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May 06, 2005
Virgin Trees in Kleenex: Greenpeace Lambasts Kimberly-Clark Fiber Sourcing
    by William Baue

Between 15 and 30 percent of K-C tissue products fiber originates from the Canadian Boreal Forest, according to a Greenpeace report, and only 19 percent of its fiber is recycled.


Just before the annual meeting last week at Kimberly-Clark (ticker: KMB), Greenpeace released a report skewering the company for sourcing fiber from the Canadian Boreal Forest and using minimal recycled content in its tissue paper products, such as the ubiquitous Kleenex brand. The report also discusses how socially responsible investment (SRI) and green consumerism play an important role in ferreting out the legitimacy of claims of corporate social responsibility (CSR) and sustainable business practices.

In November 2004, Greenpeace and the Natural Resources Defense Council (NRDC) launched an international campaign to inform consumers about Kimberly-Clark's fiber sourcing from the Canadian Boreal Forest, the largest tract of ancient forest still intact in North America. The campaign urges consumers to purchase products from competitors that do not source from ancient and endangered forests and use higher recycled content, such as Cascades (CAS) and Seventh Generation.

The Calvert Group, which added K-C to the Calvert Social Index in 2002, finds these trends equally worrisome.

"Calvert is concerned about the cumulative impacts of resource extraction, particularly sourcing of wood fiber from the Boreal Forest, on First Nations, the environment, and endangered species," said Stu Dalheim, a social research analyst with Calvert.

In its defense, K-C points to its sustainable forestry policy.

"We adhere to a corporate policy that prohibits the use of fiber from virgin rainforests or ecologically significant old growth areas, including designated areas in Canada's Boreal Forest," states Dave Dickson, a Kimberly-Clark spokesperson.

However, this policy does not fence off the Canadian Boreal Forest in its entirety.

"Less than 15 percent of the fiber we use globally is sourced from the Canadian Boreal Forest," Mr. Dickson told SocialFunds.com, though the Greenpeace report estimates the number to be closer to 30 percent. " The vast majority of the fiber we purchase comes from residual waste (sawdust and chips) from the lumber production process."

"The small percentage of Boreal fiber we use is harvested responsibly and is promptly reforested," he added.

Responsible harvesting may be in the eye of the beholder, though. Mr. Dickson points out that by year-end 2005, K-C will require all its global fiber suppliers to adhere to one of five sustainable forestry certification systems. These include the Forest Stewardship Council (FSC), the American Forestry & Paper Association's Sustainable Forestry Initiative (SFI) , and the Canadian Standards Association's National Sustainable Forest Management Standards (NSFMS). For Greenpeace, NRDC, and others, this is four certification systems too many.

"The difficulty Kimberly-Clark faces is that high-profile environmental groups . . . consider only one set of standards to be a credible measure of sustainability--the Forest Stewardship Council (FSC) management and certification system," the Greenpeace report states. "Both [the SFI and NSFMS] initiatives were created by the forestry industry and are not considered by conservation groups to be fitting determinants of environmentally sustainable forestry practices."

Calvert concurs.

"Calvert would prefer to see certification to the Forest Stewardship Council standard and encourages use of higher recycled content in products," Mr. Dalheim told SocialFunds.com.

However, K-C contends that there is a limited supply of FSC-certified fiber.

"According to the Canadian Sustainable Forestry Certification Coalition, at the end of 2004, FSC-certified forest lands accounted for only 5.1 percent of the total certified forest lands in Canada, and only a small portion of this fiber is made available for sale to third parties," said Mr. Dickson.

As for recycled content, according to Kimberly-Clark's 2003 Sustainability Report, only 19 percent of the total fiber used to manufacture its tissue products comes from recycled sources.

"If Kimberly-Clark wants to show real environmental leadership, it will dramatically increase the post-consumer recycled content of its products," said Susan Casey-Lefkowitz, a senior attorney with NRDC.

The Greenpeace report acknowledges that K-C is not completely asleep at the wheel on environmental issues.

"In 2003, for instance, the company achieved an 87 percent toxics reduction, exceeding its goal of a 50 percent reduction," the report states.

Calvert also applauds K-C's overall environmental management.

"Our analysis of a company's environmental performance includes an assessment of overall management systems, policy, disclosure and performance on issues such as compliance with environmental regulations, emissions, and energy and water use--KC performs well in these areas," said Mr. Dalheim.

However, K-C's response to controversies such the Greenpeace/NRDC campaign can influence its ongoing inclusion in the Calvert Social Index and other SRI lists.

"Calvert subjects every company in our investment universes to frequent scrutiny, and there is always a possibility that a company that we hold may develop problems that might warrant reconsideration as a prospect for our funds," Mr. Dalheim concluded.

 

 
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