Scope and Objectives

Two Tomorrows (North America) Inc. was retained by Kimberly-Clark Corporation to conduct independent assurance of its 2010 Sustainability Report (“the Report”), as published on the company’s responsibility website.

The assurance process was conducted in accordance with AA1000AS (2008). We were engaged to provide Type 2 assurance, which covers:

• Evaluation of adherence to the AA1000APS (2008) principles of inclusivity, materiality and responsiveness (“the Principles”), and;
• The reliability of specified sustainability performance information. 

Claims in the Report, with the exception of financial information related to Kimberly-Clark’s Annual Report, were included in the scope of our assurance engagement. We used the Global Reporting Initiative (GRI) Quality of Information Principles as Criteria for evaluating performance information.

Responsibilities of Kimberly-Clark Corporation’s Directors and of the Assurance Providers

Kimberly-Clark’s directors have sole responsibility for preparation of the Report. Two Tomorrows, in performing our assurance work, is responsible to Kimberly-Clark’s management. Our statement, however, represents our independent opinion and is intended to inform all stakeholders including Kimberly-Clark’s management.

Two Tomorrows was not involved in the preparation of any part of the Report. We have no other contract with Kimberly-Clark, and this is the second year we have provided assurance. We adopt a balanced approach toward all stakeholders.

Our team comprised Todd Cort and Doug Bannerman. Further information, including individual competencies relating to the team, can be found at www.twotomorrows.com.

Basis of Our Opinion

Our work was designed to gather evidence with the objective of providing moderate assurance as defined in AA1000AS (2008). We undertook the following activities:

• Review of the current sustainability issues that could affect Kimberly-Clark and are of interest to stakeholders;
• Interviews with U.S. senior executives and managers in Roswell, Georgia; Neenah, Wisconsin; and Irving, Texas, who are responsible for management of sustainability issues;
• Review of Kimberly-Clark’s approach to stakeholder engagement and materiality determination. This included interviews with senior managers responsible for engagement with key stakeholder groups and specific investigation of stakeholder engagement activity during a site visit; 
• Review of information Kimberly-Clark provided to Two Tomorrows on its reporting and management processes relating to the Principles;
• One site visit to the company’s LaGrange, Georgia, U.S., non-woven manufacturing facility to assess the controls and processes present at the site in comparison to the claims made at enterprise level and to conduct sample verification of data that is collated into the Report;
• Review of supporting evidence for key claims and data in the report.

Findings

On the basis of the work conducted, and with the exceptions outlined below, nothing came to our attention to suggest that the Report does not properly describe Kimberly-Clark’s adherence to the Principles or its performance. Based on our assessment, we conclude that Kimberly-Clark meets the requirements of the GRI for Application Level B+.

Observations

Without affecting our assurance opinion we also provide the following observations on Kimberly-Clark’s adherence to the three Principles and on the published performance information:

Inclusivity: the participation of stakeholders in developing and achieving an accountable and strategic response to sustainability.

Kimberly-Clark employs a variety of mechanisms to engage stakeholders, solicit feedback and utilize this feedback to inform business decisions, particularly around the identification of risks and opportunities. This proactive stakeholder engagement tends to be focused at the enterprise level, with key examples such as the Sustainability Advisory Board and the consultation with Greenpeace on fiber sourcing policies. However, effective engagement at the operational level can also be an effective driver for risk mitigation and the current focus on enterprise level engagement may miss this potential value. Ideally, systematic processes to tap into broad stakeholder perception can be implemented at each level of the company. 

Stakeholder engagement by Kimberly-Clark is not universally inclusive. Supplier engagement, for example, appears primarily focused on requirements that ensure compliance to Kimberly-Clark standards of practice rather than on efforts to proactively partner with suppliers to understand and address key and emerging challenges or opportunities. These might include quality or safety of products, environmental practices of suppliers, protections of labor standards, etc. The approach to supplier engagement continues to evolve within Kimberly-Clark, particularly with the recent emphasis on a global procurement strategy. We look forward to future discussions of supplier engagement that focus on partnership over compliance.

Materiality: identification of those issues which are necessary for stakeholders to make informed judgments concerning Kimberly-Clark and its impacts.

The Report includes information on Kimberly-Clark’s material sustainability performance issues and should enable stakeholders to make informed judgments and decisions. While Kimberly-Clark has clearly identified material issues in the Report, as evidenced by the company’s 2015 sustainability goals, the process by which the company identifies these priorities is not clear. Moreover, the clear link between the selection of material issues in reporting and business risk management processes is not sufficiently clear. Ideally, Kimberly-Clark would disclose criteria employed to determine which issues are material to stakeholders and which sustainability issues are material to the business.

On specific material issues:

• Pulp manufacturing: Kimberly-Clark has announced its intention to divest pulp manufacturing operations including the Everett, Washington, U.S., mill. The decision to close a mill is a material impact to the community and employees of the mill and we recommend that Kimberly-Clark discuss its efforts to protect the socio-economic interests of these stakeholders. 
• Mexico operations: Kimberly-Clark de Mexico is a joint venture in which Kimberly-Clark does not have operational control. For this reason, data from the Mexico operations is not included in the Report. Although we agree that this operation is outside of the Kimberly-Clark operational boundary, this data may be material to some stakeholders and is currently not reported elsewhere. Therefore, we recommend that Kimberly-Clark provide the data from the Mexico mills in addition to the aggregated group data.
• Public advocacy: Kimberly-Clark undertakes some public advocacy activities and also contributes to trade organizations that undertake lobbying activities. We recommend that Kimberly-Clark make its position on lobbying clear and provide information regarding specific areas of activity.

Responsiveness: the extent to which an organization responds to stakeholder issues.

Kimberly-Clark has well established metrics and targets to promote strong performance in sustainability. In particular, we note the expanded list of health and safety indicators in this year’s Report as an example of metrics that help stakeholders understand the priorities and actions of the company.

Future reports would benefit from more extensive use of benchmarks to provide context on these metrics to readers. Applicable benchmarks might include average industry performance, performance against specific peers or performance against widely accepted standards and norms.

Two Tomorrows (North America) Inc.
San Francisco
June 2011