Kimberly-Clark Corporation, the world’s largest tissue products manufacturer, has just announced a new corporate environmental policy that incorporates outstanding commitments to responsible forest management. The announcement was made with Greenpeace, which in view of Kimberly-Clark’s new commitments has agreed to end a nearly five-year long environmental campaign against the company.
Behind the announcement are years of exchanges and negotiations between Kimberly-Clark executives on the one hand, and environmental organizations and shareholders on the other. The Ivey Foundation, in partnership with SHARE, was among the shareholders who engaged with Kimberly-Clark on sustainable forestry issues.
THE “KLEERCUT” CAMPAIGN
In November 2004, Greenpeace and the Natural Resources Defense Council launched an environmental campaign against Kimberly-Clark. Named “Kleercut,” after Kleenex™, the company’s most popular brand, the campaign focused on Kimberly-Clark’s fibre procurement practices in North America, including its use of virgin fibre not certified to the high environmental and social standards of the Forest Stewardship Council (FSC), and the very low or non existent content of recycled fibre in Kleenex™ and other tissue products. Claiming that Kimberly-Clark’s sourcing practices contributed to the destruction of Canada’s Boreal forest, campaigners requested that the company purchase only FSC-certified fibre and increase the content of recycled fibre in its tissue products.
SHAREHOLDERS GET INVOLVED
In light of the reputational and market access risks associated with the “Kleercut” campaign, and convinced that by embracing FSC certification and increasing the use of recycled fibre Kimberly Clark could protect shareholder value, a group of U.S. investors decided to approach the company to request that it make new commitments in these areas.
In 2006, and again in 2007, Domini Social Investments and other U.S. shareholders filed resolutions with Kimberly-Clark to ask the Board to produce a report assessing the feasibility of phasing out the company’s use of non-FSC certified virgin fibre within 10 years. Shareholders also requested that the report consider goals and timeframes with respect to:
• Increasing the use of FSC-certified virgin fibre with the goal of phasing out fiber certified by “less reliable and credible” certification schemes; and
• Increasing the use of recycled fibre in consumer and commercial products so as to reduce reliance on virgin materials.
In response to the resolutions, in March 2007 Kimberly-Clark adopted a new “Fiber Procurement Policy” that gave preference to FSC-certified fibre, provided certain conditions (e.g., availability, quality) were met. While the policy recognized other forest certification standards, including those of the Sustainable Forestry Initiative (SFI) and the Canadian Standards Association (CSA) – both of which were developed by industry groups and enjoy no credibility among major environmental groups –shareholders decided to give Kimberly-Clark a chance to implement the new policy.
Given Kimberly-Clark’s impact on Canada’s Boreal forest, on March 11, 2009, SHARE sent a letter to Kimberly-Clark on behalf of the Ivey Foundation (a Canadian shareholder) to ask about the company’s success in securing FSC fibre as part of its 2007 Fiber Procurement Policy. Specifically, we inquired whether Kimberly-Clark had considered revising its Fiber Procurement Policy to include concrete targets and timelines to increase the content of FSC-certified fibre and recycled fibre in tissue products sold in Canada and the U.S. We suggested that doing so would help mitigate ongoing reputational and market access risks for K-C and investors, and included references to recent media coverage highlighting these risks.
Kimberly-Clark responded to our letter on April 22, 2009, providing information on progress toward increasing the use of FSC-certified fibre and recycled fibre in tissue products. While the company indicated that it had no plans to revise its Fiber Procurement Policy to incorporate new targets, its new policy does just that.
KIMBERLY-CLARK ADOPTS NEW CONCRETE TARGETS
Kimberly-Clark’s new environmental policy includes two specific objectives that demonstrate the company’s commitment to sustainable forest management in Canada and the U.S.:
1. By the end of 2011, 40 percent of Kimberly-Clark’s North American tissue fibre will be either recycled or FSC certified; and
2. Also by the end of 2011, Kimberly-Clark will eliminate the purchase of any fibre from the Canadian Boreal forest that is not FSC certified.
The significance of these goals is two-fold. First, they incorporate concrete, measurable targets against which investors, NGOs and other stakeholders will be able to hold Kimberly-Clark accountable. Second, the new targets are an encouraging example of how combined efforts by environmental groups and active shareholders toward a common objective can have a significant, positive impact on corporate behaviour.
By Paula Barrios, Research Analyst