Committed toSustainabilityKimberly-Clark Australia & New Zealand Sustainability 2020 Update (2018)

Australia & New Zealand

A Message from our Managing Director, Doug CunninghamAt Kimberly-Clark, sustainability has always played an important part in shaping our business strategy and company vision to lead the world in essentials for a better life.

We have a responsibility to our consumers, our customers and the communities in which we work and live to drive positive change and sustainable growth. By incorporating sustainable practices into our strategy, we are able to create social, environmental and financial value for both our company and the communities we touch.

We launched our five year sustainability strategy for Australia and New Zealand (ANZ) in 2016 with a set of measurable sustainability objectives that help us deliver value across five key priority areas – Social Impact, Forests & Fibre, Waste & Recycling, Energy & Climate, and Supply Chain. The strategy brings together the power of our brands, operations and employees and guides the development of initiatives, practices and the ways we work with our customers, consumers, partners and suppliers to ensure we’re looking after our world for generations to come.

I am proud to share with you our most recent ANZ Sustainability update for 2018, a summary of our local performance in the third year of the Sustainability 2020 strategy. I am pleased that at the end of year three, we remain on track with our new goals – and importantly we have already exceeded our Energy & Climate goal to reduce our carbon emissions by 40%.

Whilst we have achieved a number of worthy milestones through our partnerships and programs, we must continue to develop our initiatives and strategy in light of new challenges, including changing consumer expectations, and push ourselves to do even more.

I would like to thank our ANZ employees for all their great work and dedication to create a safer and more sustainable future and look forward to what’s to come.

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TSUPPLYCHAIN

FOREST ENERGY& CLIMATEWASTE &

RECYCLINGIMPROVE THE

WELL-BEING OF

1.2MPEOPLE

THROUGHOUR BRANDS

EXTEND OUR

ZEROWASTE

MINDSET

40%REDUCTIONIN CARBONEMISSIONS

100%COMPLIANT WITH ENVIRONMENTAL

HEALTH AND SAFETY STANDARDS

MAINTAIN

100%OF FIBRE FROMFSC® CERTIFIED

OR FSC®

CONTROLLED WOOD SOURCES

1,015,570 LIVESImproved through

our brand-led social and education programs since 2016

100%Fibre from FSC®

certified or FSC® controlled wood sources

91.9% Manufacturing waste diverted

from landfill

21 TONNESof post-consumer flexible plastics

recycled in Australia

60% Reduction in carbon emissions from 2011 baseline

ON TRACK

SUSTAINABILITY 2020PROGRESS SCORECARD

OURPRIORITIES

ANZ2020 GOALS

2018PROGRESS

HUGGIESIt is our Huggies brand ambition to extend a mother’s embrace with our essential products to ensure babies can thrive, so we’re using the power of Huggies to give back to causes and communities in need.

We provide financial assistance to the Rhodanthe Lipsett Indigenous Midwifery Trust, a scholarship fund established to support Aboriginal and Torres Strait Islander midwifery students with their education and transition into the workforce.

We partner with Life’s Little Treasures Foundation (LLTF), Australia’s leading charity supporting premature and sick babies, to provide families in need with our Huggies premmie and newborn nappies. In 2018 we reached over 800 Aussie families in need. For the second year running, we were major sponsors of the LLTF annual fundraiser Walk for Prems, which took place across major cities in Australia to raise funds and awareness for premature babies.

Globally, Kimberly-Clark is proud to deliver essentials for a better life to one-quarter of the world’s population every day through our leading brands such as Kleenex®, Huggies®, U by Kotex® and Depend®. Our programs are focused on increasing access to sanitation, helping children thrive, and empowering women and girls.

Locally we are committed to driving meaningful and lasting change in Australia and New Zealand through our brand-led initiatives and community partnerships. Since the launch of our strategy in 2016, we have improved the lives of over 1,015,570 people through our brand-led social and education programs.

We also continue to donate our Huggies products to the The Nappy Collective, an Australian charity which calls on individuals and communities to donate leftover, unused, disposable nappies which will provide vital support to vulnerable families across the country.

We have a strong 26-year partnership with Plunket, New Zealand’s largest provider of support services for the development, health and wellbeing of children under five. After launching the South Auckland nappy bank initiative in 2017, we provided over half a million nappies to families and communities in need of support in 2018, as well as a further 170,000 nappies to Plunket for

distribution to other parts of the country. More broadly, our Huggies brand continues to support Plunket with a range of education initiatives, awareness campaigns and sampling programs, to ensure babies and children are given access to the essential resources needed to thrive.

In Papua New Guinea (PNG) and American Samoa we have established a Hospitals Program with our distributors, where mothers at participating hospitals receive a newborn gift pack which includes a combination of Huggies and Poise® products. We also run a Clinic Program in PNG to educate families and communities on nappy usage and correct disposal methods.

Note: The data point 1,015,570 lives impacted through brand-led social and education programs’ – pertains to the total number of people reached through our Plunket partnership initiatives in New Zealand and our U by Kotex Education programs in Australia and New Zealand since 2016. 4

2020 GOAL Improve the well-being of 1.2 million

people through our brands

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U BY KOTEX®

Our U by Kotex brand is passionate about championing women’s progress and ensuring that a period or social stigmas about periods, never hold women back from achieving their full potential. We support vulnerable women through a number of different initiatives through Australia and New Zealand (ANZ) and the Pacific Islands.

We work closely with national Australian charity Share the Dignity, to support their efforts in ensuring vulnerable women have access to feminine hygiene products when and where they need them – whether in remote Indigenous communities, homeless and domestic violence shelters or elsewhere.

In 2018 we donated over 8,640 packs of our sanitary products to Share the Dignity’s April and August campaign drives. Our team in Sydney also proudly participated in Share the Dignity’s annual Christmas fundraiser ‘It’s In

the Bag’, by donating thoughtful handbags filled with essential items and little luxuries to make Christmas brighter for women in need.

We supported a new national research project at the University of Western Sydney, which aimed to reduce the incidence of undiagnosed menstrual disorders (e.g. endometriosis, polycystic ovaries) and improve the levels of knowledge and understanding relating to the menstrual cycle and its management amongst young women. The findings from this study allowed our U by Kotex team and the researchers to develop the online resource ‘Menstruation Matters’, available through the University’s NICM Health Research Institute.

In 2018 we also reached over 239,900 students across ANZ with our U by Kotex Puberty Education Program, which provides teachers and health professionals with valuable

resources developed in consultation with experienced teachers, including lesson plans, interactive digital teaching materials and product samples to support their lessons on puberty and menstruation. We also have a similar education program available for students in Papua New Guinea and Fiji!

In New Zealand, our U by Kotex brand sponsors Endometriosis New Zealand, which delivers education programs to schools on ‘What a healthy period looks like’ and we reached over 10,000 students via this partnership alone.

We also donated over 10,000 U by Kotex feminine hygiene packs to New Zealand not-for-profit The Foodbank Project, an online hub which allows shoppers to donate groceries to Kiwis in need. Local supermarket chain Countdown will then pack these orders for the Salvation Army to distribute to families and communities across the country.

FOODBANKWe work closely with Foodbank, Australia’s largest hunger relief organisation, to ensure more than 4 million disadvantaged Australians still have access to basic essentials during times of need. Last year we donated 75,120kgs of our products to the cause. In addition to our regular donations, we also provided additional support during natural disasters. In 2018, Australia experienced one of the worst droughts in decades, so to lend our support to farming and rural communities, we donated over 40 pallets of our essential products to the much-needed drought relief efforts.

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100% of the fibre used in our all our Australian manufactured tissue and towel products has been sourced from FSC® certified or FSC® controlled wood sources.

We have a long-standing relationship, both globally and locally, with WWF. Kimberly-Clark is a participant of the Global Forest and Trade Network (GFTN), which promotes responsible forest management and trade to reduce the impacts of the pulp and paper sector and conserve

the world’s valuable and threatened forests. GFTN works with more than 300 companies across the globe that are committed to ensuring a legal, responsible and sustainable forestry supply chain.

We’re pleased that our Love Your Forests campaign, which we established in partnership with WWF-Australia from 2011 until mid-2018, achieved great results and its intended purpose. Over the last seven years, we successfully raised awareness of responsible forest management, FSC® as the certification of choice when shopping, and highlighted the importance of sourcing tissue, paper and timber products from responsibly managed forests. Since the campaign launched in 2011, consumer awareness of FSC® increased significantly to 34% from a very low base. Kimberly-Clark Australia and WWF-Australia are delighted with this result, and are pleased that it inspired a similar campaign in the United States, Love Your Planet. Since the campaign commenced, we have seen a marked uptake in FSC® certification right across the tissue sector.

As one of the world’s largest buyers of market pulp, we have an important role to play in protecting the world’s forests and understand that our involvement is critical to creating a resilient supply chain for our products. Globally Kimberly-Clark has been recognised as a market leader for responsible fibre sourcing and forest protecting by major environmental groups like Forest Stewardship Council® (FSC®), Greenpeace, and WWF.

We’re aware that there remains difficult work ahead to drive further improvements. We are continuing to look for alternatives to traditional sources of fibre for our products, while encouraging our suppliers, customers, and consumers to look for FSC® certification.

2020 GOALMaintain 100% of fibre from FSC® certified

or FSC® controlled wood sourcesWe have maintained Environmental Choice New Zealand (ECNZ) certification across a wide selection of our Kimberly-Clark Professional paper products, which include our Kleenex® and Scott® Toilet Tissue and Kleenex and Scott Compact and Optimum Towel range. We are continuously exploring different ways to reduce the environmental impacts of our products, so this certification serves as validation that we are on the right track. Importantly the ECNZ certification provides consumers a credible and independent guide for consumers on which products have been proven to be better for the environment.

In 2018 we also continued our Kleenex Facial Tissue brand partnership with the Wingspan National Bird of Prey Centre as part of our SneezeSafe Healthy Forests education program. In support of conservation efforts for the threatened Kārearea species (New Zealand Falcon), New Zealand primary and intermediate schools were provided with free teaching resources to educate children about the importance of the Kārearea and encourage the protection of their natural pine forest environments.

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packaging. One example is that in 2018, we reduced the amount of plastic wrap we used to ship our VIVA® Paper Towel, Kleenex® Toilet and Facial Tissues and Scott® Bath Tissue to our customers which resulted in a reduction of 40,330 kg of plastic.

PACKAGINGIn 2018 in Australia, 21 tonnes or 5.2 million pieces of Kimberly-Clark flexible plastic packaging was diverted from landfill and recycled, which is an incredible 53% increase from 2017. These plastics were recycled through our foundation partnership with REDcycle, a recycling program which enables consumers to drop their flexible plastics off at one of their designated bins located around the country. The soft plastics are then collected and sent to local manufacturer, Replas, to be converted into quality recycled-plastic products for schools and communities. In New Zealand we have a similar partnership with the Soft Plastics Recycling Program.

We are focused on designing packaging to be 100% recyclable, reusable, or compostable by 2025 and identify partnerships and systems-based innovations that enable recycling. Our aspiration is to divert materials from our oceans and landfills and keep them in the value chain for secondary, beneficial uses.

As a member of the Australian Packaging Covenant Organisation (APCO), we are always reviewing our practices to ensure we are optimising our packaging, to adopt more sustainable materials. We ensure our packaging design selection is carried out under the principles of the APCO Sustainable Packaging Guidelines (SPG), which outline the principles for optimising the design and selection of packaging for the environment.

Every month we meet with our packaging suppliers to investigate how we can better optimise our current

Across our business, we are always on the lookout for opportunities to extend our zero-waste mindset, so that we can continue to eliminate waste in our processes, products and packaging.

We understand the value of materials in our product categories and seek secondary, beneficial uses of these materials from source to shelf – and beyond. Our program focuses on utilising materials efficiently in product and packaging design and manufacturing, and diverting manufacturing and post-consumer waste from low value outlets (landfill) to higher value, beneficial uses.

2020 GOALExtend our zero waste mindset

WASTE In 2018, we successfully diverted 91.9% of our manufacturing waste from landfill.

We celebrated with our Millicent Mill, as they passed the annual surveillance audit for ISO 14001:2015, Environmental Management Systems, for the 10th consecutive year. This accreditation is highly regarded and ensures that our facility at Millicent has continued to demonstrate a consistent and dedicated approach to environmental management and sustainable development.

Our Millicent Mill is also regularly exploring possible solutions to reduce our waste. In 2018, 93.1% of the solid waste material generated from the mill was successfully recycled. This included sludge (tissue fibre), low density polypropylene plastic, cardboard, scrap metal and e-waste materials.

DO NOT FLUSHAs a major producer of a wide range of non-woven, single-use products, we understand that we have a significant role to play in educating consumers and increasing awareness on how to correctly dispose of products, to prevent harmful materials from contaminating the environment or entering our water systems. In recent years, we have updated the labelling on the majority of our non-flushable consumer products, which include our Huggies® Baby Wipes, U by Kotex® Tampons and Kleenex Facial Tissues among others, to include a clear ‘DO NOT FLUSH’ logo.

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Since 2011, we have successfully reduced carbon dioxide emissions by 60% by improving processes at our manufacturing sites to deliver energy efficiencies. This has been achieved while also increasing production numbers.

Our state-of-the-art $33 million cogeneration facility at Millicent Mill plays a critical role in making the mill more energy efficient while reducing emissions. By utilising the waste heat in the exhaust from the gas turbine as a replacement for hot air generated by natural gas in paper drying and steam production, the mill benefits from lower energy consumption, lower energy costs and the overall environmental benefits of reduced carbon dioxide emissions. By optimising energy programs, the team at Millicent Mill has managed to reduce the overall carbon dioxide emissions per tonne of production from 2017 to 2018 by 7%.

In 2018, the team at our Ingleburn Mill upgraded the office lighting to LED lighting, which reduced their energy consumption by 166 MWh/year. The mill also took part in a heating, ventilation and air conditioning (HVAC) optimisation project, which resulted in changing the control methodology for the equipment to reduce energy consumption, without impacting its effectiveness. This resulted in energy savings of 530 MWh/year.

We’ve been working hard to reduce the amount of energy we consume, reduce greenhouse gas emissions (GHG) and create energy efficiencies across our entire business. At our manufacturing site in Millicent, we have a strong focus on energy conservation and alternative energy programs to minimise climate change impacts, reduce GHG emissions from our operations and transform our financial performance.

2020 GOAL40% reduction in carbon emissions

Note: Correction from 2017 report. The 2017 greenhouse gas emissions reduction number was incorrectly stated in last year’s sustainability update. The reduction was stated as 47% when it should have been communicated as a 59.3% reduction in greenhouse gas emissions from our 2011 baseline. This occurred as we incorrectly excluded the Albury Mill and Tantanoola Mill facilities (which closed in 2015 and 2011, respectively). However according to the greenhouse gas (GHG) protocol we follow as an enterprise, we should have included these facilities in baseline calculations. Our 2011 baseline now includes greenhouse gas emissions from both facilities. 8

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COMMITMENT TO HUMAN RIGHTS AND PRACTICESGlobally, Kimberly-Clark is a signatory to the United Nations Global Compact, meaning we are committed to upholding the Compact’s 10 Principles (per UNGC) on human rights, labour standards, the environment and anticorruption, working within our sphere of influence to encourage their support.

We remain dedicated to ensuring that employees around the world – including those of our suppliers – are treated with respect and that our workplace and human rights standards are met. This commitment is formalised in our Human Rights in Employment Policy and our Code of Conduct, which guides our interaction with suppliers, partners, customers and consumers worldwide.

Similarly, we have published Supplier Social Compliance Standards (SSCS) that sets forth our principles and

As a global company with a global supply chain, Kimberly-Clark is committed to creating a supply chain that is strong and resilient. We recognise that a responsible supply chain creates value for our customers, suppliers and minimises risk to our ongoing business success. It also helps us deliver the essentials for a better life that one-quarter of the world’s population relies on every day.

Our program focuses on working with our mills and key suppliers to ensure our standards for social and environmental compliance are met; ensuring that the products and materials we purchase come from traceable, resilient, and sustainable sources; and collaborating with our supply chain partners to drive innovation in sustainability and create value for our business and our customers.

procedures to hold suppliers, employees, and contractors accountable for combating forced labour and human trafficking. Suppliers acknowledge and agree to the SSCS as part of their contracts with Kimberly-Clark.

In 2018, we met our Social Compliance target for Kimberly-Clark sites and facilities by assuring 100% compliance with customer and licensor requirements as well as with our own Social Compliance Standards. Centred on our values and reflecting our vision, our Supplier Social Compliance Standards are aligned with the goals of international standards like the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work.

We assess and ensure both our suppliers and our own facilities comply with our standards through third-party audits. The Sedex SMETA 4 pillar audit standard is deployed as our preferred audit protocol. However, as members of the AIM-Progress, we also support the principle of Mutual Recognition and honour equivalent, recently-conducted audit reports conducted by accredited third-party auditors.

2020 GOAL100% compliant with environmental

health and safety standards

SAFETY & WELLBEINGKimberly-Clark is proud to have industry-leading performance in safety, yet we always aspire to do better. Our safety vision is to realise an incident free workplace. While 2018 was a strong year operationally for our business, we did unfortunately experience a rise in reportable injuries compared to 2017.

Incidents are an important reminder that we must continue to act cautiously and continue to check and adjust our safety improvement initiatives to ensure everyone working for and on behalf of our company returns home safely each day. We will continue to focus on proactive risk reduction and employee awareness of essential safety principles and preventative measures.

We also remain committed to employee wellbeing, with our comprehensive and award-winning sales and corporate office safety program. This program provides a framework to identify and reduce risk in our workplaces, delivers health and safety training opportunities, assists employees to evaluate and set wellness goals, access a range of resources and encourage employees to strive towards a balanced healthy lifestyle.

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WATERWater is a very valuable resource, critical to our manufacturing process, and its importance will only rise as the world’s population and economies continue to grow. Our water conservation and recycling initiatives are centred on our Millicent Mill in South Australia.

We are regularly improving our processes and reviewing our methods, in order to continue to improve our water stewardship and impact on the local community. Water volumes discharging from the mill are now only 30% of what they were at the beginning of 2011, with a visible improvement to the quality.

In addition, in 2012, the water discharged from our Millicent Mill was tested and successfully met the Australian Drinking Water Guidelines (aside from traces of E.coli). While we have not specifically tested against this same standard in recent years, other related testing has indicated that our performance has remained consistent.