Squashfs environment variables

I have a Linux box that is using squashfs for the system. in /etc is a
"profile" file with
"export TZCE%T-1CEST,M3.5.0/2,M10.5.0/3"

This sets the time wrong, one hour out. In /etc/init.d there is rcS and the
last two lines are
if [ -e /var/etc/init.d/rcS.local ]; then
        . /var/etc/init.d/rcS.local

None of the system files are editable because of the squashfs but /var and
sub-directories are. I created /var/etc/init.d/rcS.local and put
#!/bin/sh
 . /var/etc/profile
in it and made /var/etc/profile to have TZ=GMT in.

This didn't work at all.

I then just made a file containing
TZ=GMT
export TZ
made it executable and ran it from the command line but this didn't work
either. If I type "TZ=GMT" then "env" I can see that it works when typed
directly from the command line.

I think my problem is something to do with "global" environment variables
because if I open a second telnet session the TZ variable is back to the
original.

How do I set the TZ variable for the whole machine without being able to
write to the normal system files?

Thanks for any input.