Causes

Describe Current/Future State

1. Procedure/Policies?

2. Who is involved?

3. Communication/Trainings?

4. Measurement?

Step 1

Step 8

Step 2

Step 3

Step 4

Step 5

Step 6

Step 7

1. Corrective

2. Communication

3. Resistance

4. Measurement

5. Celebration

Identify Necessary Actions

Timeline/Summary

Cause & Effect AnalysisWhy is the current state the wayit is? (Brainstorm)

Review andApprove

ActIon PlAnnIng PRoceSS


How the Assessing Process Has Gone So Far

We began implementing our new assessment process late last year

and have had some successes…and some failures. One bright spot has

been our ability to gather more information directly from workers using

the participatory approach. This method encourages engagement and

gets workers involved. This level of comfort helps them to open up—and

allows our assessor to learn more about their situation. In fact, these

discussions have often turned into informal conversations with the assessor

after the session is over.

But as in any new process, there’s a learning curve. It took longer than

we expected to train both our assessors and those who were being as-

sessed. It took time to adjust. But we continue to train. To educate. To

improve. And we’ve adjusted our expectations. We’ve allowed more time

to introduce the concept to factory management and work through the

new MAP process on-site. Our assessors now spend two to five days

on-site at the factory (it used to be only one or two). This way, they have

a deeper understanding of the situation at each factory.

Probably the biggest challenge with the new process is that we can’t

compare the new data with data from previous years. And in order to

measure our impact, we need to be able to identify trends. We are

committed to new process, however, and are confident that we’ll be

able to report a more concrete analysis in our next Corporate Social

Responsibility report.

In the meantime, we continue to shift the focus from reactive to proactive.

From policing to collaboration. And from management to worker.

Ultimately, placing the worker at the center is what Timberland’s Code

of Conduct is all about.


[4.3] Assessment Results

Timberland is a multinational company. Last year, our products were made in 33 countries, by more than 120,000

workers—with over 40% of these workers in China and 27% in Southeast Asia (Cambodia, the Philippines, Thailand

and Vietnam). Plus, our supply chain includes approximately 227 factories in five of the seven continents. That’s a

lot of territory to cover, but it’s important that we cover it.

Yet, even given the enormity of the project, we managed to roll out our

new assessment process around the globe in the second half of last

year—to 214 of these factories, or 94% of our active factories. What

about the other 13 factories? (Good question—we weren’t satisfied with

that coverage either). It is important for us to have a full understanding

why we did not hit our stated goal of 100%. For several of our sched-

uled assessments, there was a massive flood that prohibited entry to the

region where the factory was located. In another situation, there was a

car wreck involving some of our external auditors. (Fortunately, none of

the assessors was seriously hurt.) For additional detail, please see the

“Missed Assessments in 2005” sidebar below. We are happy to report

that by February 2006, all 13 of the remaining factories had received

their rescheduled assessment.

Greater china

east asia

southeast asia

indian sub-continent

north africa and middle east

sub-saharan africa

europe

Us and canada

mexico, c. america, caribbean

south america

3.3%

40.6%

1.0%27.1%

9.1%

3.7%

1.0%

5.4%0.5%

8.4%

geogRAPhIc DISPeRSIon of fActoRy WoRkeRS

mISSEd aSSESSmEntS In 2005

Country number Reason date Receiving assessment? of factories

India 9 Series of assessments missed due to major flooding in the area 8 in January 2006,1 in Feb 2006

Pakistan 3 Series of assessments missed due to major flooding in the area All in January 2006

USA 1 Assessors traveling to this factory were involved in a car accident January 2006

which caused them to postpone assessment



Immediate action description

Working Hours Total hours exceed 60 hours per week, 12 hours per day, or more than 6 days consecutively

Ethics Falsification of documents, willful violation of law, unethical business or financial practices

minimum Wage Legal minimum wage not being paid

Harassment Verbal, physical, or psychological

discrimination Based on race, religion, gender, color, age, or other personal characteristics

minimum age Under the country minimum age or 16, whichever is higher

forced labor Prison or debt-bonded labor

Refuse assessment Factories refuse an assessment

pregnancy testing Performed or results used in workplace for employment applications, promotions, etc.

freedom of association Denied the right to freely associate and bargain collectively

Taking Immediate Action

One of the cornerstones of our new assessment process is the identification of “Immediate Actions.” These violations

are the most serious, pose the most risk to the worker and generally cannot be tolerated. They are violations

of basic human rights. To be treated humanely. To be treated equally. And to be treated with respect and honesty.

The list of immediate actions includes:

fRequency of ImmeDIAte ActIonS

1%

49%

19%

17%

4%

3%

3%2% 2%


If an assessor finds one of these violations, the factory receives an

automatic “High Priority” designation—alerting Timberland management

of the severity of the violation(s). He or she then asks the factory for an

immediate commitment to resolve the problem as quickly as possible. With

that commitment, the supplier’s remediation activities and progress are

monitored closely by the assessor and the Timberland sourcing manager.

Through the remediation process, our assessors aim for sustainable

change to improve the lives of the workers. We will invest the necessary

time, energy and resources to see that the factory’s remediation plan is

successful. However, when a factory fails to commit—fails to invest in a

sustainable solution—alternative sourcing is our only choice.

Assessors identified 176 violations requiring immediate action among

the 214 factories that received an assessment in 2005. In some cases,

assessors found more than one Immediate Action per factory. Three

issues were consistently found in the assessment results—accounting

for 85% of the “High Risk” violations:

• Working Hours

• Ethics

• Wages

In 2006, we’re dedicating extra resources to root out the underlying

cause of these untenable—and all too frequent—violations. As a

start, we have included a deeper analysis on working hours, the most

frequently found violation, later in this section.

How Our Assessments Were Scored

Under the new assessment process, a factory receives a score that

places it in one of three categories:

• partner: No Immediate Actions found and infrastructure for continuous

and sustainable workplace improvements exists.

• acceptable: No Immediate Actions found, but improvements are needed.

• High priority: Immediate Action violation found in the factory.

These scores are based on eight factors. For example, the risk associated

with the findings. The skills and capabilities of the suppliers’ management

team. And their willingness to go above and beyond what’s expected of

them. The results for 2005 are illustrated in the pie chart below. As you

can see, over 50% of our factories fall into the “High Priority” category.

These results are far from acceptable, but they are to be expected as we

roll out our new collaborative process. As we put our Management Action

Plans and remediation plans to work in 2006, we expect to see improve-

ments over last year and will report our findings in the next CSR report.

We also plan to improve something else—consistency around the globe.

Different regions pose different challenges for our assessors in the field.

We feel it’s important to look at absolute results, as well as regional ones.

The graph below shows the results of our assessments by region. As

you’ll see, the Asian regions received the most consistently low scores,

while North and South America and the Indian Sub-Continent received

higher scores. (When you look at the Sub-Saharan Africa results, please

keep in mind that we have only one factory in the region and it received

an acceptable rating.)


hIgh level ASSeSSment ReSultS

partner

acceptable

high priority

25%

21%

54%

RegIonAl ASSeSSment ScoReS

partner

acceptable

high priority

Greater china east asia southeast asia indian north africa & sub-saharan europe U.s. & mexico, south

(86) (11) (28) sub-continent middle east africa (27) canada c. america & america

(22) (16) (1) (10) caribbean (24)

(9)

59.09%

22.73%

18.18%

63.64%

18.18%

18.18%

32.14%

64.29%

3.57%

40.91%

13.64%

45.45%37.50%

62.50%

100%

55.56%

3.70%

40.74%

40.00%

10.00%

50.00%

66.67%

33.33%

29.17%

41.67%

29.17%

100%

80%

60%

40%

20%

0%

Region (number of factories)


Assessing Our Assessors

Of course, when you look at the data, it’s only fair to look at how it was

collected, too. As we mentioned, we started our new assessment process

mid-year and we needed outside help. We turned to Cal Safety Compliance

Corporation (CSCC) to help us. CSCC is a global organization that provides

auditing services to all market sectors concerned with corporate social

responsibility and accurate information gathering. By the end of the

year, they had performed 81 assessments, or about 38% of the 214

assessments that were performed last year.

Working with an organization like CSCC allows us to benchmark our

assessors against external auditors. Also, CSCC brings additional industry

insight to factory engagements. Finally, we used them for practical

and cost reasons—to help us perform assessments in places where

Timberland doesn’t have staff or local knowledge.

Because we relied so heavily on CSCC, we wanted to see how much

difference there was between our internal and external assessments. As

the charts below show, external assessors seemed to be more likely to

give a factory a partner score (that is, our highest score) than internal

assessors. In addition, internal assessors found more instances (on a

normalized basis) of all top three Immediate Actions. But as we know

from some factory visits, appearances can sometimes be misleading.

IntERnal VS. ExtERnal: faCtoRy SCoRInG

partner acceptable High Risk

External 42.0% 13.6% 44.4%

Internal 15.0% 25.6% 59.4%

IntERnal VS. ExtERnal: numbER of ImmEdIatE aCtIonS found8

Internal External

Hours 59 46

Ethics 27 10

Wages 19 18

there are several possible explanations for these results:

1. Many of Timberland’s internal assessors have been evaluating factories

based on our Code of Conduct for many years. Because of their experience

with Timberland’s Code of Conduct, they’re generally better equipped

to find violations than CSCC assessors. In addition, the CSCC assessors

only had limited exposure to the participatory approach required by the

new assessment process.

Solution: We’re including CSCC trainers in all of our internal assessor

trainings. As they get up to speed on our approach and Code, we expect

there will be less disparity in the scoring.

2. Specific violations are more prevalent in some regions than in others.

For example, we have found that ethics violations are more common in a

specific country than in most other countries—and this is a region visited

mainly by Timberland’s internal assessors. Situations like this can skew

the overall results.

Solution: We’ll continue to monitor our results to make sure the assessment

process is being applied equally—among internal or external assessors

alike. We believe that, when our Code of Conduct is followed consistently,

we can focus our efforts on addressing the root causes of human rights

abuses in the workplace.

3. The assessment results represent a relatively brief period of time—

approximately six months. We will be more confident about conclusions

that come from larger samples when more time has been spent on training

and field application of new assessment techniques.

Solution: Timberland commits to report on this data in our 2006 CSR report.

While we have not yet pinpointed the exact reason for the differences between

internal and external assessor results, we continue to work to create an even

playing field for our factories during the assessment process.


[4.4] Analyzing the Results

In order to chart a path towards sustainable improvement in our supply chain, we must step back and take a look

at the assessment results from 2005. The better we understand the assessment results, the better we can implement

programs to improve working conditions. This section dives a little deeper into the data.

8 We normalized the results from the two groups so that we could compare results.


Immediate Actions By Country (Average Per Factory)

Immediate Actions By Business Units

0.00.10.20.30.40.50.60.70.8

Hours

Ethics

Wages

Harassment

Discrimination

Child Labor

Forced Labor

Refuse Assess

Pregnancy Test

Free Association

AHQ APP DIS FTWR LIC SUP TAN


Looking for Patterns

Another way to analyze the results is to look for patterns where Immediate

Actions were found. Did they relate to what the factory was producing?

Or was it tied more to where the factory was located? Here are two charts

that look at these categories:

Geographic Considerations

We want to understand where, geographically, we need to focus our

attention. In the “Immediate Actions by Country” chart below, we looked

at how frequently violations requiring immediate action occurred in

countries with more than five factories. (Countries with fewer than five

factories aren’t represented on the chart because they could skew

the overall results.) The idea isn’t to point fingers. We just want to

understand the root causes of the problems. We believe that if we can

understand the root causes, our assessors will be better equipped to

deal with issues on an individual factory level.

As you can see, on average, Vietnam, Turkey, Tunisia and Taiwan all

average more than one Immediate Action violation per factory. So we

have to rule out geography as a determinate of frequency of immediate

actions. (Four different regions, with three different assessors, representing

both internal and external work made the findings, so we think we can

safely come to this conclusion based on the data we received.) However,

specific types of Immediate Actions can be tied to geographic regions.

For more information, please see a deeper analysis of working hours

later in this section.

operational Considerations

Another way to get at the root cause of an issue is to see if there are

certain kinds of operations that are susceptible to workplace violations.

In the “Immediate Actions by Business Unit” chart below, you can see

that the findings are pretty consistent across business units and that

working hours are the most frequent violation, no matter what kind of

business it is. Ethics and wages come in second or third on all counts.

So we also have to eliminate process as a root cause for actionable

violations. But that doesn’t mean it’s any less important to Timberland.

In fact, being able to eliminate geography and operations as root causes

help us strategize what we do next. Like working to develop a better

understanding of working hour violations in our supply chain (see

section 4.7 for more information).

Immediate Actions By Country (Average Per Factory)

Immediate Actions By Business Units

0.00.10.20.30.40.50.60.70.8

Hours

Ethics

Wages

Harassment

Discrimination

Child Labor

Forced Labor

Refuse Assess

Pregnancy Test

Free Association

AHQ APP DIS FTWR LIC SUP TAN

immediate actions by coUntry (aVeraGe per Factory)

2.0

1.5

1.0

0.5

0

Vietnam turkey tunisia taiwan china morrocco thailand brazil india Usa pakistan argentina italy

1.91

1.46 1.43

1.20

0.92

0.710.67

0.56 0.540.44 0.43

0.14

0

immediate actions by bUsiness Unit (aVeraGe per Factory)

hours

Wages

discrimination

Forced labor

pregnancy test

ethics

harassment

child labor

refuse assess

Free association

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.0 asia headquarters apparel distributor Footwear licensee supplier tannery

.14

.29

.57

.02 .02 .02.06

.35.31

.04 .04

.25.21

.09 .09.14

.27

.18

.77

.04.01

.04

.20

.27

.03.07 .06

.05

.06.11

.05

.14.1 .1

.67

Through this partnered remediation process, we seek to improve the ability

of workers and factory management to take a lead in improving workplace

conditions, and enhance the sustainability of improvements. How?

• By empowering workers to protect their own rights and take an active

role in improving their working conditions.

• By creating grievance systems, self-monitoring systems and other

procedures to find and fix problems as they arise.

• By finding new ways to move beyond policing factories, and analyzing

the root causes for their individual problems instead.

• By training our business partners in the best practices for addressing

the root causes of issues industry-wide.

In other words, it all boils down to the concept of collaboration. Partnership.

Letting workers and factory managers lead the way. Becoming personally

involved in finding the root causes behind problems. Then making lasting

improvements. It’ll take time. But we’re committed to investing whatever

it takes to make lasting improvements in the workplace. After all, protecting

workers’ rights is everyone’s responsibility. We’re in this together.


[4.5] After Assessments—Partners in Remediation

In moving from compliance audits to collaborative assessments, the process moves more focus, energy, and resources to

what happens after the assessment is completed. Having spent more time at our factories during the assessment process

engaging with workers and management to better understand the root causes behind the issues, we feel committed

and personally invested to help the factory make sustainable improvements.


Jorge started out by clearly communicating Timberland’s role in the

project. He shared his experience and knowledge about being socially

responsible and complying with global workplace standards. Then he

invited the factories to participate in the training programs and motivated

them to see these trainings as an opportunity. To create a culture that

upholds labor rights. Even improves them.

Whatever successes we’ve had in improving working conditions at our

factories, we owe to Jorge and others like him. It’s through our dedicated

field team that we can support programs like the “Continuous Improvement

in the Central American Workplace” (CIMCAW), an ongoing regional project

that helps garment workers and manufacturers in Central America confront

competition in the marketplace while maintaining decent working conditions.

Our goals for these and other partnerships are simple:

• To improve the lives of workers who make Timberland® products.

• To increase their job security.

• To enhance local communities’ well-being and economic growth.

• To guide our sourcing decisions.

• To continue learning about new best practices and improvements

in global labor standards.

more Help needed

“More engagement is needed by all actors—buyers, suppliers, and the public sector—to implement better busi-ness practices in more efficient, sustainable, and humane work environments.”—Kevin M. Burke,

President and CEO, American Apparel and Footwear Association

to learn how you can participate go to www.cimcaw.org

a day In tHE lIfE of a tImbERland aSSESSoR

put yourself in Jorge Guzman’s shoes. you’re in a Guatemalan factory as an assessor for timberland,

who is a primary partner in something called “Continuous Improvement in the Guatemalan Workplace”

(CImGuaW). It’s a project that was launched in September 2003 with $500,000 backing from the federal

government. this Global development alliance, with timberland and Gap Inc. as partners, leveraged the

expertise of Social accountability International (SaI) and the International textile, Garment, and leather

Workers federation (ItG). With development alternatives, Inc. (daI) as the project manager, this initiative

provided training for textile, garment and leather workers and management to improve working conditions.

these trainings covered best practices, improved management systems, self-evaluation tools, and

factory-level action plans. as part of this effort, timberland involved employees at its new Hampshire

headquarters and field staff, of which Jorge is a part.

Jorge Guzman during a factory tour in the Dominican Republic.

http://www.cimcaw.org

Argentina 7 171

Bangladesh 1 3521

Brazil 16 3854

Bulgaria 2 73

Cambodia 1 1541

Canada 1 35

China 66 51182

DR 4 8122

Egypt 2 833

El Salvadore 1 682

France 2 291

Germany 1 10

Guatemala 1 225

Honduras 1 532

India 22 11184

Italy 6 217

Japan 2 49

Mexico 2 1050

Morocco 7 1096

Pakistan 10 2076

Philippines 1 820

Portugal 3 218

Romania 2 720

South Korea 4 138

Sri Lanka 1 175

Swaziland 1 1200

Taiwan 5 1030

Thailand 15 7914

Tunisia 7 2707

Turkey 11 5277

USA 10 600

Venezuela 1 130

Vietnam 11 23979

COUNTRY FACTORIES EMPLOYEES COUNTRY FACTORIES EMPLOYEES COUNTRY FACTORIES EMPLOYEES

Updated from last year, this list of Timberland contract factories

(active as of May 1, 2006) includes:

• apparel factories

• footwear factories

• distributors

• tanneries

• Suppliers

Like last year, this list omits our Licensees due to current contractual

restrictions. We hope to include these locations in next year’s report. You

can find our list at www.timberland.com/factorylist.

Why are we telling you this? At Timberland, we understand how important

it is for us to be completely open and transparent, if we are to be

accountable to our stakeholders. But if we don’t hear from our stakeholders,

how will we know how to improve?

We’re eager to find out from you how this list is being used in the field.

Are you using it to monitor factories in some way? Is there any critical

information missing? Questions and comments alike are welcome. If you

have suggestions, please reach out to us at [email protected].

[4.6] Our Factories Around the World

We’ve tried to give you a picture of who we are. Now we’d like to tell you a little about the organizations we contract

with. As promised in last year’s report, we’re providing you their names, addresses, type of businesses and just what

type of work they do. We believe, along with others in our industry, that full factory disclosure and collaboration can

create common standards and shared solutions and help advance global human rights in all of our factories.



tImbERland faCtoRIES WoRldWIdE

http://www.timberland.com/factorylist




[4.7] How We Tackle Global Issues

Timberland’s Code of Conduct assessment team is eight people strong. They’re charged with dealing with the whole

range of human rights issues throughout our global supply chain. That’s 227 factories in 33 countries. While they’re

positioned all around the world, we can’t claim to have the local knowledge we need to be effective in every situation.

We want to participate in making significant changes in the workplace. But even if we start with just a small number

of factories, we’ll be taking resources away from the foundation of our work, assessments and remediation. That’s

why we’ve developed strategic partnerships with local and global organizations to help us make things better in the

lives of our workers.

Finding Local Partners Worldwide

We have an idea of what’s needed, but believe we can achieve powerful

solutions by working with local partnerships. We need local partners,

who know their own local situation, to assess our workers’ needs, help us

design and implement strategies and let us know if we’re investing our

resources where they’re needed most. Partnerships also help make local

organizations self-sufficient, so projects can continue—and workers will

still benefit—after our funding stops.

We like to fund projects that show cooperation between the local

partner and factory management. As you can see on the next page, CARE

launched an initiative at the Pou Yen Factory in Vietnam in which the

factory and the local partner continued to work together—even after the

project was completed. It just shows that local groups often relate better

to the workers than an outsider can. And they have almost instant cred-

ibility with the workers, simply because they are local. Local partnerships

also help us commit our limited resources where they’ll do the most good.

We continue to search for the right type of partnership in any given work-

place situation, as the “Strategic Initiatives” chart shows. Ultimately, it all

comes down to one thing. Making it better in the lives of the workers who

put our product on the shelf.

Local partnerships also help us commit our limited resources where they’ll do the most good.



tImbERland StRatEGIC ConSultInG

name of project Country nGo year project tbl Scope of Work Workers (partner) was Initiated Contribution affected

food assistance Dominican PISANO 2005 1 Year Provide employees access to low cost food 900

program Republic and the ability to pay for it with credit

physically Challenged Dominican Patronato Cibao de 2005 1 Year Integrate physically challenged

Employment program Republic Rehabilitación, Inc employees to Timberland work force. 4

“promoting a Healthy Vietnam CARE 2004 2 Years Improve the capacity of the factories’ management 2,500

Workplace and Cohesive to sustain workers’ development programs, strengthen

Community” the capacity of local stakeholders and enhance the

knowledge and practices of workers about safe working

environments.

Social accountability China SAI, ITGLWF, CWN, 2004 1.5 Years Promote worker participation and participatory 650

program for China ICO, Toys “R” Us, management systems, raise manager and worker

Eileen Fisher awareness of workplace conditions, and build capacity

locally in China.

Continious Improvement Central SAI, DAI, USAID, 2003 3 Years Improve working conditions and management systems 112,500

in the Central american America ITGLWF, GAP in order to increase garment factories’ ability to meet

Workplace (CImCaW) growing global demands for social compliance and

increase their competitiveness in areas such as quallity

and productivity.

life Skills training China Verite 2003 1 Year Improve the workers’ employability through increased and 550

enhanced skills. Skills training included: computer literacy,

tailoring/sewing, beauty culture, and Cantonese language

(for migrant workers).

Integration of the China, Turkey, Verite 2002 2 Years Integrate the Timberland Code of Conduct into the supplier 4,663

timberland Code of and India company’s internal system; definition of roles and function;

Conduct into the commitment building among the different groups involved;

factory’s Internal team building; and effective communication and interpersonal

management System skills training.

Verité mobile China Verite 2002 2 Years Implement the Verité Mobile Training program in Guangdong 10,000

training program province, China, aimed at promoting social compliance

awareness among workers, educate workers on general

health issues, develop leadership skills of factory

supervisors/managers and interpersonal relationship skills

of workers.

“Enhancing the Quality Vietnam CARE 2001 1.5 Years Improve the quality of life through a focus on improving 1,700

of life for pou yuen management and workers’ skills, ensuring safer working

factory Workers assigned environments, and improving worker health status.

to timberland® products”

CEpZ Corp pilot project Bangladesh CARE, MAMATA 2001 4 Years Enhance awareness of women’s legal rights, labor laws and 15,000

trafficking, improved nutritional intake practices, enhanced

awareness of common diseases and of referral services, and

access to flexible micro savings and credit facilities.

Continuing Education Dominican Secretaria de 1999 7 Years Provide continuing education for Timberland workers by 85

and Job Skills training Republic Estado de using local teachers and professors.

Education

total Workers affected: 148,552


A Focus on Working Hours

Excessive overtime. Employees working a total of more than 60 hours

per week. Twelve hours per day. Or more than six days consecutively.

In 2005, of the 176 violations we found that required immediate action,

87 involved working-hour violations. That’s 49% of the total. When we

saw these results in our supply chain, we knew we needed to do some

further analysis.

How We did the Research

When we wanted more information, we asked our eight assessors

and external auditors these general questions about the working-hour

violations they found in our supply chain:

• What country is the factory located in?

• What’s the factory name?

• How many workers are at that factory?

• What does it manufacture?

• What’s its overall assessment score?

Then, we drilled down a little deeper, with questions like these:

• How many workers are affected?

• How many hours are worked above 60 per week, on average?

• Is local law stricter than Timberland’s Code of Conduct?

• Are workers expected to work seven days in a row?

• How many days does the violation last?

• What department does it occur in?

What We found

Here are some of the statistics we compiled from the information

provided by our assessors:

• 37% of the violations occurred in China.

• 77% of our footwear factories reported working hours violations.

• The average violation was for a 70-hour work week.

• The average number of workers affected was 593, with the median

around 220.

• 87% of working-hour violations were in the production area of the

factory.

• 27% of the violations lasted less than one month, while 38% were

between one and two months long.

What We plan to do about It

When we see results like these, we want to do something about it. Based

on our research, it was apparent that we should look at a footwear factory

in China to begin to understand the root causes of excessive overtime.

Then we can try to develop actions to eliminate the problem. Actions we

hope can be transferred to factories throughout our supply chain.

A three-month pilot program was launched in March 2006 to focus on a

Chinese footwear factory’s production and support functions. The project

was broken down into these three phases:

phase 1: Analyzing a factory’s capacity and expanding our monitoring of

its working hours. The number of workers employed. Production output.

Delays in materials or production. How many times violations occur.

During this phase of the project, we asked the factory for this kind of

input, so that we could gain a fuller understanding of the working-hour

violation. As the project continues, we will analyze the factory’s production

capacity over different construction types.

phase 2: Analyzing the impact of capacity, while continuing to search

for other causes. Timberland® will work with the factory to evaluate how

capacity issues impact excessive overtime. At the same time, we’ll con-

tinue to push to understand what else might be causing working-hour

violations. Our goal is to define and prioritize everything that can cause

excessive overtime.

phase 3: Action planning. Timberland Code of Conduct specialists

will use what we learn from Phases 1 and 2 to work with the factory to

develop action plans to address these issues.

Once we have a better understanding of the situation within this particular

Chinese footwear factory, we’ll set targets for reducing working-hour

violations there. You’ll find the results and goals in our 2006 Corporate

Social Responsibility report.

A Special Focus on China

China houses approximately 30% of our factories and 40% of the

workers that make Timberland® products. Because of this, we thought we

should take a closer look at the issues that workers face in this region.

We asked our employees in China to tell us about the issues they face

on a day-to-day basis working in our Chinese factories. The following is

a compilation of some of the responses we heard.

building a transparent Relationship

Fluctuating demand, forecasting pitfalls and overall market forces

make it difficult enough for factories to prepare for business. Adding

well-intentioned socially responsible mandates can create impossible

situations for them. Especially if the choice is to do business based on

Timberland’s Code of Conduct—or not do business at all. The factory

wants our business. But if they can’t possibly manufacture the entire

order, on time, within the working-hour restrictions outlined in the




Code of Conduct…well, it becomes an issue. By building collaborative,

transparent relationships with these factories, we hope to better understand

the actual situation. It’s a lofty goal. And one we are confident we can

achieve over time.

Helping Workers who Work far from Home

The Pearl River Delta is a manufacturing mecca for China. Most of the

work force (usually women, ages 18–24) come from faraway provinces.

If these workers are lucky, they’ll have the chance to travel home once a

year, during the Chinese Lunar New Year Festival in January or February.

You can only try to imagine the challenges these young women face.

Working for the first time. Living away from home, probably in a much

more industrialized area than they’re used to. Confronting personal

safety issues that were never even considered in their hometowns.

We believe that providing education and opportunities for these migrant

workers to make their lives better is an ongoing opportunity for us.

Hearing directly from Workers

A vital part of any successful Corporate Social Responsibility program

is input from the workers themselves. After all, the whole reason for our

Code of Conduct is to ensure a safe, fair and non-discriminatory working

environment them. In China, though, the term “freedom of association”

implies a pro-union bent, and they have laws about that. There are

avenues for workers to express their needs, concerns and issues. But

working to improve workers’ rights while not violating China Law remains

a delicate balance for us.

[4.8] Working Together to Tackle Tough Issues

A spirit of collaboration. Sharing ideas. Speaking together with one voice. Some global issues are simply more important

than corporate competition. At Timberland, we know that we don’t have all the answers. That’s why we’re working with

like-minded companies within our industry, to work together to make positive changes in the issues that really matter.

Sharing and Collaborating through the Fair Factory Clearinghouse

One of the ways we’re working to “Make it better” for workers every-

where is by monitoring what conditions are like in the workplace. For our

suppliers’ employees. For our own factory employees. In short, everyone

involved in the production process—from the buying of the materials to

the actual manufacturing process.

The industry has been engaging in social compliance audits for over a

decade, yet improvements in workplace conditions across the globe have

been slow. In revisiting the approach to social compliance audits, one

of the things that Timberland identified as missing was coordination or

collaboration with brands sharing our suppliers. Why not share information?

Share lessons learned?

To facilitate the process of collaborating with other brands, Timberland

joined the Fair Factory Clearinghouse, Inc. (FFC). The FFC, a not-

for-profit collaborative industry effort supported by a grant by the U.S.

Department of State, is developing an information management system

that will provide a platform for companies around the world to share non-

competitive information about the social and environmental conditions of

their suppliers. Timberland intends to be active on this system by the end

of 2006.

By using the FFC’s sharing platform, Timberland will be afforded the

opportunity not only to use a global data management system to track

its social compliance audits but to also:

• Improve the availability, comprehensiveness, and standardization of

factory social compliance audits.

• Access other brands’ social compliance audits of factories currently

shared and of potential new suppliers.

• Understand what other companies are doing to improve workplace

conditions.

• Identify opportunities to eliminate the duplication of audits.

• Identify opportunities to advance and promote education and

knowledge sharing.

By helping companies like Timberland effectively and efficiently share

information with other brands, the FFC will help Timberland make

informed and independent decisions about third-party vendors and

“Make it better” for factory workers around the world.

Why not share information? Share lessons learned?

http://www.fairfactories.org/


ouR GoalS foR 2006

1. Expand our assessment Collaborations: In our small way, we want to do all we can to create lasting change,

and we’ve learned that the best way to do that is through collaboration. Going forward, we’d like to collaborate

with selected brands in footwear and apparel factories during our factory assessments. Sharing knowledge.

Improving efficiency. And reducing audit fatigue in the factories. By conducting our assessments at the same

time and conducting a joint closing meeting, we could work together to effect positive change in the workplace

through education and guidance.

2. Improve Workplace Conditions: Our new collaborative assessment process entered its second year in 2006.

Last year, one-quarter of the factories we assessed achieved a Partner rating, the highest rank. Our hope is

that factories that routinely achieve a Partner-level score can eventually assess themselves. That will allow us

to focus our scarce resources on improving workplace quality, rather than on the assessment process. After all,

its not the assessment that will “Make it better” in the workplace—it’s the actions taken afterwards to remedy

whatever’s wrong.

3. form Strategic partner Relationships: Getting workers involved. Making them full partners in assessing,

maintaining, and improving the working conditions of the factories they work in. That’s the idea beyond a pilot

program aimed at making lasting improvements in human rights in the factories we work with. We’ve begun a

project like this in China with Verite. We want to expand the program into other factories in Asia. Then share the

results with other brands.

4. focus our Community Efforts: There are certain countries that are our strategic sources for the manufacture

of footwear and apparel. One of our goals for 2006 is to implement community-based projects with our partners

in these countries, to complement factory-based initiatives that address the needs of our workers.

[4.9] Looking Forward

The bulk of this Corporate Social Responsibility report recaps our initiatives and results for 2005. We also think,

though, that it’s important to talk a little bit about what our plans are for the future. Read on to see what we’ve

identified as our major goals for Global Human Rights in 2006 and beyond.


Voices of Challenge: LEVI STRAUSS & CO.

I am deeply honored and humbled by the invitation to be a contributor to Timberland’s

2005 Corporate Social Responsibility Report. I have long admired the risks Jeff Swartz

has taken in seeking to link commerce and justice as the CEO of Timberland. I was asked

to share my perspective on the issue of global human rights in the apparel and footwear

sector. I accepted the challenge knowing that some may question whether a corporate

perspective on human rights adds value.

Many apparel and footwear companies seem to reduce human rights

to a code of conduct to be applied to suppliers and audited or assessed

to ensure compliance. A few companies engage in human rights work

beyond the factory walls in efforts like Timberland’s to partner with

non-governmental organizations (NGOs) that focus on educating workers

and providing opportunities to increase their income through micro-

business and savings.

What continues to elude many players in our industry is that human

rights is more than a code of conduct or a set of violations in a factory.

We must begin to look at all of our supply chain practices through a

human rights lens and on a much broader scale to identify and prioritize

issues, resources, potential partners, and areas where we can have the

greatest impact. Commitment to a human rights approach encompasses

promoting civil, political, economic, social and cultural rights and

working at the factory, community and policy levels to prohibit all forms

of discrimination.

Applying a human rights lens to global sourcing, our industry

might consider:

• Focusing not just on workers, generally, but on understanding the

unique needs and issues facing women, migrants, immigrants and

ethnic or cultural minorities in factories.

• Comparing types of violations by country against their record on

human rights.

• Recognizing that systemic change cannot be accomplished by focusing

efforts solely within the four walls of the factory. For sustainable

change to occur, the focus must include change at the community and

country level as well. As Timberland’s experience closing their factory

in Puerto Rico demonstrates, codes and auditing do not guarantee jobs

or the competitiveness of factories. There is great value in supporting

capacity-building in local communities, forging relationships between

NGOs and contractors and working with governments to help them

frame competitiveness in the context of their human rights records.

• Expanding environmental programs to include water, the looming

human rights issue of this decade. The focus on water should not only

include wastewater effluent standards but also water conservation efforts.

• Advocating and lobbying governments to link human rights protections

and enforcement mechanisms with trade liberalization and to devote

resources toward building the capacity of governments to frame

competitiveness in this way.

The apparel and footwear sector is highly competitive and price sensitive.

The challenges that come with globalization have not been easy to

navigate—especially when it comes to the issue of human rights. Developing

practical solutions to address these challenges can be a daunting task

as we and others are discovering. However, the key to progress must be

a focus on partnership and innovation through the lens of human rights.

I challenge our industry to think about human rights as a lens, a tool

that can help identify where progress can be made, where strategic

partnerships can be developed, and where brands and retailers can use

their power and influence to improve working and living conditions in

apparel- and footwear-manufacturing communities.

theresa fay-bustillos

Vice President of Community Affairs

Executive Director of the Levi Strauss Foundation

Levi Strauss & Co.

I challenge our industry to think about human rights as a lens, a tool that can help identify where progress can be made.


5.0 Environmental Stewardship

[5.1] Our Relationship to the Environment

No matter what all of us do—at home, at play, or at the office—we’re going to have an impact on the environment.

From climate change to natural resource consumption, some of today’s biggest ecological challenges have been linked

to our industry. As a company with a passion for the outdoors, we believe that doing our best to “Make it better” for

our planet is at the core of our business. Through our environmental stewardship program, we’re committed to doing

our part to address these challenges. We’re minimizing our environmental footprint—in the way we design our stores,

package and design our products, and select our resources. We’re also exploring the processes and behaviors that

prevent us from being environmentally effective from the start. In 2005, our efforts were concentrated in three major

focus areas: Energy, Chemical, and Natural Resource Consumption.

tHE CaRdEn WElSH EnVIRonmEntalISt aWaRd2005 Winner: tim davis

on february 9, 2006, tim davis became the fourth person to win timberland’s annual Carden Welsh Environmental award. this award was created to honor an individual or team of employees who have improved timberland’s environmental footprint in a lasting way.

Known affectionately as the “crazy gringo” in our dominican Republic footwear factory, tim is a native mainer with a combination of yankee ingenuity and passion for environmental conservation. He personifies the “make it better” culture of timberland by constantly challenging the way we make our product.

HERE aRE a fEW of HIS maJoR aCComplISHmEntS foR 2005 alonE:

• Installed a 10kW wind tower in the Dominican Republic factory that generates approximately 30,000 kilowatt hours

of electricity per year for our footwear manufacturing. The tower was a demonstration project for renewable energy

in a place where power quality is poor and the price of electricity is high. Beyond clean power generation, it serves

as a point of inspiration and pride for the more than 1,600 workers who walk past it to work every day.

• Placed a solar heating panel on the roof of our factory to heat all of the water used in the hand-stitching line

for our boat shoes.

• Helped Timberland convert our footwear outsole assembly line from solvent-based cements to more

environmentally friendly water-based adhesives.

So what does someone like Tim do for an encore in 2006? “We have been able to reduce some of our solid waste to landfills by recycling our waste foam.

What an awesome achievement it would be to eliminate landfill wastes while generating electricity and thereby reducing a portion of our dependency on

fossil fuels,” says Tim. “That is why I am now focusing on a gasification technique that would turn the ubiquitous leather scraps and other waste in our

factories into usable energy.”

For a more detailed look at our Dominican Republic factory, be on the lookout for the Facility Reporting Project due in fall of 2006. This document

will report on all the environmental and social indicators for our Dominican Republic Factory (like a mini-CSR report for this one facility).

tim davis, the 2005 carden Welsh

environmentalist award winner,

getting up close and personal with

his latest project.

http://www.facilityreporting.org/documents/updates/FRP-Timberland_pilot_7Feb06.pdf


Our Greenhouse Gas Inventory

We have been collecting data for our greenhouse gas inventory since

2002. Over time, we have seen our ability to collect and process data

improve. This is a good thing. Our increased knowledge of this process

has highlighted some mistakes we made in the past. Specifically, we came

across what we believe to be minor inaccuracies in how we calculated our

2002 baseline and that impacts how we set targets for the coming year.

So, instead of hastily setting a new baseline, we have decided to commit

to involving a third-party in verifying our greenhouse gas inventory in

2006 (including our baseline) and report on it in our next CSR report. In

the meantime, we will share with you the results for 2005.

As you see in the following graphs, we saw increases across the majority

of the segments in our greenhouse gas inventory. These increases can

be attributed to the growth of our business, increased employee travel,

and the delay in bringing the Ontario solar array online. Unfortunately, as

our business and proficiency with data collection grows, we mask what

otherwise would be considered significant emissions reductions. Nobody

said this was going to be easy. In 2006, we will make absolute reductions

(reductions not tied to business growth) in our carbon emissions that

realign us with our emissions goals.

How We Measure Greenhouse Gas Emissions

Timberland uses The World Resources Institute (WRI) protocol for

measuring greenhouse gas emissions. It’s a widely accepted and utilized

methodology for businesses like ours that voluntarily choose to report

emissions. WRI’s tools allow us to take electricity, gas, and oil bills as well

as airline, car and public transit mileage, and calculate our contribution to

climate change. Specifically the model tells us our direct emissions (the

emissions from fossil fuels burned for power or transportation) and our

indirect emissions (emissions from purchased electricity.) Our inventory

reports the emissions from the facilities and vehicles we own and operate,

as well as the emissions from air mileage.

The system isn’t perfect. We haven’t yet found a good way to estimate

the direct emissions from leased spaces where heat is included in our

lease agreements. Sometimes, we don’t have enough stores in a single

climate regime to make good assumptions. We’ve also been challenged

to find a way to calculate the emissions produced by the third-parties

that ship our product in the US and in Asia. That’s why we’ve partnered

with groups like Clean Air-Cool Planet, The Climate Group, and Businesses

for Social Responsibility’s Clean Cargo initiative to develop tools for

building our 2006 inventory.

5.0 Environmental Stewardship (continued)

[5.2] How We’re Coping with Climate Change

At Timberland, we like to head out and enjoy the outdoors. So if climate affects the way we recreate, it’s personal.

But…what if we are helping to create the problem? We believe that human activity is changing our climate. And

we’re contributing by utilizing energy that generates greenhouse gases. At our corporate offices. In our retail stores.

At our Caribbean manufacturing facilities and Distribution Centers. And whenever our employees travel.

direct GhG emissions

6,000

5,000

4,000

3,000

2,000

1,000

0

headquarters distribution U.s. U.s. manufacturing international international international offices

centers retail showrooms retail showrooms

2004 2005

met

ric

tons

oF

carb

on

4,943.385,275.12

303.42 359.92 269.03 91 0 0426.93 151.24 0 0 0 0

1,704.362,262.46

8,0007,0006,0005,0004,0003,0002,0001,000

0

met

ric

tons

oF

carb

on



1,8651,290

2,158.46 2,270.81

4,989.24,548.4

90.61 58.08

5,442.78

7,327.56

2,483.45 2,707.56

11.64 16.24 395.74 495.52

indirect GhG emissions

2004 2005


What We Plan to Do about Greenhouse Gas

We created our first greenhouse gas inventory back in 2002 to help

us gain an understanding of our contribution to climate change. We’ve

updated it annually to analyze our emission sources and trends, and

map out our path to carbon neutrality (the point where our business

does not impact climate). While the tool we have employed has not

been exact, it has turned out to be useful for benchmarking other facilities

and identifying areas where we can improve the efficiency of our business.

Our plan for reducing carbon emissions, summarized in the five steps

below, involves first minimizing our emissions of greenhouse gas as

much as possible. While reducing our pollution, we look to source

locally generated renewable energy—either off the grid or produced

on-site. Whatever emissions we can’t reduce through these efforts we’ll

offset with the purchase of renewable energy credits that promote the

development of clean energy sources.

our process to reduce our carbon footprint:

Step 1: Verify our greenhouse gas inventory with a third-party vendor.

Step 2: Reduce energy demand through energy efficiency improvements.

Step 3: Purchase whatever clean, renewable energy we can from

electric utilities.

Step 4: Generate our own renewable energy on-site where we can’t

purchase clean energy from the electric grid.

Step 5: Purchase renewable energy credits to offset emissions and

help develop local renewable energy projects, if no options are

available to us.

We hope that the combination of these five actions will help us achieve

our ultimate goal of becoming carbon neutral by 2010.

tHE bonuS of dRIVInG a HybRId VEHIClE

Suppose it’s 7:00 in the morning. You are leaving

your house on the way to work. There are no buses.

No trains. And no one nearby to carpool with. Chances

are, like millions of other workers across America,

you’ll hop in your car, by yourself, and hit the road. It’s

easy to believe that nothing can be done about that…

but we’ve tried to make environmentally responsible

living just a little bit easier for Timberland employees.

$3,000 easier. That’s the size of the bonus we began

offering in 2004 to qualified employees who purchased

a hybrid vehicle.* To make commuting a little more

eco-friendly. Then we sweetened the deal. You think

the early bird gets the worm? At Timberland, it doesn’t

matter how early you arrive. Only the fuel-efficient

commuters (hybrid drivers and carpoolers) get the

best parking spots.

* To date, 16 employees have taken us up on our offer.

Nine of them made their purchases in 2005.


10,000

8,000

6,000

4,000

2,000

0

met

ric

tons

oF

carb

on

asia europe U.s. and carribean total

5972,086 1,992 1,183.41

5,551

15,442.42

8,140

18,714

reGional GhG emissions For 2005

direct indirect

10,000

8,000

6,000

4,000

2,000

0

met

ric

tons

oF

carb

on



6,809

10,218

2,462 2,631

5,258 4,639

91 58

5,870

2,483 2,708 12 16 2,100 2,758

total GhG emissions

2004 2005

7,479


A Focus on Renewable Energy

In the world of environmental stewardship there are few better ways to

demonstrate “doing well by doing good” than by investing in renewable

energy sources. No matter where you live these days there’s likely a

technology or natural resource that can provide power in a clean and

sustainable way. Renewable energy offers power reliability, cost savings,

fewer emissions, and local jobs. Listed below are a few initiatives that

we’ve launched to generate clean, renewable energy:

• Installing a wind turbine and a solar water heater at our Dominican

Republic factories.

• Using 100% renewable energy in our Enschede, Holland distribution

center.

• Installing solar panels at our New Hampshire headquarters.

• Installing solar panels in our Ontario, California, distribution center.

(For more on that, read on.)

• Building a solar panel system for a local middle school in Stratham, NH.

We’ve also begun voluntarily purchasing T-RECs: Tradable Renewable

Energy Credits. These renewable energy credits—or “green tags”— fund

the creation of renewable power sources. We’re using them to offset

emissions from our facilities where we cannot purchase or generate our

own clean power.

Solar panels: Commitment made Visible

If you’re sold on the benefits of renewable energy, like we are at Timberland,

you would cringe if you flew into sunny Ontario, CA and witnessed a sea

of warehouses with bare roofs. With an average 312 days of sunshine per

year it’s seems a shame that there is so much roof space without any

solar panels providing energy.

Two years ago this thought prompted us to build one of our most ambitious

renewable energy projects to date: a 400kW solar power system. Towards

the end of 2005, we began installing 1,932 solar panels at this facility. That

made it one of the ten largest corporate installations in California—and one

of the 60 largest installations anywhere in the world. Over the next 25 years,

the panels will produce 60% of the facility’s electricity needs—emission-free.

They’ll save 4,000 tons of greenhouse gases from being produced by

traditional electric power. And the energy they provide will be virtually

cost-free.9 For 30 to 40 years.

It pays to be socially responsible, in a lot of ways. For the energy savings.

For the protection against fluctuations in the cost of electricity. For the

protection against rolling blackouts that are caused by the over-constrained

electric infrastructure in Southern California. And for the financial incentive

that our electric utility, Southern California Edison, provides with a rebate

for businesses that generate clean power.

One payback we never counted on was the creative payback. Building

such a visible symbol of our commitment to environmental stewardship

ignited our employee’s imagination for identifying additional ways we

could do better. Projects that have spun off from this include green building

work in our new retail spaces, carbon offset projects for our corporate

events, and the introduction of more environmentally friendly materials

in our product.

Update: The Ontario solar array did not produce power in 2005. It

just recently passed its final inspection on March 15, 2006 and is now

up and running. Just another reason to be happy on a sunny day.

Renewable Energy breakdown

In 2005, renewable energy accounted for approximately 6% of our total

energy usage. With the delay of the Ontario solar array in 2005, this was

lower than we were hoping, but we did hit our stated goal for 2005. The

chart below provides the statistics.

Renewable Energy breakdown

Total Timberland Energy Use 37,089,047

Stratham, NH Solar Array 3,000

Enschede Wind and Hydro Power 1,518,292

Dominican Republic Wind Turbine* 30,000

Renewable Energy from the Grid 692,173

total Renewable Energy used 2,243,465

Renewable Energy as percent of total Energy used 6.0%

* Modeled power rating of turbine.


9 energy is cost free after the initial investment to install the array.

“We’re working to

reduce emissions wherever we can.”


Impact of Transportation

Transportation efficiency is evaluated at every level of Timberland’s

business, from the way we ship our product to our employees’ commute.

In particular, we have an initiative at our European distribution center to

analyze and streamline the shipping process both on inbound (coming

from the factory to the distribution center) and outbound (leaving the

distribution center for retail outlets) shipments. In the past four years,

we have been able to eliminate 3.6M kilometers of travel, resulting in a

reduction of approximately 11,700 metric tons of carbon, through the

following efficiency measures:

• Increasing the number of packages per barge

• Reducing packaging requirements

• Streamlining the order management process

• Reducing the number of shipments per week

While this is good progress, we consider it just the beginning. In 2006,

we will be focusing on how to collect similar data at our U.S. and Asian

distribution facilities, so that we may begin incorporating third-party

shipping emissions and emission reduction initiatives, similar to the ones

listed above, into our greenhouse gas emissions inventory.

Meanwhile, our group in Europe continues to search for new ways to

find efficiency in the process. There are many new initiatives that our

team is looking at for the near and long-term future. A continued focus

on improving utilization per carton shipped (fewer cartons shipped =

fewer trucks). Adjusting shipping frequency from daily to weekly when

appropriate. Implementing more direct shipments to our customers.

Use of railroad transportation for line hauls to Italy. The list goes on. We

will continue to evolve and search to find greater efficiency in our supply

chain and ultimately see improvements in both the environment and the

bottom line.


10 this chart assumes an estimated cost of $1.17 per driven kilometer in europe in 2005.

0

300,000

600,000

900,000

1,200,000

1,500,000

500,000

1,000,000

2,000,000

1,500,000

2,500,000

2,000

4,000

6,000

8,000

10,000

12,000

Total Carbon Reduction: Inbound and Outbound Efficiencies

0

300,000

600,000

900,000

1,200,000

1,500,000

500,000

1,000,000

2,000,000

1,500,000

2,500,000

2,000

4,000

6,000

8,000

10,000

12,000


inboUnd eFFiciency: cUmUlatiVe miles aVoided

1,500,000

1,200,000

900,000

600,000

300,000

0

112,772 397,032

863,032

1,218,590

0

300,000

600,000

900,000

1,200,000

1,500,000

500,000

1,000,000

2,000,000

1,500,000

2,500,000

2,000

4,000

6,000

8,000

10,000

12,000


12,000

10,000

8,000

6,000

4,000

2,000 2002 2003 2004 2005

total carbon redUction: inboUnd and oUtboUnd eFFiciencies

2,2414,710

7,777

11,699

making the link: Outbound Transportation

year avg Cost Kilometers Cost Savings of fuel10 avoided

2005 $1.17 849,450 $993,856.50

oUtboUnd eFFiciency: cUmUlatiVe miles aVoided

2002 2003 2004 2005

2,500,000

2,000,000

1,500,000

1,000,000

500,000 2002 2003 2004 2005

564,228

1,116,228

1,616,228

2,465,678

met

ric

tons

oF

carb

onm

iles

mil

es


Plans to Eliminate PVC

Polyvinyl chloride. PVC. A plastic used to manufacture everything from

beanbags to concrete. It’s also used to make apparel and boots. Large

quantities are widely used in the manufacture of Timberland® footwear.

Unfortunately, it has also been linked to human and environmental health

concerns. Cancer-causing dioxins can be released during production

or when shoes are burned after they’re thrown away. Softeners called

phthalates don’t bond well with PVC and can cause health issues. The

European Union has even banned six phthalates from children’s goods.

In terms of environmental health, phthalates can damage soil and water

supplies, and burning PVC can contribute to air pollution.

Activist groups like Greenpeace are already boycotting PVC-based

products, and other footwear brands like adidas, Asics, Nike and Puma

have also taken a stand. We want to do the right thing for ourselves, for

our customers and for those who look to us as a model of commitment

to corporate sustainability.

Timberland has volunteered to do its best to eliminate PVC from product,

where alternatives are available, by 2008. There are two challenges

to this phaseout. At present, we do not have alternatives for PVC outsoles

and Timberland PRO® midsoles that meet our performance standards.

Our Research and Development team and suppliers have been working

on solutions. In the meantime, we are making progress and, with proper

manufacturing, we can help eliminate the environmental risks of PVC.

We’re working with our suppliers and manufacturers to do just that.

[5.3] Collaborating to Minimize Chemical Use

These days it seems the sky is the limit to what you can design and produce. Modern chemistry and manufacturing

eliminate the need to choose between fashion and function. And shorter lead time and production time means quicker

turnaround for riding fashion trends. With the rapid pace of innovation, however, how do you make sure that what’s

being innovated isn’t harmful?

Our industry, like just about every other industry out there, relies on chemicals to produce our product. We wish we

could get pink leather hides from pink cows, but in reality we need to treat and process all our raw materials to make

products that people want to buy. We’re constantly challenged to make sure the products we design, the materials we

source, and the processes our factories use to manufacture our product are efficient in their use of resources and do

not incorporate chemicals that could harm a factory worker or end up in a product that harms a customer.

Our work in this area has focused on designing product that minimizes chemical solvents and favors water-based adhesives,

substituting compounds in footwear components for more sustainable alternatives, and implementing a restricted

substance program with our factories and suppliers. We are at the very beginning of this process and recognize how

important collaboration is for driving progress. By aligning with other footwear and apparel companies, we’re starting

to create a strong demand for non-hazardous alternatives that protect workers and the environment.


By aligning with other footwear and apparel companies, we’re starting to create a strong demand for non-hazardous alternatives that protect workers and the environment.


Reconciling Commerce and Justice: Water-Based Adhesives

Timberland is proud to be using water-based adhesives (WBA)—a

more environmentally and worker-friendly adhesive than solvent-

based adhesives (SBA)—in many of our shoes. This past year, while

progressing towards our goal of eliminating solvents in our footwear by

substituting solvent-based adhesives with water-based alternatives, we

hit a stumbling block. We discovered that some more complicated shoe

constructions are not suitable for WBA, therefore further research and

development is needed to convert those to WBA.

We first conducted studies at our Dominican Republic manufacturing

facility and found WBA to still be cost neutral. Then we engaged our

laboratory partner, SATRA, to determine whether adhesive application

standards could be created and taught to factory workers to ensure

that adhesive costs remained predictable. This testing will be completed

in 2006.

We halted the expensive transition process where both SBA and WBA

were applied in production. We now rely on laboratory testing and

production trialing for making decisions about switching to WBA for new

constructions.

Despite the real challenges to our assumptions about WBA, we were able

to produce 11.8 million pairs in 2005 using this environmentally friendly

adhesive. The commitment to drive WBA to 100% of Timberland®

footwear was not lost, but production realities did require a revisit on our

execution and was a primer for other material substitutions we might

make on our path to becoming a more sustainable enterprise.

Restricting Substances from Our Products

About a decade ago, we began our drive to ban substances from

manufacturing that could pose human health and environmental risks for

factory workers and for people who wear our product. We had suppliers

sign statements pledging that banned substances were not present in

the products we manufacture. Sometimes we even packed certificates

guaranteeing it into our boot boxes. In 2000, we decided to take more

decisive action with our suppliers and factories by introducing a restricted

substance list (RSL) that they were legally obligated to comply with. Our

progress since is summarized below.

2001: Our first RSL was developed as a short list of substances we had

banned from production since our effort began. There was no formal

auditing of the effort on-site, however.

2003: We became involved in a project aimed at creating a more

comprehensive RSL list. This became our unofficial guide for restricted

substances.

2005: Timberland joined AFIRM (Apparel, Footwear International RSL

Management), a cross-brand group geared toward sharing best practices

with regard to RSL. We also began drafting a comprehensive restricted

substance policy, testing protocol, as well as new restricted substance

lists for our apparel and footwear manufacturing.

Timberland is one of several brands that have been developing a restricted

substance program over the years. In general, we all have similar missions,

principles and approaches on this issue. Due to the different markets

in which we operate, our policies, lists, and requirements will always be

slightly different. In July of 2004, a group of the brands began discussing

how valuable it would be for our workers and our consumers to share

best practices and resources. AFIRM was formed with the goal of

contributing to product safety in these three ways:

1. Ensure that chemical product safety is understood as an integrated

whole, from workplace to consumer, throughout the world.

2. Help achieve a partnership in chemical product safety among retailers,

suppliers and manufacturers.

3. Encourage our suppliers and manufacturers to oversee chemical

product safety within their own spheres.

In 2005, we met to share best practices and develop tools to strengthen

our ability to manage restricted substances. We created a lab-auditing

protocol that will allow brands to verify that the labs they use to test

product against restricted substances are qualified to accurately test for

the chemicals and concentrations of concern. In 2006, the group will

focus on sharing updates on chemical legislation and conducting a joint

training for our suppliers on restricted substance list management.

11 assembly includes when Wbas are used in the production of the “upper” portion of the shoe. stockfit includes

the production of the midsole to the outsole. total production is the total amount of footwear produced by

timberland in 2005.


Water-based adhesiVes Used in timberland® FootWear prodUction11

30

25

20

15

10

5

0

29.8

2004 2005

total Footwear production Wba-stockfit Wba-assembly

29.2

7

1.4

8.4

3.4

mil

lion

s oF

pai

rs


Recycled Materials

Thanks to a big push from our materials team and a few outstanding

footwear suppliers, we’ve been able to incorporate recycled materials

into our shoes. Of the new products developed at the end of 2005,

nearly 95% of them incorporated at least one material with recycled

content. Hard to tell from the looks of your new shoes that there are

recycled contents inside. Where’s it hiding? See chart below.

The Case for Organic Cotton

What’s so great about organic cotton? It’s true that organic farming is

more labor-intensive than conventional farming. But just look at some

of the benefits:

• Healthier soil, due to organic plantings, crop rotation and tilling,

which retain soil nutrients

• Decreased water use, since the soil retains more moisture

• No chemical pollutants

• Protection of wildlife (especially birds, insects and healthy soil-organisms)

Conventional cotton cultivation, on the other hand, takes up about 5% of

agricultural land—but consumes roughly 22.5% of the world’s insecticides

and 10% of its pesticides. To put that into perspective: with conventional

farming, it takes about 1/3 of a pound of chemicals to grow the cotton for

a single T-shirt. Scary, isn’t it?

Clearly, organic farming provides a cleaner, healthier environment for

everyone. Yet, organic cotton fiber accounts for only one-tenth of one

percent of the overall supply. Demand is steadily growing, but supply

of organic cotton remains increasingly tight. Why? Because of lack of

market for the rotation crops. Because of the relatively difficult production

of cotton crop compared to other organic crops. And because low

conventional fiber prices adversely affect organic fiber prices and discourage

farmers entering into this market.

What We’re doing to plan ahead.

Our goal last year was to convert 5% of our cotton usage (or 540,000

pounds) to organic cotton. We didn’t make it. We actually used only

around 227,000 pounds, or 2.1% of our total cotton supply. While we fell

short of our target, it still represented a 36% increase in overall organic

cotton purchases12. While this is an improvement, it is not good enough.

We needed a better strategy. A tight supply of organic cotton and high

costs for the raw material translated into eye-popping price tags for

finished organic cotton apparel. Without a clear merchandising and

marketing plan to attract the right consumers and sell the product, we

had very little interest from our buyers. On the supply side we needed

to solicit more farmers to convert their land into certified organic cotton

fields. That generally takes about three years. Enter Timberland’s Cotton

Club and the Organic Exchange.

footWEaR ComponEntS

footwear Component total lbs. of material purchased Recycled content total lbs. of material saved from landfills

Lining materials 93,984 25% 23,496

Insoles: what your foot rests on 1,610,672 35% to 44% 573,696

Counters and box toes: the structural 2,190,570 21% 456,249

components of the shoe’s upper

[5.4] Resource Consumption

Recycled content materials. Organic fibers. Footwear and apparel manufactured with less energy, less water and

fewer chemicals. From boot to box to store shelf, we’re focused on making our products from materials that minimize

our environmental footprint. In 2003, we began blending cotton fiber grown without harmful pesticides or herbicides

into our apparel line. Since then, about 50,000 T-shirts used for promotional events have been made from 100% organic

cotton. And we’ve introduced a line of 100% organic cotton products. But we didn’t stop there. We’re also using renewable

and recycled materials in our stores, from floors and countertops made from recycled pine boards to store fixtures made

with repurposed materials. Even our paints and floor finishes meet green building criteria for low volatile organic content.

It’s all part of our commitment to using more sustainable materials in manufacturing. Expanding our use of “green”

building techniques. Improving our recycling practices. And helping to make sure there will always be trees.


12 167,000 lbs in 2004 to 227,000 lbs in 2005 represents a 36% increase in overall cotton purchases


The Cotton Club is an internal cross-functional team comprised of

merchandising, apparel design, environmental stewardship, marketing,

and continuous improvement employees who strategize on how to increase

our volumes of organic cotton. In 2005, we identified a quick bullet list

of tasks to get us back on target for our 5% organic cotton commitment:

• blend organic cotton into all of our organic apparel. This weans us

from conventional cotton without adversely affecting the price point of

our product.

• Establish “Earthkeepers” hang tags and point of purchase communi-

cation for organic cotton apparel to consumers about the benefits of

organic cotton.

• develop educational materials with Organic Exchange to train our

retail store associates on the benefits of organic cotton.

• analyze market trends for organic merchandise. Are our own retail

stores the only outlet where we should be selling 100% organic cotton

product or are there additional opportunities through wholesale to outlets?

The Organic Exchange, a non-profit organization committed to expanding

organic agriculture, worked with us on the supply side of the equation.

We learned that many farmers looking for organic certification operate

small farms and cannot afford the certification fee. The Organic Exchange

is working with farmers to organize cooperatives that divide the cost of

certification. They’re also soliciting organic cotton purchase commitments

from brands, like Timberland, to provide incentives for farmers to convert

all their land to organic agriculture. With big brands like Wal-Mart coming

on board, we hope to see the supply grow in upcoming years.

Working to Save Our Forests

For us, some of our happiest moments are spent hiking in the forest.

So we really hate to see our forests unnecessarily logged. That’s why we

began requiring post-consumer recycled content in our paper several

years ago, and it’s why we’ve always favored the use of reclaimed wood

for our building and store fixtures.

In 2005, we purchased over 100,000 lbs of paper for our corporate office.

As part of our agreement with our office product supplier, this paper has

a minimum of 30% post-consumer recycled content. What does that

mean to the environment? See the sidebar for a breakdown of the

environmental savings. In addition, our shoeboxes were made from 98%

post consumer recycled material, which saved over 200,000 trees from

being forested!

While our creative, catalog, and purchasing teams have been proactive

at doing better than 30% PCR with their procurement, we recognized

the need to create a formal policy with some metrics for tracking our

purchases, and targets for encouraging better practices. We created a

forest product procurement working group comprised of all the Timberland

individuals responsible for the procurement of forest products. The

group, with input from our suppliers and environmental partners, began

drafting a forest product procurement policy and identifying metrics. In

2006, we’ll be introducing the policy to our U.S. and international teams

and we’ll begin tracking our global consumption of forest products. Our

objectives are to continually increase the recycled content of our paper

purchases, give preference to Forest Stewardship Council (FSC) certified

wood products, and work to ensure that we do not source any products

from endangered or threatened forests. Given the complex chain of

custody associated with the various paper products that we use, we have

a long path ahead of us. Stakeholder engagement will be a key component

for driving achievable and sustainable progress in this area.


making the link: Environmental Effect of Purchasing Paper with Recycled Content

total paper purchases* 102,123 lbs.

total post-Consumer Recycled Content 31,254 lbs.

Average post-consumer recycled content 30.60%

Greenhouse gas emission reduced (Co2) 32,941 lbs.

Equivalent number of average US cars not 2.99

driven per year

Water saved 136,735 gallons

trees saved 375 trees

Wood resources saved 93,761 btus

total Energy Saved 265,659,000 btus

Energy Equivalent to Oil Saved 1,898 gallons

Equivalent number of Average US homes 6.83

heated per year

Energy Equivalent to electricity saved 75,642 kWh

Equivalent number of average US homes 6.67

powered per year

* This represents paper purchases at our corporate headquarters.


Sourcing Leather

Performance. Ruggedness. Heritage. These are the reasons why

leather is crucial to the business of Timberland. When we talk about

our environmental footprint, nothing is more important than this

quintessential ingredient of our boots and shoes. To get the uniform

appearance our customers want, the hide undergoes several processing

steps that are chemical-, energy- and water-intensive. A life-cycle

analysis performed on Timberland’s classic yellow boot found that leather

accounts for 8% of the energy, 78% of the Greenhouse gas emissions,

70% of the water, and 77% of the waste associated with the product

over its life. Reducing our environmental impact means working closely

with our tanneries on their environmental management systems.

the tanning process in a nutshell

Leather is a waste product of the meat-packing industry. There are three

main technologies used to turn a raw hide into the finished leather that

makes it into your shoes: Chrome-tanned leather represents the majority

of leather we purchase because is the only leather capable of making

lasted (or heat-shaped) shoes as well as waterproof shoes.

As you can see in the chart below, a look at the lifecycle analysis for these

different tannages shows that there are pros and cons to each process and

no clear winner. Currently the best way to reduce the environmental impact

associated with leather tanning is to purchase leather from well-managed

tanneries.

What We’re doing about leather tanning

Timberland performs annual on-site assessment of all of our tanneries,

to evaluate how well their environmental practices conform to our

standards. We explore chemical, waste, water, and energy management,

the presence of environmental hazards such as asbestos, PCBs and

restricted substances; we require compliance with local permits; and we

score tanners on how far above and beyond the requirements they go to

reduce their environmental footprint when it comes to energy use, solid

waste and water recycling.

tannery Environmental forum

A developing industry trend in supplier auditing is to create and implement

cross-brand audits. Timberland is participating in a multi-brand group

that is expanding upon the scope of individual brand audits to create

a more comprehensive environmental audit for tanneries. The group’s

objective is to make the multi-brand auditing protocol the common

environmental assessment process for brands and tanners. The new audit

is being tested in tanneries and will officially be launched in late spring

of 2006. Cross-brand groups are being developed to apply the same

model to apparel factories. Eventually, Timberland could move all of its

environmental audits in this direction.

tannery Innovations We Support

In addition to assessing our tanneries, we’re also doing our best to look

ahead at new technologies and processes that can help us use leather

that’s good for the planet, too:

• Vegetable-Based Tanned Leather: Featured in a Timberland line

called Earthkeepers™, this material has potential if water baths can

be recycled and energy is derived from cleaner sources.

• Wet-white: Also featured in the Earthkeepers™ line, this leather has

benefits if it’s produced in a tannery with a certified, well-developed

chemical management program, as the chemicals are easier to treat

and sort out in waste water.

• Recycled content projects: One example is leather board, which is

ground up factory waste leather scrap that is bonded with adhesives

and molded into shape to make welts and midsoles.

• Gasification of leather waste: This technology, currently being explored

in our Dominican Republic factory and with some of our tannery

partners, has the potential to convert waste leather into energy. This

process also separates the chrome from leather, allowing the chrome

to be recycled.


tanning method definition pros Cons

Vegetable-based Uses vegetable extracts to dye leather in a series of Uses more environmentally Uses more water and energy concentrated dye-baths friendly chemicals

Chrome Uses chromium (inert Chrome 3) to seal the pores of The most energy- and Produces product, and sometimes the leather and allow bonding of the chemical dyes water-efficient method waste water, that can convert to a carcinogen if incinerated at end of life

Aldehyde, or wet-white Uses the aldehyde family of chemicals to tan leather Produces heavy-metal-free, Relies on chemicals that must be instead of chrome biodegradable leather carefully managed to ensure worker safety

“We think that open dialogue leads to

improvements, from products to processes to market share. Our latest initiative for increasing

our transparency is labeling our product in a manner more familiar

to you with food than with footwear.”


About the EcoFacts Label on Mion™ Footwear

Our distinctive new brand of Mion™ footwear is all about people who love

to play in water. It’s also about setting an example as a steward of our

planet’s limited resources. When you pick up a box, you’ll see exactly

how Mion™ footwear is designed with the environment in mind. By its

EcoFacts label, a first for Timberland. With one glance you see that Mion

offsets 100% of the energy used to manufacture the sandals with Green-E

certified renewable energy. That its distribution center is 60% powered

by the sun. That Mion™ sandals are manufactured in a way that produces

very little waste and uses very little energy (less than 1/3 the amount of

electricity that it typically takes to manufacture a pair of shoes).

Introducing “Nutritional Labels” on Footwear

We think Mion set a pretty darn good example. Beginning this year, retail

consumers will see something they’ve never seen before: “nutritional

labels” on footwear boxes. This new initiative—the first in our industry—is

designed to give you an informative picture of that product. Including

where it was manufactured and how our business impacts the environment

and communities we live in.

Our new labels are just a part of a whole new packaging initiative for

Timberland. Here are some other highlights:

• Footwear boxes made of 100% recycled fiber

• Labels printed with soy-based inks

• Communication about our company’s social and environmental

values,

• Dual purpose box liners. For example, each Outdoor Performance

shoe comes in reusable, biodegradable bag that describes the Leave

no Trace principal for outdoor recreation. You can take on the trail

with you to carry out your garbage. Children’s footwear boxes include

tissue wrap with a key for tracking animal footprints. Mion™ sandals

come in a dunk bag for carrying supplies for your water sports.

Our Footprint Notre EmpreinteEnvironmental Impact Impact sur l’environnement

Energy to Produce: (per pair)* 3.1 kWhÉnergie utilisée (par paire)* 3.1 kWh

Renewable energy (Timberland-owned facilities): 5%L’énergie renouvelable (sites appartenant à Timberland) : 5%

Community Impact Impact sur la communauté Hours served in our communities: 119,776Nombre total d’heures données : 119,776

% of factories assessed against code of conduct:* 100%% d’usines évaluées pour leur conformité au code de conduite :* 100%

Child labor:* 0%Main-d’oeuvre enfantine :* 0%

Manufactured Fabriqué àYoung One, Bangladesh Young One, Bangladesh

*metrics based on global footwear production for 2005*informations fondées sur production totale de chaussures en 2005

FOR MORE INFORMaTION vIsIT WWW.TIMBERLaNd.COM/CsRREPORTPOuR PLus d’INFORMaTIONs : WWW.TIMBERLaNd.COM/CsRREPORT

[5.5] Identifying the Ingredients for Social Responsibility

At Timberland, we think it’s important for you to know what you’re buying. It’s the only way you can make an informed

choice. Besides, we think we have a great product, so we’re happy for you to know all about it. We have nothing

to hide, which is not to imply we don’t have our problems. We do believe in being honest in our annual reports, in

this Corporate Social Responsibility Report, and even in our packaging. Open dialogue leads to improvements, from

products to processes to market share. Our latest initiative for increasing our transparency is labeling our product in

a manner more familiar to you with food than with footwear. Read on to see what we mean.



Keeping Score of Our Environmental Impact

About a decade ago, we decided that we needed a Code of Conduct

written into all legal agreements, to make sure our vendors, tanneries

and major suppliers “Make it better” for all workers, by meeting certain

standards in the workplace. We’ve since expanded our assessment

process to include environmental performance.

What happens is this. A Timberland Code of Conduct team trained in

our environmental standards interviews apparel and footwear factories,

tanneries, and large material suppliers. The idea is to make sure

human and environmental health are protected and best practices in

environmental management are encouraged. As we’ve done with

tanneries, we search for environmental hazards such as asbestos

and PCBs, look at chemical, water, waste and energy management

systems, and score factories based on how far above and beyond

compliance they go with their environmental measures.

We’re a long way away from the old days of auditing—which is akin to

policing our factory base. Today we take a collaborative approach with

our suppliers. Our assessors act as consultants, helping our factories

find innovative and economical ways to make things better.

[5.6] How We Measure Environmental Performance in Our Supply Chain

At Timberland we don’t just say we care about the environment, we’re keeping score on how we’re treating it. At

footwear factories. Tanneries. Apparel factories. We’re constantly developing systems that help us track and manage

high-priority environmental issues.



ouR GoalS foR 2006

1. Climate Change: Verify greenhouse gas emissions inventory and progress towards bold goal of becoming carbon neutral by 2010. Climate

change is one of the most pressing environmental issues of our time, but it’s an issue we can tackle with continued reductions in our energy

demand, efficiencies in shipping, investments in renewable energy and carbon offsets, and through service, such as tree planting, which

sequesters carbon from the atmosphere.

2. Environmental assessments: Expand the scope of environmental assessments and develop incentives for factories and suppliers to reduce

their footprint. Key to this effort will be developing our cross-brand initiatives and training.

3. product: Improve the environmental performance of our products. Through our water-based adhesive initiative and restricted substance

program we will reduce solvent use in our footwear and ensure that our product is kept free and clear of dangerous chemicals. We will also

continue the phaseout of PVC. Organic cotton and other sustainable fibers such as bamboo and hemp will grow in our apparel line. We are

excited to pilot a material rating system that will score our materials based on their environmental impact over their life cycle. The goal is to

get this tool into the hands of our designers so that they can make informed material choices from the start.

4. Systems: Develop systems for tracking and improving our procurement and waste management practices. In 2005 we created internal

working groups to establish baselines and identify targets to achieve annual reductions in natural resource consumption. Some of these goals

were submitted as part of our annual U.S. EPA Waste Wise report. We look forward to making progress against our goals and engaging more

external stakeholders in our working groups and goal setting during 2006.

Voices of Challenge: PATAGONIA, INC.

I am a total pessimist about the fate of the natural world. In my lifetime I have seen nothing

but a constant deterioration of all the processes that are essential to sustaining life on

Planet Earth. I agree with E.O. Wilson who described the time that we live in as “nature’s

last stand.” We are the last generation that can experience true wilderness.

I am a pessimist because I see no will in society to do enough about impending doom.

But I am a happy person, because I have discovered that the cure for depression is action.

Patagonia exists as a company to inspire and implement solutions to the environmental

crisis. What follows is a summary of our environmental philosophy.

1. Lead an examined life. Most of the damage we cause to the planet

is a result of our own ignorance. And it’s hard to find real answers.

Asking one or two questions might just lead to a false sense of

security. The first step on the path is to truly understand the issues

at stake, as well as your own culpability.

2. Clean up our own act. In 1994, after a detailed environmental

audit, we made a commitment to use only organic cotton. It was a

decision that increased the cost of our fabric by three or four times

and required us to reduce our entire cotton line from 91 to 66 styles.

But in the long run, not only was this the right thing to do for the

environment, it was the right thing to do for the bottom line. Every

time we’ve elected to do the right thing, even when it costs twice as

much, it’s turned out to be more profitable.

3. Do our penance. No matter how hard we try, everything we do

causes some waste or pollution. So the next step is to pay for our sins.

Patagonia has given more than $25 million to environmental causes

over the years, but the most important thing that we have ever done

as a business was to help start an organization called One Percent

For The Planet. One Percent is a network of companies that give at

least one percent of their sales to environmental causes. As of May,

2006 there were more than 300 corporate members of 1% across 14

countries and in just about every industry imaginable.

4. Support civil democracy. Activists are the most powerful agents

of change in our society. This was true when John Muir helped inspire

Teddy Roosevelt to create Yosemite National Park. It was true when

Rachel Carson helped launch the modern-day environmental movement.

And it still holds true today.

5. Influence other companies. One of the main reasons that we

continue as a company is to demonstrate to others that it’s possible to

run a successful business under the constraints of our environmental

philosophy. It’s promising to see companies like Nike and Timberland

using organic cotton. But it will take much more collaboration to

reverse the course that we’re on.

If reading these words inspires one action, let it be supporting One

Percent For The Planet. One Percent is a movement that every one of

us can join. As a consumer, check the list of members before you make

a purchase from a non-member and encourage non-member companies

to join. If you work for a business, consider becoming a part of the

network. Together, we can inspire a revolution.

Yvon Chouinard

Founder and Owner

Patagonia, Inc.

...it will take much more collaboration to reverse the course that we’re on.


6.0 Community Involvement

[6.1] Working Together for a Strong Community

Making communities strong. Healthy. Environmentally sustainable. We want to engage our stakeholders in this vision

of community. At Timberland, we are committed to the connection of commerce and justice and its ability to improve

the quality of life for employees and the communities in which they live. We are passionate about driving civic

engagement through global service initiatives and strategic investments with the end goal, always, to “Make it better.”

Making It Better in 2005

In order to help our employees make a difference in the world, we

focused on a number of key strategies in 2005:

• Share stories of how employees have affected social justice by living

out our values.

• Engage our stakeholders in our Path of Service™ program (more on

that below.)

• Invest resources where we think they’ll have the most impact, worldwide.

• Communicate our corporate values and encourage employees to

embrace them.

• Lead the development of the Global Stewards Program13.

We believe that communicating functions like these is essential to

achieving our own goals for community service—for our own brand,

and for peer organizations, too.

The Case for “Themed” Service Events

At Timberland, we’re doing our best to become the company you think of

for community service. We believe that in order to accomplish this goal,

we need to be innovative. Larger companies are reporting the number of

hours employees devote to corporate-sponsored service in the hundreds

of thousands. We couldn’t be happier that other organizations have

embraced the idea of service as vital to the organization’s relationship

with its community. But as a medium-sized company, we will never be

able to report as many hours as our larger counterparts. While service

sponsored by an organization is vital to a local community, we realize the

need to be pragmatic about our approach. When you come right down

to it, what really matters to a community isn’t how many hours were

spent in service—it’s how much actually got done. That’s what led us to

develop “service themes” for our community events.

It used to be that our employees would serve any way they wished, for

any cause they wished. We applaud that effort, of course. And we’ve

tried to boost its effect by developing specific objectives best suited to

the partner organization. By being able to report back on how many

play spaces were built or how many trees were planted, for example,

we’re better able to measure the impact of our employees’ efforts. And

that gets to the crux of the matter: activity versus impact. We want to

push our efforts and analysis past the activities and really drill down on

the impact of our service events. Still wonder what we mean by this? A

perfect example is the “Community Revitalization” theme for our annual

Serv-a-palooza event.

[6.2] Our Approach to Community Service

Employees. Customers and consumers. Business partners. Other socially responsible organizations. These are four

key stakeholders. And we want to do our part to keep them active in social service throughout the year. Attending

meetings, conferences and other events. Keeping them informed, inspired and engaged. And building civic leadership.

One way we want our approximately 5,500 employees to impact their communities is through a benefit we call the Path

of Service™ program. This program enables full-time employees to contribute up to 40 paid volunteer hours per year.

It’s more than charitable giving. It’s a way of supporting an ethic of citizen service to the community. Making it stronger,

healthier and safer. We also encourage activities to protect the natural environment, to promote sustaining it for future

generations to enjoy.

13 the Global stewards program extends the reach and impact of our csr team through a network of 24 stewards, located around the world, who will ensure that our csr initiatives play out with consistency and impact worldwide.

this program was rolled out in 2006.


The Results for 2005

In 2005, Timberland employees served more than 65,000 hours in

the community. The number of volunteer hours served by Timberland

employees increased by 18% over last year, and engagement with

external partners in service increased by approximately 45%.

2005 Serv-a-palooza Service theme: Community Revitalization

Serv-a-palooza is Timberland’s premier showcase of civic engagement. In 2005, it marked its 8th year with a focus on “Community Revitalization.”

The chart below highlights the three focus areas for Community Revitalization and the types of service that align under each theme.

Environmental Sustainability: • Expand/beautify public green spaces

Revitalize the natural environments • Protect conservation land

where we live and work • Extend reach of organic/local farming

• Protect local habitats

Hunger & Housing: • Expand, clean or paint facilities

Improve the physical capacity of organizations • Sort, organize food

addressing hunger and housing • Build new homes

• Refurbish old homes

• Extend reach of agencies by building new

systems to better meet needs of clientele

play Spaces, learning Spaces for Kids: • Expand and beautify schools and school yards

Build and beautify places where children learn and play • Refurbish public parks and ball fields

• Expand, clean, paint or organize libraries, after-school

program facilities, or other places where children congregate

In 2006, Timberland will repeat this theme and will measure year over year results of our service in the community. Just another way we

can drill down to understand the impact of our service activities. Look for an in-depth discussion of these results in our 2006 CSR report.

6.0 Community Involvement (continued)

2005 EmployEE EnGaGEmEnt ExtERnal EnGaGEmEnt

Region End of year totals yr/yr Increase HuR non-tbl yR/yR Increase Employee Hours (Hours utilization Rate) Volunteer Hours non-tbl hours

North America 35,699 24% 50% 39,605 28%

EMEA/CASA 12,516 16% 36% 11,136 156%

Asia 5,408 18% 18% 4,585 -1%

Caribbean 11,516 4% 16% 3,408 481%

total Hours 65,139 18% 31% 58,734 45%

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

tImbeRlAnD emPloyee SeRvIce houRS

2001 2002 2003 2004 2005

30,60038,700

46,21955,008

65,139


Hours utilization Rate

Every year, we make 40 hours available to Timberland employees for

community service through our Path of Service™ program. Worldwide,

our Hours Utilization Rate (HUR) increased from 28.8% in 2004 to

31.3% in 2005. While we were delighted to see a year-over-year increase,

we realize there is a lot of room for improvement. In other words, less

than one-third of the time available was used to “Make it better” in the

world. That’s a lot of hours left unused.

As a company, we pride ourselves on the ethic of service. So, we know

we have work to do. Our first step is to try to understand better what

motivates employees to serve in the first place. To accomplish that,

we’re looking first to see where volunteering occurs within Timberland’s

operations in North America. We hope that what we learn will help us

to focus our service recruitment efforts in the future. We plan to include

our results in our 2006 Corporate Social Responsibility report.

benefit utilization Rate

The other metric we use to gauge our service is the Benefit Utilization

Rate (BUR). This metric tracks the number of Timberland employees

engaged in service, rather than the number of hours served. More spe-

cifically, it counts how many employees gave at least one hour of service

in a given year. In 2005, the answer was 68% of our global workforce.

That made us feel better. But we have come to realize that our method

for determining the indicator is a little rough. After all, every year, some

people leave the company, and others join us. Not only that, but people

change jobs within the company, and many of our employees are temporary

or part-time. All these variations make determining a headcount for

2005 a little tricky. Up until now, we have done our best to approximate

this number. To solve this problem, we’re currently working with our IT

department to come up a system that will capture this data more accurately.

Challenges and opportunities

Based on our results, we’ve set a number of goals for ourselves in the

form of challenges to meet our ultimate goal of a 20% increase in hours

(to approximately 78,000 hours) in 2006:

• the challenge: Raise the percentage of employees engaged

in Serv-a-palooza this year (up from the 39% of North America

employees involved in 2005).

the opportunity: Find ways to communicate our strategy better

and encourage involvement.

• the challenge: Help our regions in Asia and Europe become less

dependent on Serv-a-palooza and Earth Day to reach the regional

goal of increasing service hours by 20%.

the opportunity: Find common interests to link departments or

subsidiary offices, using an “adopt-an-agency” model.

• the challenge: Find ways to reduce the budget restraints that are

inhibiting employees from becoming more socially involved in the

Dominican Republic.

the opportunity: If production is slow, engage employees in service

activities, rather than sending them home.


SPOTLIGHT ON EARTH DAY 2005On April 22, 1970, the first Earth Day was held to address concerns about the growing

environmental crisis. Thousands of schools and communities nationwide participated in this

grassroots event. Today, it is an annual international event, dedicated to seeking solutions to

pollution and poverty, promoting peace and appreciating the wonder of life and the potential

of the human spirit.

2005 EaRtH day HIStoRICal GRoWtH CHaRt

year total Volunteers % tbl Employee/ total Hours Served annual % Growth***

% tbl Consumer

1998 1,379 29% / 71% 6,197 —

1999 919 37% / 63% 4,433 (28%)

2000* 1,058 38% / 62% 5,085 15%

2001 1,112 41% / 59% 5,772 14%

2002 980 38% / 62% 7,600 32%

2003** 3,300 30% / 70% 15,824 108%

2004 4,712 30% / 70% 23,304 47%

2005 5,809 40% / 60% 34,012 46%

* First year Asia involved ** First year US, Asia and Europe all involved *** Growth measured in hours, not volunteers.

Earth Day is an important date on the

Timberland service calendar. All employees

are encouraged to join in its mission, with

these results last year:

• Employee leadership: 253 employees around the world (that’s

10% of our participating 2,521 employees) led projects on Earth Day,

either directly or indirectly.

• Growth Rates: All regions significantly increased the number of service

hours volunteered over the previous year’s total—with Asia leading the

way at 100% growth!

• newcomers to the Effort: Our Global Supply Chain increased its

involvement in 2005, with the Danville, Ontario and Dominican

Republic teams joining Puerto Rico for a combined total of 2,742

service hours. Plus, 5 new stores in Europe observed Earth Day,

including first-time partners from Sweden and Switzerland.

• milestones: Not only did Team Timberland surpass the 30,000-hour

mark for the first time, but the 6,202 volunteers who served for Earth

Day made this our single largest service event to date.

2005 SERV-a-palooZa HIStoRICal GRoWtH CHaRt

year total total total annual

Volunteers projects Hours Served % Growth**

1998* 1,000 25 11,000 —

1999 650 12 5,200 (35%)

2000 700 15 5,600 8%

2001 1,100 17 8,800 57%

2002 2,200 61 17,600 100%

2003 4,099 158 29,765 69%

2004 3,669 108 27,061 (9%)

2005 5,363 173 44,246 64%

* Launched in 1998 as part of 25th anniversary of the company **Annual % growth in number of hours served

• Global Growth: Serv-a-palooza ’05

generated our largest number of volunteer

hours to date—17,000 hours more than

2004’s event. That’s a growth rate of 64%

in volunteer hours and 46% in the total

number of volunteers.

• Regional Growth: With the exception of

Asia, in 2005 all regions met or surpassed

their growth target of 20% over the previous

year. These are a few of the key results; see

the chart to the right for more details.

SPOTLIGHT ON SERV-A-PALOOZA 2005Serv-a-palooza is Timberland’s premier showcase of employee leadership

and civic entrepreneurship. In 27 countries, hundreds of team members

dedicate their time, passion and skills to “Make it better” for their local

communities—and the world. Let’s take a look at how successful this

initiative was in 2005:

REGIonal RESultS

Region Rate of Increase: Rate of Increase: number number

Volunteer Hours number of of projects of Countries

Volunteers

North America 146% 111% 91 2

EMEA/CASA 31% 25% 38 22

Asia -6% -12% 9 8

Caribbean 32% 20% 35 2

SPOTLIGHT ON OUR HURRICANE kATRINA EFFORTS

Like so many others in this interconnected mosaic spanning states, regions and

coastlines we call America, all of us at Timberland felt pain, grief and frustration

as we watched our brothers and sisters in the South in despair and in need of

our help in the wake of Hurricane Katrina last August. Individual employees across

the country and around the world immediately mobilized to assist the massive

relief effort. Training for the American Red Cross. Pooling funds to donate to

disaster relief. Offering prayers and support. As a company, as new details emerged,

we immediately evaluated how we could increase our commitment to those most

gravely affected. As our efforts evolved, these are the areas we focused on to

“Make it better”:

• Cash donations and In-Store fundraising: In addition to Timberland’s corporate donation, employees expressed their generosity through a

one-time payroll deduction. A combined total of $38,027 cash was donated to the American Red Cross. All U.S. retail stores were also equipped

to accept and direct customer donations to the organization.

• Employee Sabbatical: In response to the emergency, we established a mini-sabbatical to provide for on-site recovery, clean-up, relocation and

long-term efforts through community service. Eleven employees from our Stratham, New Hampshire headquarters signed up for the three-week

sabbatical, receiving Red Cross disaster relief training and venturing to the Gulf Coast region to lend support.

• product donations: As evacuees from the devastated Gulf Coast area were transferred out of the region, we arranged to donate products valued

at $60,000 to various organizations. Additionally, employees were encouraged to donate personal goods to their local Salvation Army.

SPOTLIGHT ON OUR HURRICANE kATRINA EFFORTS (continueD)

HElpInG to Staff an InVEntIVE RElIEf CEntER

In an emergency such as the aftermath of

Katrina, sometimes the toughest problem is

getting help to those who need it—fast. On

September 28, 2005, five Timberland employees

volunteering in the Gulf Coast helped the

American Red Cross launch an innovative

program: a drive-through service center in

Slidell, Louisiana. Created out of the need to

supplement a fund-request hotline that had been

overwhelmed by evacuees, the drive-through site

was designed to register survivors and disburse

funds to those in urgent need.

Six traffic lanes at an abandoned retail outlet

mall were set up, enabling some 70 volunteers

to process up to 170 emergency financial

assistance applications an hour, serving multiple

families simultaneously. The center processed

an average of 1,300 cars daily during the first

nine days of its two-week operation. In all,

more than 55,000 survivors were served by

the drive-through site, which distributed over

$19 million. Timberland was proud to send

employee volunteers to the site to “Make it

better” for those in need.

VoICE of tHE EmployEE: HuRRICanE KatRIna

dottIE daWSon, Customer Service

Impressions from the Gulf Coast

Talking with, crying with, mothers and grandmothers—hearing their

heart-wrenching stories. Playing with the children to ease the anxious,

fearful look in their eyes and then having to watch them return to who-

knows-what may be left of their homes. To tell this story is one thing, to

actually experience this disaster has been life changing.

tRoy bRoWn, Senior director of Ecommerce

Recalling the impact of the experience

My experience working in Slidell was emotionally, physically, and mentally

intense. Every day, I witnessed extreme examples of the best of humanity

and the worst. Every day, volunteers and hurricane survivors on our

line fell out due to heat exhaustion, mental stress, or other reasons.

Almost every day, the volunteers slept in different places (I slept in 8

different places in 19 days). You really see what you’re made of and what

you’re capable of in situations like these. I also learned to keep what’s

important. My family now takes a higher priority. In retrospect, the fact

that Timberland would allow me to take a 3 week service sabbatical was

a gift not just to the victims of Hurricane Katrina, but it was also a gift to

me and my family for which I’ll be forever grateful.

Raymond maRK, point of Sale analyst

Reflections on the role of community in community service

Although the most obvious service was what we did down in Louisiana,

so much of the work was done by others elsewhere: from my Timberland

teammates who encouraged me to go and covered my work, to the

company staff members who organized our service, to the local Louisiana

volunteers who showed amazing hospitality and looked out for our

safety. Yes, community service is about giving service to a community

(even if the community is over 1500 miles away from where you are!),

but it’s also about a community enabling that service to happen. And

for that I’m thankful.

You really see what you’re made of and what you’re capable

of in situations like these

SPOTLIGHT ON OUR HURRICANE kATRINA EFFORTS (continueD)

SERVICE SabbatICal pRoGRamS

Work and Serve mini Sabbatical Service Sabbatical

description Flexible service schedule enables Employees serve full time for up Employees serve full time for up to six

employee to serve part time with to three weeks to meet a defined months to complete a defined capacity

an NPO/NGO while maintaining short term need in an NPO/NGO building project in an NPO/NGO.

Timberland work responsibilities

Expected Impact Build capacity in the long term Meet pressing needs in the short term Build capacity in the long term

and build capacity in the long term

Work at timberland Part-time None None

term Up to six months part time (up to Up to three weeks full time Three–six months full time.

2 days per week for up to 52 weeks)

Examples An employee works part time with Skills Sabbaticals: employees match An employee works full time with an

an NPO/NGO to develop a new their skill sets with a specific short term NPO/NGO to develop a new and

training program. need of an organization. independent revenue stream to fund

disaster Response: employees respond programs.

to an external call to provide relief

services in the wake of a disaster.

KatRIna’S ImpaCt: ExpandInG of SERVICE SabbatICalSWhen the Timberland volunteers returned from serving in the Gulf Coast, Timberland’s CEO asked them to drive an effort to expand our sabbatical

offerings. The team created a proposal and worked with Social Enterprise and Human Resources to finalize it. The result was two additional options

to the traditional service sabbatical.

Like our flexible work options, Timberland now offers all eligible employees15 a choice of service sabbatical opportunities. All three models provide

employees with an opportunity to serve while receiving full salary and benefits. A chance for professional development while working on projects that

reflect their individual passions. So out of our response to a national disaster came the development of a program that will help “Make it better” in

communities around the world for years to come.

paRtnERInG In tHE Gulf CoaSt

Share Our Strength (SOS). AmeriCares. The Red Cross. Here’s how Timberland worked with each

of these outstanding service organizations in the Gulf Coast:

Share our Strength (SoS)

www.strength.org

has a strong network in the Gulf Coast region

that provides critical resources to people in

need. That network was devastated by Katrina

and needed to be rebuilt quickly. Timberland

did what we could to help. We sent a small

group of employees to Washington, D.C. to

help organize and plan SOS’s “Restaurants

for Relief” event, through which

participating restaurants could donate a

portion of one day’s proceeds to a Hurricane

Katrina relief fund that enabled SOS to

rebuild its network in the region.

ameriCares

www.americares.org

is a worldwide humanitarian relief

organization. Following both the Tsunami

and Hurricane disasters of 2005, we

followed AmeriCares expert advice about

what was needed on the ground in those

communities. Working through their

well-established network of local non-profit

organizations we were able to distribute

our product where it was needed most.

the Red Cross

www.redcross.org

is a first responder organization that provides

on-the-ground emergency relief in the form

of food and shelter immediately following

a disaster. We sent employees on a “mini-

sabbatical” in the Gulf to support the Red

Cross when the need was the greatest,

handing out debit benefit cards, and

serving food.

15 to be eligible, employees must have 12 months’ continuous employment at timberland, a satisfactory work record and a manager’s approval.


[6.3] Measuring the Impact of Community Service

How do you know whether your efforts are having any effect? In our effort to find an answer to that question,

we decided to look at one of our own community partners: City Year. Our 15-year association with City

Year is a strong illustration of how we do our best to “Make it better” in our local communities. We recently

learned about a study that was performed on City Year Alumni that analyzed what types of leaders this

program creates.


A Case in Point: City Year

Founded in 1988 by two Harvard Law School students, City Year

(www.cityyear.org) is an international organization whose mission is to

build democracy through citizen service, civic leadership and social

entrepreneurship. A critical element of the mission of City Year is to

train youths to become citizen leaders, with a lifelong commitment

to leading active, thoughtful and effective civic lives.

A leading research firm, Policy Studies Associates (PSA), recently

conducted a historic study of the men and women who serve as City

Year corps members16. A surprisingly high number (2,100) of City

Year alumni responded to a mail survey sent by PSA. The goal was to

compare City Year alumni with other members of the community. What

they found is that:

• City Year alumni are 45% more likely to vote than other 18 to 40-year-olds

nationwide.

• City Year alumni are 65% more likely to engage in volunteer activities,

with nearly 70% volunteering 10 hours a month.

• At least 90% of alumni gained leadership skills through their City Year

experience.

• Working as a team and working with people from diverse backgrounds

were part of the City Year experience, according to over 90% of alumni

surveyed.

• 75% of City Year alumni are involved in problem-solving within their

own communities.

• More than 75% of City Year alumni belong to civic organizations, a

significant increase over the national average of 29%.

• Although 83% of alumni came to City Year without a high school

diploma or GED, fully 81% of alumni continued their education after

City Year.

In other words, no matter what yardstick you use to measure civic

engagement, PSA’s analysis reveals that City Year alumni excel. It’s these

kinds of results that make us humbled—and proud—to be a City Year

community partner.

16 http://www.cityyear.org/about/pressroom/natenews.cfm?date=01-06&v=1&i=6&article=s3

making the link: Community Service and Employee Retention

Total Employees (annual average) 5,448

For the average company, the annual 1%

percentage of employees that leave a

company that the company wanted to

retain*

average number of valuable employees 54 lost for a company timberland’s size

Based on the 2005 Employee Survey, 70%

the percentage of employees who say our

commitment to the community and our

Path of Service™ program play a strong role

in their decision to stay at Timberland

number of employees retained due to 38 timberland community service work

Average cost of losing and replacing one $30,000

good employee**

annual savings from investing in community $1,144,080 service programs

* The Sustainability Advantage, Bob Willard

** U.S. Department of Labor

http://www.cityyear.org


BUILDING WITH BOOkS (www.buildingwithbooks.org)

our grant funded the construction (by volunteers)

of a primary school in mali, West africa.

SUSTAINABLE SOUTH BRONx

(www.ssbx.org)

our grant funded an education project to train

low-income community residents in ecological

restoration skills, so they can obtain employment

in horticulture, landscaping and bioremediation.

ETVA (Escuela Timberland de Vela Adaptada)

(www.advela/net/etva/default/htm)

Founded in 1998 in barcelona, spain and supported

by timberland since 2000, etVa teaches sailing to

disabled people to help increase their social integra-

tion, self-esteem and independence.

[6.4] Investing in the Community

City Year. Share Our Strength. Earthwatch. These were among our major community partners last year. There were other

community-based organizations we supported, too. We don’t give to our local partners because we want applause from

the community. We give because we’re part of the community. The chart below shows a few of the 40-plus organizations

to whom we distributed donations to in 2005, through our Community Investment Competitive Grants Program.


Our Community Investments

At Timberland, we believe in strengthening communities through service

and through the actions and beliefs of individuals committed to the

common good. We also know that sustained change is advanced through

strategic investments in partnerships, innovative non-profits and high-impact

programs. To forge locally based solutions to critical needs, we assess our

portfolio of options—transformational service events, financial resources,

in-kind donations, loaned executives through Service Sabbaticals,

capital investments, strategic partnerships and board leadership. Working

collaboratively with stakeholders and across our company, we make

informed decisions for powerful change.

While we are challenged to assess a monetary value of this comprehensive

commitment, we are mindful that corporate donations—both cash and

in-kind—is one indicator with precise measures. Each year, we track

donations as a percentage of income and as one of the inputs against

our holistic approach to community involvement. It is important to note

that we will never decrease our contributions based on a decline in profits.

Our commitment to communities and to our strategic partners is steadfast.

Our annual financial support varies based on several factors including

natural disasters and the growth of our service events. Community

investments represent requests by employees and partners to resource

defined opportunities for impact and transformation against defined

giving criteria. These donations are focused in the areas of citizen

service, environmental stewardship and disaster relief.

tImbERland InVEStmEntS 2004–2005

year Charitable Contributions* previous year’s operating Income** Giving as a % of operating Income

2004*** $3,931 $184,302 2.10%

2005 $3,813 $233,900 1.60%

notes:

* Company-wide charitable contribution figures are consistent with figures reported to the IRS

** Operating Income figures derived from Timberland Annual Reports

*** Contributions reported are subjected to change as they become finalized with the filing of the corporate tax return

http://www.buildingwithbooks.org

http://www.ssbx.org

http://www.advela/net/etva/default/htm



Looking forward into 2006, we have designated three key areas to focus our efforts as we continue to

innovate in the area of community service and engagement.

ouR GoalS foR 2006

1. leverage service events to inspire, engage and transform communities in which we live and work: We can accomplish this through

many different avenues such as building awareness in our pillar events (i.e. Earth Day and Serv-a-palooza), leverage our Global Stewards

program17 to inspire and engage stakeholders, and using our Community Investment program to broaden stakeholder reach.

2. Continue to optimize path of Service™ program: One way to accomplish this is through a focus on values integration at team meetings, sales

meetings, and tradeshows to raise awareness and inspire participation. In addition, we will communicate enhanced sabbatical opportunities to

drive NGO capacity building. Finally, we will focus on the valuation of volunteer hours to support impact “beyond checkbook philanthropy.”

3. Strategically allocate corporate investments to increase global impact: We will look to balance investments globally. We will also encourage

the utilization of employee grants to strengthen NPO/NGO relationships—offering greater individual service opportunities.


In 2005, community investments totaled 1.6% of operating income—a

decline from 2.1% in 2004. This drop off can be attributed to a decrease

in incremental giving from our business units. The combined value of our

product and cash donations went from $3,931,800 in 2004 to $3,813,463

in 2005. Additionally, 63% of our investments in 2005 took the form of

cash, down from 70% in 2004.

Going forward, we will continue to invest a complement of human,

financial and in-kind resources in non-profit organizations and community

priorities whose missions are consistent with our vision and values. We

will also endeavor to measure this portfolio in a manner that provides

greater transparency and accuracy against our investments and impact

in our stated CSR priorities. As we continue to improve our efforts, our

commitment to our employees and to our stakeholders remains to create

the most sustainable and positive impact in the communities in which

we live and work.

17 more on this program in our 2006 csr report.

Voices of Challenge: THE HOME DEPOT

The Power of One—Multiplied by the Passion of ManyWhen CEO Jeff Swartz asked for my thoughts on The Home Depot’s efforts outside of our

stores for Timberland’s 2006 Corporate Social Responsibility Report, he was really asking

a unique favor: “Challenge me to do better!” In such a call for suggestions from other

companies and organizations, he has displayed a confidence and fierce commitment to

improvement that are inspiring.

Both Timberland and The Home Depot

believe that a fundamental commitment

to improvement transcends the

boundaries of the business out into the

community. In other words, we’re not

simply focused on how to make our

businesses more profitable. We’re also

interested in how to make them more

responsible. The goal is to build more

than commercial enterprises. It’s to help build stronger communities to

improve our world.

These are certainly bold claims on the surface, but they are actually fairly

pragmatic ones too. If the private sector and its resources—relative to

employee skill and deep sense of service—isn’t part of making our society

better, then the effort is deprived of a vital, perhaps even decisive, force.

Of course, for a company like Timberland, already deeply involved in

corporate social and environmental responsibility, there is actually little to

suggest beyond this: Keep doing what you’re doing. But for the sake of the

“challenge,” here’s my other suggestion: Do more—and use the power of your

leadership and brand to convene and collaborate with more corporations.

Now, that’s unique. It’s also creative, brave and unconventional.

Instead of aiming ourselves at the largest, most pressing problems and

attacking them with only resources available to our individual companies

and partner nonprofits, why not aggressively go after impact and create

transformational change by aligning together? We too often settle for

convenient, smaller, often localized targets of opportunity and simply

throw money and volunteerism at needs looking for one-day solutions.

That approach is no longer sustainable. But what if we didn’t worry about

brand differentiation and instead united on behalf of a common cause or

community need to increase volunteerism among corporate Americans?

Timberland’s well-known statement of corporate purpose says it all: Make

it better. Those three words don’t place limits on what problems can be

tackled or how high to aim. They simply declare an imperative—make it

better. Period.

Not only do I love the fact that three words capture the soul of the

company, I cannot help but note the similarity to The Home Depot’s core

purpose: Improve Everything We Touch. The central idea is the same in

both: unceasing and unrelenting improvement, both in the business and

in the community.

The statements demand that we must leave this community, this society

and this planet better than we found it. When you combine the freedom

to dream with the courage to change, sparks fly. When you aim that revved

up sense of possibility at social problems or people and communities in

need, you get fireworks—not only more effective action, but action of a

much more profound scale and scope.

This spirit was the motivation for our Month of Service, a collaborative

volunteerism effort last fall that resulted in the completion of

approximately 2,000 projects harnessed by more than 850,000 volunteer

hours in just 30 magical days. It is why we joined with 29 companies

across North America driven by the vision and leadership of Michelle

Nunn at the Hands On Network. The vision—increase volunteerism in

America by 10 percent, or by 6.4 million new volunteers, in two years.

Yes, those commitments—and achievements—are huge. None of them

were, or will be, easy. But our core purposes don’t guide us to shortcuts.

They challenge us to confront each other and ourselves to undertake

uncompromising improvement.

In order to fulfill a vision of that magnitude, you need allies. You need the

extraordinary multiplier of corporations and nonprofits banding together

and sharing a dream. You need a team, with all members focused on a

simple, crystal clear objective: Make it better, together. Precisely.

Bob Nardelli

Chairman, President & CEO

The Home Depot

When you combine the freedom to dream with the courage to change, sparks fly. When you aim that revved up sense of possibility at social problems or people and communities in need, you get fireworks.

the timberland company make it better 2005 csr report 59

7.0 Timberland Employees

Our Employees

Overall, Timberland employed an average of 5,448

full-time employees worldwide in 2005. Our workplace

employment grew by 7% in 2005 with 14% growth in

our manufacturing sector (growth rate excludes 286

employees at our manufacturing location in Puerto Rico

which was closed in December 2005)18.

As we continue to grow as business, we continue to

evolve our people programs and strengthen our metrics

to measure them.

[7.1] Our People Philosophy

Passion. Purpose. These are two things that make Timberland unique. We invite and invest in people who share our

values and passion to make a difference by doing well as a business and doing good in the community. Our people—and

the ways we engage them on our journey—are of utmost importance in our aspiration to be an employer of choice. The

task of balancing the development of organizational capability to support the dynamic growth of our business, while

keeping our employees effectively engaged, continued to be key areas of focus in 2005. We are pleased with the results

of our people-plan metrics which reflect the good progress we’ve made and the ground yet to be covered.

KEy WoRKfoRCE StatIStICS

Employment

Global Employment: 5,448

2005 Workforce Growth 288 19

Number of Global Leaders: 199

average age

Grouping full-time part-time total

Office 38 40 38

Distribution Center 38 43 39

Manufacturing 32 0 32

Retail Store 29 24 27

Average 34 26 33

18 if you include the loss of puerto rico factory workers, our workforce remained flat year over year.

19 our 2004 csr report listed number of employees at 5,600, which included temporary workers. the 2005 data does not include temporary workers. the growth statistic is based on full-time employee count for the past two years.

20 leaders are defined as senior managers (grade 7) and above.

office

retail

distribution

manufacturing

31%

DIStRIbutIon of tImbeRlAnD emPloyeeS

34%

7%

28%

men

Women

globAl comPoSItIon of leADeRShIP20

35%

65%

AveRAge tenuRe (In yeARS) AcRoSS buSIneSS Segment

6

5

4

3

2

1

0 office manufacturing distribution retail center store

5.3 5.1

4.2

2.3


[7.2] How We Manage Our Talented Staff

Talent management continued to be a focus in 2005. Building organizational capability in a complex, global business

environment requires both depth and breadth of experience. We continued our focus on developing leaders from within

through our global Leadership and Talent Review process—a cross-functional global review process of leadership levels

and jobs that feed into our leadership positions.

Our leadership development strategy reflects our belief that growth occurs as much through meaningful business

experiences that provide opportunity to stretch skills in a supportive environment as through formal training. We

realize this belief through a balance of training and business experiences tailored to the specific needs of the

individual—individual development plans (IDPs). Currently, we have 255 active IDPs worldwide. In 2005, our Internal

Hire Rate declined slightly from 48% in 2004 to 47%. This indicates we hired more leadership talent from outside our

community than we would have hoped. In 2006, we will continue our focus on developing leaders from within.

Reflecting our belief that development is not always “up,” lateral moves within

the leadership levels of our organization rose from 6 to 21 positions last year,

providing those affected with opportunities to expand their knowledge of the

business. And consistent with our diversity goals, two-thirds of our internal job

changes involved moving women into leadership roles.

Of course, talent exists at all levels in our organization—not just in our leadership.

That’s why the individual development plan process is available to everyone, so

that all our employees can keep pace with our business and help it grow. And,

at the same time, work toward their own long-term career goals.

In 2005, our U.S. employees received an average of 38 hours of training—down

slightly from 2004’s total. The decrease of training hours was a result of

employees not attending external training courses at the same rate as last year. One reason for this decrease is the

focus of business experiences to drive development through IDP planning. We will continue to provide opportunities to

develop through many vehicles internally and externally. Our focus will be internal development opportunities in 2006.

Community service and business-related activities were equally the focus of two-thirds of the skill-building opportunities

offered last year. We also introduced our New Manager Assimilation Program in the U.S. so that teams can quickly

clarify expectations, establish a work style that suits everyone in the team, improve working relationships, and get

the most productive start on critical business challenges. We plan to roll out this new program to our international

locations this year.

7.0 Timberland Employees (continued)

Our focus will be internal development opportunities in 2006.

SPOTLIGHT CAREER PATH AT TIMBERLANDKim Krummell; director of the asia footwear Supply Chain team; Zhuhai, China

I started my journey at timberland in 2000. I had been

working for another apparel/footwear brand when I was recruited by a

former colleague to join Timberland. At that time, I hadn’t heard much

about Timberland, but the prospective job was an opportunity I couldn’t

resist. I started out as the Apparel Sourcing Manager for the Americas.

I didn’t even have a designated office space at Timberland HQ because

I spent the majority of my time on the road. In my previous jobs I had

done a lot of domestic travelling. One of the lures of this new position

was the opportunity to expand my horizons to Latin America. Within the

roughly two years that I held this position at Timberland I had traversed

many new landscapes, including 12 different countries in Latin America/

The Caribbean. Through the course of my travels, I sourced factories

to produce Timberland® apparel and monitored them for adherence to

TBL Code of Conduct standards as well as to TBL quality requirements.

I was also able to brush the dust off my high school Spanish and learn to

communicate enough to get around.

The next chapter of my career path at Timberland brought me

into headquarters as a more permanent fixture while at the same time

expanding the breadth of my travel experiences and my exposure to

various other aspects of the business. As Category Manager for Apparel

Woven Tops and Bottoms, I was exposed to managing the business, on

the supply chain side, from soup to nuts. The designers still designed the

product but as soon as the product brief was handed off to my team,

we were responsible for everything else, delivering the right product

at the right price and on time. I loved this job because I participated in

and learned about the business side, which was something new to me. I

was able to focus on developing my management skills and learned a lot

about leading a team. I also had the opportunity to include Asia, Africa

and India in my trip itineraries. Being a resident at headquarters also

opened a lot of doors for me to be a part of something bigger. I partici-

pated in large-scale community service events (ie: Serv-a-palooza) and

one year was fortunate to be able to dedicate the time to being a team

leader at this incredible event.

While I felt that I still had a lot to learn and a lot to do as Category

Manager, I was very interested in an opportunity to live abroad and

work for Timberland in another country. I enjoyed working closely

with factories and learning about other cultures. Being based in

Stratham, New Hampshire only allowed for intermittent exposure to

these environments. Manufacturing is the pulse of the business and

every time I walk into a factory, I learn something new. I expressed to

my boss my desire to live and work abroad and even interviewed for

possible opportunities within Timberland. I have a degree in Apparel

Manufacturing and at this point I had spent nine years in the apparel

industry, working in various capacities involving the development and

production of apparel and could speak Spanish to some degree. When

I was approached to pursue an upcoming opportunity abroad...I was

surprised to find out that it involved moving to China and working in

Timberland’s Footwear Office! The rest is history. While I have been

able to apply my experience in the production of apparel to footwear

manufacturing, I’ve also had to learn a completely new vocabulary and

of course try my best to learn enough Mandarin to get around in China.

Timberland gave me a fantastic opportunity to expand my experience

and my exposure. At the same time, the cross-pollinization of my ap-

parel experience in a footwear world has, I believe, added value on an

operational level. As I am writing this, I have been on assignment in

China for 1½ years. The former colleague who recruited me to come

to work for Timberland told me that while being on assignment I would

learn more than I would actually at the time...he was so right and I’ve only

just begun!

“Timberland gave me a fantastic opportunity to expand my experience and my exposure”


[7.3] Employee Satisfaction

Last year, Timberland was included among Fortune’s

“100 Best Companies to Work for” in the United States,

an honor we have received for the past eight years. We

were also named to Working Mother Magazine’s “Best

Companies for Working Mothers” in the U.S. for the

second year. While we humbly appreciate our external

accolades, it is equally important to hear how we are

doing on our quest for a common values-based culture

from our own community—our people. In 2005, we

marked the fifth year we have sought input on the

state of our community directly from our employees.

Well-understood expectations. Community impact. Ethics. Safety.

Authenticity. These are the hallmarks of our culture as told to us—by

our people. These areas represent the dimensions with the highest

satisfaction across the globe. These scores reflect the continued

strength of our social responsibility priorities and our core values—

humanity, humility, integrity and excellence—and how our employees

feel them on a day-to-day basis.

In 2005, survey participation increased from 70% in 2004 to

75% in 2005 with 15 locations achieving 100% participation and 10

that reached over 90%. While participation increased, employee

engagement—as measured by our bellwether questions21—dipped

slightly from 76% to 74%. Results also showed differences among

our geographic regions with some business units reporting increases

in satisfaction scores and some showing slightly weaker responses.

Progress is being made—albeit not consistently across the globe.

• Solid progress was made in the areas of development and

communications in the Dominican Republic and Europe.

• In Asia, where we concentrated on focus groups and action

planning in 2004, consistent improvement was revealed across

all factors.

In 2006, we will continue our work on employee engagement by

identifying TBL’s best-practice culture leaders and developing

mechanisms to conduct best-practice sharing utilizing our leaders

as teachers.

21 “overall i am satisfied with timberland as a place to work” and “i would choose to work here again if were looking for work.”

PARTNERING FOR CHANGES IN ASIA

finding root causes. making things better. those are the

things we looked for when our 2004 Employee Survey pointed

out areas for concern for our employees in asia. business

unit leaders collaborated with Human Resources to develop

an action plan. by getting employees involved.

To start, focus groups were organized in business-critical markets,

such as Hong Kong and Tokyo. These gatherings involved a diverse

group of employees from retail store associates to office-based

managers. Employees who simply wanted to make a difference.

Outside facilitators led the discussions and helped make employees

feel comfortable about sharing not just the strengths of Timberland,

but also their concerns. The discussions centered on the “on-

boarding” process, compensation, individual development and

communication. Ideas and actions were developed and presented

to business leaders and Human Resources.

Here’s what we’ve done in 2005 as a result of focus group

feedback, to address the on-boarding, compensation and

communication issues:

• A global orientation on-boarding process was developed,

which will be rolled out to all Asian markets for new and

current employees alike. The goal is to ensure a consistent

global culture and to educate Asian employees on what is

expected of members of the Timberland community.

• In Japan, a retail step-up program was introduced to improve

skills and individual career development. The goal is to reduce

turnover at the retail level. Regional Human Resources also

partnered closely with Corporate Human Resources to address

issues of individual development and compensation.

• As part of a global effort to improve communication with

employees, Timberland rolled out an intranet site so that employees

throughout the company could access corporate information

more efficiently. Through this tool, new product, business and

community news is shared. As a supplement, quarterly “rallies”

share with employees business results from the previous quarter.

As a result of this partnership with employees, employee responses

improved on 11 of the 16 factories measured in our survey. And

voluntary turnover in this region is down 1% (from 25% in 2004

to 24% in 2005).

We’re pleased with this outcome, but we know our work isn’t over.

We hope that additional employee focus groups this year will

keep us on the path of actively involving our employees in finding

solutions that enhance their own level of job satisfaction.



[7.4] Diversity

At Timberland, community is a way of life. We are passionate

about fostering an inclusive community that respects

individual differences and encourages our employees to

make a difference in the communities where they live and

work. Change starts at the top—so did we. In 2005, minority

representation on our Board of Directors increased from

9% to 27%. Supported by programs such as our Women’s

Network, which sponsored multiple networking and career

development opportunities in the U.S., gender diversity in

leadership positions increased 18%. In 2006, in support

of our inclusivity aspirations, Timberland will report EEO

diversity statistics for our U.S. locations along with our

gender inclusivity reporting.


White

black

hispanic

asian/pacific islander

DIveRSIty of ouR WoRkfoRce

69%

13%

15%

3%


New Health & Safety Initiatives for 2005

In 2005, we began to redesign our Health and Safety programs worldwide,

starting with the United Kingdom. The project is being spearheaded by a

cross-functional team including Human Resources, Facilities and Retail.

Their task is to identify needs and recommend regulations that can be

adapted to multiple locations. We plan to report results from our efforts

in our 2006 Corporate Social Responsibility report.

Addressing Health-Related Lost Work Days

Human beings need sick days. As an employer, even as we sympathize,

we have to assess how lost work days caused by injury or illness impact

our business. In the U.S. in 2005, the rate of “lost work days due to injury

or illness” occurrences (LWDII) was 1.5—or, in other words, an average

of 1.5 lost or restricted workdays for every 100 employees. This statistic

represents all U.S. operations, including retail, corporate headquarters

and the Ontario and Danville distribution centers.

You may be wondering how we fared in the rest of the world. We weren’t

able to provide a statistic for our global operations (including our Dominican

Republic and Puerto Rico factories) in last year’s Corporate Social Re-

sponsibility report, because of inconsistencies in how LWDII was reported.

We addressed this gap in our reporting by providing factories with clearer

guidelines on just exactly what a LWDII occurrence is. Thanks to this

effort, we’re able to get current LWDII data and correct the inaccuracies

in historical data. As a result, Timberland reported a LWDII rate of 3.2

incidents per 100 employees in our global operations. See chart for details.

Now, you may be wondering why there’s such a difference between our

global and domestic results. It all boils down to the nature of the work

performed in our manufacturing facilities abroad. We recognize that we

need to reduce our international rate in particular, to narrow this gap.

Plus, we want to reduce the severity of injuries, not just their frequency.

To do that, we are continuing to work to identify and eliminate the

sources of injuries and illnesses. It’s all part of a proactive approach to

“Make it better” in the workplace.

[7.5] What We’re Doing to Improve Health & Safety

As an overall policy, we are committed to making it better for all Timberland employees around the world by providing

a safe and healthy workplace. How? By taking steps to prevent incidents before they even occur. To do this, our Corporate

Health and Safety team works directly with employees, both individually and in groups, to identify health and safety issues

in the workplace and to develop solutions. Should an incident occur, we report it promptly. Then we assess its root

cause and take action to prevent it from happening again. For example, we’ve improved employee and supervisor training.

Bought new equipment. Hired professional safety consultants. And designed workstations ergonomically—that is, to

maximize comfort and minimize physical stress.


u.S. lWDII

2000 2001 2002 2003 2004 2005

u.S. & cARIbbeAn lWDII

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0

8

7

6

5

4

3

2

1

0 2000 2001 2002 2003 2004 2005

3.7

2.4 2.52.3

1.91.5

6.8

4.7

3.83.3

4.4

3.2

Voices of Challenge: HARLEM CHILDREN’S ZONE

Lemonade or vinegar—the choice is oursI often tell people that if you show me a child who will choose a glass of lemonade over

one of vinegar, I can educate that boy or girl. If a child chooses vinegar over lemonade, one

has to question whether the child can make choices that are predictable and with which we

would agree. If the child makes predictable choices and responds to positive reinforcement,

I can build an education plan around that.

But when I look at how our country chooses to raise its children—

particularly poor children of color—I see a society that continues to

choose vinegar over lemonade. We will spend billions to incarcerate young

men, yet we balk at raising lesser amounts of money for educating them so

they can become productive members of society.

For those of us in the trenches of the war against poverty, the choice

couldn’t be clearer and recent statistics confirm what we see daily—

education makes a critical difference in the outcomes of young lives.

Today the high-school dropout rate among African-Americans is almost 50

percent. In 2004, 72 percent of black males in their 20s who dropped out

of high school were jobless. By their mid-30s, 6 in 10 black male dropouts

have spent time in prison. The cost to society is just astronomical: in New

York City, the annual cost per inmate is over $60,000 and there are about

13,500 African-American or Latino inmates.

Why do we as a society continue to choose the vinegar of incarceration

rather than the lemonade of education? First, the sour taste is experienced

most keenly in poor communities, where voices are muffled, if heard at all.

Misinformation has blurred the picture too, so that people think these

terrible outcomes in poor communities are inevitable. Undoubtedly,

the challenges are extraordinarily tough, but these children can succeed

just like their middle-class peers. I have seen that every day of my profes-

sional life for over 20 years.

The picture is distorted even further by the fact that our current education

system is a disaster, particularly in regard to boys.

All of us for whom school is a distant

memory may wonder “what’s wrong

with kids today?” But kids today—par-

ticularly in poor neighborhoods—live

in a vastly different world than the one

in which we grew up.

Drugs, guns, disintegrating families, and

a toxic culture celebrating sexuality and

violence have all escalated, while our

education system has not risen to the

challenge. In fact, large sections of the education establishment have suc-

ceeded in putting their own interests before those of failing children.

While the kids fail in our schools, the people who are charged with operat-

ing those schools simply carry on as if nothing were wrong. Ask yourself:

if Timberland produced boots with a 30-50 percent failure rate year after

year, would workers and management simply accept that?

As dire as the picture currently is, I believe things will change for the better

and I’m committed to making that change happen. What I need are allies.

When our society and the country’s corporations recognize that today’s

poor children are tomorrow’s work force, the political climate will change.

Ultimately, there is no way around it: these kids are our kids—all of ours.

The numbers may be worse in places like Harlem, but the national dropout

rate among all high-school students is about 30 percent.

These children will either help fuel our economy through their labor and

fund our government through their taxes, or they will be endless drains

on our resources. Lemonade or vinegar. It’s a pretty clear choice, even if

the sweeter rewards are not instantaneous. We may need to squeeze some

lemons and stir things up a bit, but the other option is unpalatable.

Geoffrey Canada

President and CEO

Harlem Children’s Zone

If Timberland produced boots with a 30-50 percent failure rate year after year, would workers and management simply accept that?


8.0 Report Scope

[8.1] The Scope of this Report

Our last report was published on November 1, 2005 and covered Timberland’s global Corporate Social Responsibility

(CSR) activities in 2004. This report covers these actions for the calendar year 2005. Most of the data included is

from that year, with the notable exception of our factory list, which catalogs our active factories as of May 1, 2006.

Instances when we report only on U.S.-based activities are clearly indicated.

The Basis of this Report

This report was developed based on the Global Reporting Initiative (GRI)

and guided by the draft version of the G3 indicators. While we attempted

to create a comprehensive report, there are some GRI indicators not

included in this report. There are several reasons for these omissions.

Our impact may have been immaterial, or we might have lacked enough

internal data to provide a report. In the future, our goal is to narrow that

gap as we continue to report on social and environmental impacts that

are both relevant and strategically important.

How this Report Was Verified

Every data point in this report was verified internally, as was the way

it was characterized. As we go forward, we’ll explore the viability of

an external verification program. After all, such programs enhance the

credibility of our CSR reports and make them easier to audit. We hope

to receive guidance on this issue during conversations with our stakeholders.

If you have any questions about this report,

please direct them to Alex Hausman at

[email protected].



9.0 GRI Index

1. Vision and Strategy

1.1 Vision and Strategy Timberland Footprint 4

1.2 CEO Statement CEO Letter 2

2. pRofIlE

2.1 Name of reporting organization Timberland Profile 8

2.2 Major products, services, brands Timberland Profile 8

2.3 Operational structure 10-k

2.4 Description of major divisions 10-k

2.5 Global operations Timberland Profile 8

2.6 Nature of ownership 10-k

2.7 Nature of markets served 10-k

2.8 Scale of organization Timberland Profile 8

2.9 List of stakeholders The Timberland Footprint 6

2.10 Contact person for report GRI Index 68

2.11 Reporting period Report Scope 66

2.12 Date of previous report Report Scope 66

2.13 Boundaries of the report Report Scope 66

2.14 Significant business changes Timberland Profile 10-11

2.15 Basis for reporting on joint ventures Not Applicable

2.16 Restatements 10-k

2.17 Decisions not to apply GRI principles Report Scope 66

2.18 Criteria/definitions used for Not Applicable

non-financial accounting

2.19 Changes in measurement methods Global Human Rights 17

2.20 Internal assurance policies and practices Report Scope 66

2.21 Policy for independent assurance Not Applicable

2.22 Obtaining additional information GRI Index 68

3. GoVERnanCE StRuCtuRE and manaGEmEnt SyStEmS

3.1 Governance structure Corporate Governance section,

2004 CSR Report

3.2 % of independent Directors Proxy Statement

3.3 Process of determining strategic Not Reported

expertise of Board

3.4 Governance Process Not Reported

3.5 Executive Compensation Proxy Statement

3.6 Organizational structure for CSR, Timberland Profile 9

key individuals

3.7 Mission, values, codes related to CSR The Timberland Footprint 4

3.8 Mechanism for shareholder dialogue 10-k

3.9 Identification and selection of The Timberland Footprint 6

major stakeholders

3.10 Stakeholder consultation methods The Timberland Footprint 6

3.11 Information generated by stakeholders The Timberland Footprint 7

3.12 Use of stakeholder information The Timberland Footprint 7

3.13 Precautionary principle Not Reported

3.14 Endorsed principles, voluntary charters Corporate Governance section,

2004 CSR Report

3.15 Industry and business association Timberland Profile 12

memberships

3.16 Systems for managing upstream/ Global Human Rights 15-30

downstream impacts

3.17 Systems for managing indirect impacts Not Reported

3.18 Major decisions on operational changes Timberland Profile 11

3.19 Performance programs and procedures The Timberland Footprint 4

3.20 Certification pertaining to management Not material

systems

4. GRI ContEnt IndEx

4.1 GRI Content Index GRI Index 67-68

5. EConomIC pERfomanCE IndICatoRS

EC1 Net Sales (in millions) Timberland Profile 9

EC2 Geographic market breakdown Timberland Profile 8

EC3 Costs of good, materials, services 10-k

EC4 % of contracts paid by agreed terms Not material

EC5 Total payroll and benefits by region 10-k

EC6 Distribution to providers of capital 10-k

EC7 Change in retained earnings 10-k

EC8 Taxes paid by country (in millions) 10-k

EC9 Subsidies by country Not material

EC10 Donations, in-kind and cash (in millions) Community Involvement 56-57

EC11 Supplier breakdown, by organization Global Human Rights 25

and country

EC12 Spending on non-core infrastructure Not material

development

EC13 Indirect economic impacts Not material

6. EnVIRonmEntal pERfoRmanCE IndICatoRS

EN1 Total material use (except water) Environmental Stewardship 40

EN2 % of materials used that are wastes Environmental Stewardship 40

EN3 Energy use by primary source Environmental Stewardship 33-35

EN4 Indirect energy use Environmental Stewardship 33-35

EN5 Total water use Not Reported

EN6 Land owned, leased or managed Not Material

EN7 Major impacts on biodiversity Not Material

EN8 Greenhouse gas emissions Environmental Stewardship 33-34

EN9 Ozone-depleting substances Not Material

EN10 NOX, SOX and other air emissions Not Material

EN11 Total amount of waste Environmental Stewardship 40-41

EN12 Significant discharges to water Not Material

EN13 Significant spills Not Material

EN14 Environmental impacts of products Environmental Stewardship 32-45

and services

EN15 Reclaimable products after useful life Not Reported

EN16 Incidents and fines Not Material

EN17 Renewable energy/efficiency initiatives Environmental Stewardship 35

EN18 Energy consumption footprint Environmental Stewardship 33-37

EN19 Other indirect energy use Not Reported

EN20 Water sources significantly affected Not Material

EN21 Annual ground, surface water Not Material

withdrawals

EN22 Recycling/reuse of water Not Reported

EN23 Land owned, leased or managed Not Material

(Production/extractive use)

EN24 Impermeable surfaces as % of land Not Material

purchased

EN25 Impact on protected or sensitive areas Not Material

EN26 Changes to natural habitats Not Material

EN27 Objectives for restoring native Not Material

ecosystems, species

EN28 Number of IUCN Red List Not Material

species affected

EN29 Business units in sensitive areas Not Material

EN30 Other relevant indirect greenhouse Environmental Stewardship 33-34

gas emissions

EN31 Hazardous waste use (Basel Not Material

Convention rated)

EN32 Water discharge, runoff effects Not Material

EN33 Environmental performance of suppliers Environmental Stewardship 45

EN34 Environmental impacts of transportation Environmental Stewardship 37

EN35 Environmental expenditures by type Not Material

GRI IndICatoR dESCRIptIon SECtIon paGE

IndICatoR


IndICatoR


9.0 GRI Index (continued)

7.0 SoCIal pERfoRmanCE IndICatoRS: laboR pRaCtICES and dECEnt WoRK

LA1 Workforce breakdown Timberland Employees 59

LA2 Net employment creation Timberland Employees 59

LA3 Employees represented by trade unions Not Reported

LA4 Policies, procedures related to Timberland Employees 59-64

consultation with employees

LA5 Notification of occupational accidents, Timberland Employees 64

diseases

LA6 Joint health and safety committees Timberland Employees 64

LA7 Injury, lost day and absentee rates Timberland Employees 64

LA8 Policies, programs on HIV/AIDS Not Reported

LA9 Average hours of training per year Timberland Employees 60

LA10 Equal opportunity policies and programs Timberland Employees 59-64

LA11 Composition of senior management Timberland Employees 59

LA12 Employee benefits beyond Timberland Employee Section,

legal mandates 2004 Report

LA13 Formal worker representation in Not Reported

decision-making

LA14 Evidence of compliance with ILO Not Reported

guidelines

LA15 Formal agreements on health and safety Not Reported

LA16 Continued employability programs Timberland Profile 10

LA17 Lifelong learning programs Global Human Rights 27

8.0 SoCIal pERfoRmanCE IndICatoRS: Human RIGHtS

HR1 Human rights policies and procedures Global Human Rights 15-30

HR2 Consideration of human rights as part Global Human Rights 15-30

of decision-making

HR3 Policies to evaluate, address human Global Human Rights 15-30

rights in supply chain

HR4 Policies, programs to prevent Global Human Rights 15-30

discrimination

HR5 Freedom of association policies Global Human Rights 15-30

HR6 Policy excluding child labor Global Human Rights 15-30

(ILO Convention 138)

HR7 Policy to prevent forced and Global Human Rights 15-30

compulsory labor

HR8 Employee training on human rights Not Reported

HR9 Appeal practices related to human rights Not Reported

HR10 Non-retaliation, employee Global Human Rights 15-30

grievance policies

HR11 Human rights training for Not material

security personnel

HR12 Indigenous peoples policy Not material

HR13 Community grievance mechanisms Not material

HR14 Share of operating revenues Community Involvement 56-57

redistributed to local communities

9.0 SoCIal pERfoRmanCE IndICatoRS: SoCIEty

SO1 Policies to manage impacts on Community Involvement 47-57

communities

SO2 Policies to address bribery and Timberland Profile 12

corruption

SO3 Policies to address political lobbying Timberland Profile 12

and contributions

SO4 Awards received relevant to CSR Timberland Profile 9

performance

SO5 Contributions made to political parties Timberland Profile 12

and candidates

SO6 Court decisions—Antitrust Not Reported

SO7 Policies to prevent anti-competitive Code of Ethics –

behavior Timberland Web site

10.0 SoCIal pERfoRmanCE IndICatoRS: pRoduCt RESponSIbIlIty

PR1 Policies for preserving customer Timberland Employees 64

health and safety

PR2 Policies relating to product information Environmental Stewardship 44

and labeling

PR3 Policies relating to consumer privacy Code of Ethics –

Timberland Web site

PR4 Number of non-compliance issues Not material

PR5 Health and safety complaints upheld Not material

by regulatory body

PR6 Voluntary code compliance Global Human Rights 15-30

PR7 Instances of non-compliance—product Not material

information and labeling

PR8 Customer satisfaction Not material

PR9 Advertising—adherence to standards Not material

PR10 Advertising and marketing Not material

regulation breaches

PR11 Consumer privacy—breaches complaints Not material

For more information the GRI and its reporting principles,

please visit www.globalreporting.org.

Want to learn more about Timberland’s activities in the

area of corporate social responsibility? Please log on to

www.timberlandserve.com.

For information about this report, please contact Alex Hausman

in Code of Conduct at: [email protected].

the timberland Company

200 Domain Drive

Stratham, NH 03885

603-772-9500

[email protected]

In gratitude for each company’s participation in the “Voices of

Challenge,” Timberland donated to the following organizations on

their behalf.

• peace and Justice Center (www.pjcvt.org)

• Center for Reflection, Education and action (www.crea-inc.org)

• one percent for the planet (www.onepercentfortheplanet.org)

• El puente (www.elpuente.org)

• Hands on network (www.handsonnetwork.org)

Timberland, , Make it Better, Timberland Boot Company, Timberland PRO, Earthkeepers

and Path of Service are trademarks or registered trademarks of The Timberland Company.

©2006 The Timberland Company. Mion is a trademark or registered trademark of Timberland

Switzerland GMBH. SmartWool is a trademark or registered trademark of SmartWool Corporation.

All other trademarks or logos used in this copy are the property of their respective owners.

All rights reserved. COR32746


IndICatoR


IndICatoR

http://www.globalreporting.org

http://www.timberlandserve.com



http://www.pjcvt.org

http://www.crea-inc.org

http://www.onepercentfortheplanet.org

http://www.elpuente.org

http://www.handsonnetwork.org

the timberland company

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