Global consumer businesses are increasingly pressured to ensure their products are not tainted with forests and wildlife habitat destruction. Image: Shutterstock
As raging forest fires in Indonesia last year caused an unprecedented haze crisis across Southeast Asia for months, many businesses came under huge pressure to prove that their products were not linked to the illegal deforestation.
In Singapore, Indonesia and Malaysia - where a thick smog disrupted business operations and shut down schools and airports - consumers and NGOs launched campaigns that called for boycotts of certain consumer items linked to the burning.
Groceries such as tissue paper and palm oil food products manufactured by companies suspected of deforestation activities were pulled from supermarket shelves by retailers.
While many businesses scrambled to control the damage done to their reputation, one firm that emerged unscathed from the consumer movement was Kimberly-Clark.
The global personal care firm behind the tissue brands Scott Naturals and Kleenex in fact saw increased brand recognition as consumers looked at its Forest Stewardship Council (FSC) certification as an assurance of its sustainable business practices.
FSC is an international non-profit that offers certification of responsibly-produced wood products.
This would not have been possible if not for a conscious long-term strategy to ingrain sustainability throughout the business, says its senior director of global sustainability Lisa Morden in a recent interview.
The New York-listed firm, whose market value is US$49 billion as of this month, has recognised the need to be socially and environmentally responsible since the mid-1990s, she shares.
Sustainability: Strategies and targets
At Kimberly-Clark, sustainability strategies are set every five years and consist of specific targets under three ‘pillars’ – People, Planet, and Products. These involve investing in social programmes, reducing the company’s environmental footprint and innovating to extend the life of its products and packaging materials.
The company has just concluded its Sustainability 2015 strategy, of which key achievements in Asia Pacific include a 40 percent reduction in absolute water consumption and a 15 percent reduction in absolute greenhouse gas emissions (both against a 2010 baseline) for the business.
Ninety-five percent of manufacturing waste has also been diverted from landfills in 2015, which Morden adds, puts the company on track towards achieving a 99 percent reduction in landfill usage by 2016.
This year is the start of a new strategy called Sustainability 2022, Morden shares, which is developed with a very different mindset from previous programmes.
“We broke our five-year cycle to commit to a seven-year strategy because in 2022, Kimberly-Clark will be 150 years old. We thought it was a great connection to sustainability – the (number of) years we have been operating shows how sustainable we have been. We’ve been here for 150 years and hopefully 150 more,” she says.
Under Sustainability 2022, Kimberly-Clark will be focusing on targets and programmes around energy and climate, fiber sourcing and responsible forest management, waste and the circular economy, as well as corporate social compliance – ranging from eradicating forced labour and water security to access to sanitation.
“We constantly look at how our business impacts the environment and communities around us,” says Morden, who was in Singapore recently for a meeting with Kimberly-Clark’s Sustainability Advisory Board (SAB).
Formed seven years ago, the board consists of six members including high-profile academic, Jo Mackness, of the UC Berkeley Haas School of Business; chief executive Sally Uren from non-profit Forum for the Future; and Andrew Winston, Fortune 500 advisor and author of books “Green to Gold” and “The Big Pivot”.
Typically meeting twice a year, the board provides Kimberly-Clark regular and relevant insights on potential risks and opportunities for the business.
This year, Kimberly-Clark is focusing its attention on Asia by having its SAB members converge outside of North America for the first time. They spent a week in Singapore with business leaders across Asia Pacific, and took a day out of their schedule for a visit to a pulp mill in Kluang, Malaysia to better understand the facility’s environmental objectives.
With the SAB members predominantly based in the Americas and Europe, the visit to Asia was crucial for them to deepen their understanding of the business perspectives and consumer expectations in the region, says Morden.
Kimberly-Clark is also looking to recruit a new board member who can speak on behalf of Asia.
“Geographical representation is what we think about when we screen individuals for the SAB ,” she says.
Conversations in Asia
Morden has been with Kimberly-Clark for over 20 years, beginning her career in a pulp mill in Canada and subsequently taking on regional and global responsibilities across different product categories and departments.
She is now responsible for creating a sustainability strategy to support Kimberly-Clark’s business plans. This includes setting specific and quantifiable goals – from workplace safety in the mills to lowering greenhouse gas emissions and reducing the waste sent to landfills – and communicating the progress both internally and to the greater public.
Kimberly-Clark has operations in 12 countries across Asia Pacific, including 19 mills and 14,000 employees. As of end 2015, the region contributed US$4 billion out of the company’s total global revenue of US$18 billion.
As countries in Asia are at different stages of economic growth and sustainability awareness, Kimberly-Clark has to cater its business and communications strategy to each market.
Some of the company’s efforts to differentiate its products include clearly-labelled FSC packaging at point-of-sale displays in Taiwan, and collaboration with the World Wildlife Fund (WWF) through public relations and TV advertisements and online engagement for the Indonesian market, shares Morden.
“The diversity of perspectives in the region is driven by several factors – local policy and regulations, consumer trends and behavior, among others – that cause our teams to land in specific strategic orientations around sustainability,” she says.
But one challenge that has emerged for all of Kimberly-Clark’s markets is to get consumers more actively engaged in conversations on sustainability.
“We don’t see consumers everywhere wanting to participate in our conversations, because different markets have different consumer needs and interests,” she notes.
Encouragingly, however, her regional leadership teams have observed growing consumer interest in recent years, due to the influence from government policies, corporate sector pressure, and media attention.
From global leaders making climate change pledges under the historic Paris Agreement to celebrities taking a more vocal stance against irresponsible business practices, the awareness of sustainability issues globally have been on the rise.
“This is the time we can really think about some disruptive, innovative ways to get around some of these big sustainability issues,” she says.
Seeing the value
Kimberly-Clark’s efforts in being socially and environmentally responsible through the years have paid off in more ways than one.
It has observed tangible results from its sustainability initiatives, such as cost savings associated with energy conservation, reduction in water consumption, and cutting down its use of fiber and packaging.
Being one of the early adopters of FSC has also helped enhance Kimberly-Clark’s reputation and differentiate its line of products from the other brands on retail shelves.
The most visible result of its sustainability efforts, however, lies in talent acquisition and retention, where Kimberly-Clark is consistently seen as an employer of choice in many parts of the world, says Morden.
“I often have new employees at various levels of the organisation approach me and say that the work we do in sustainability and the importance we place on it is why they find it appealing to work at Kimberly-Clark,” she says.
But while companies may be eager to adopt sustainability practices purely to gain a competitive advantage, Morden advises that companies operating in this age of information and enhanced scrutiny should first understand that sustainability practices have to be incorporated into the business as a whole to be viewed credibly.
“Sustainability needs to be an integral part of the business and not something that happens on the side or as a social responsibility activity,” she adds.