to a Changing World
By Penny Bonda and Katie Sosnowchik
Cover and Portrait Photography By Jim Robinette
The CERES/ACCA award was given for the transparency of your communications,
not performance. What does winning this award mean to you?
CYRUS FREIDHEIM: It means that we’re on the right track.
We didn’t start reporting in the way we do in order to win
awards. We did it to build credibility and trust. This award validates
that what stakeholders really respect most is openness and honesty
in reporting. We measure ourselves against leading standards of
environmental and social performance—and we tell it like
it is, in detail: where we’re performing well or poorly,
and what progress we’re making against our goals. For us,
it’s just a logical extension of the values we adopted a
few years ago, in particular the statement that, “We communicate
in an open, honest and straightforward manner.” And so to
answer your question—we’re delighted. We think that
what they’ve recognized is exactly what we’re trying
Chiquita has been the target of much environmental criticism. Do
you cringe at how you used to be perceived?
FREIDHEIM: The answer is no. Why should we? The history of every
company has some skeletons in the closet. I think the most important
thing is what the company did about it. If you read most of the
reports of companies on what they’re doing in the community
or social responsibility arenas, there are whitewashes; they focus
only on those things that are good. They never mention that anything
is not quite there yet.
I was overwhelmed when I saw the first report and saw that the
company was willing to say, “Look, we’re not perfect,
but we’re getting a hell of a lot better than we were before.” I
think that’s an attitude that is extraordinarily positive.
It bodes extremely well for further recruitments because the company
understands that it’s not perfect. The fact that the company
went public with this and showed those issues to others on the
outside was extraordinary and is probably one of the only ways
that we could truly get across to our critics, who were harsh,
that there is a change going on.
Corporate social responsibility has great appeal to stakeholder
groups: consumers, employees and shareholders. Have you found this
reflected in your bottom line?
FREIDHEIM: We’re not measuring this by the bottom line. We
are basically doing this because we believe it’s the right
thing to do. And while there have been financial benefits, rescuing
our reputation has been priceless. Employee pride has clearly improved,
the value of the Chiquita brand has risen, activist campaigns directed
against us in the late ’90s have essentially gone away and
the tone of our media coverage has turned around, e.g., a recent
Financial Times feature that called Chiquita “the banana
giant that found its gentle side.”
So reputation was really a huge issue, but sound environmental
management has reduced costs. For example, in 2002, we saved more
than $5 million compared to 1997 by using fewer agrichemicals,
largely because of best practices implemented as part of the Rainforest
Alliance certification program.
Even very difficult problems have been easier to resolve because
of our values and our commitment to open, honest, straightforward
communication. We recently sold one of our banana divisions to
a worker-owned cooperative, converting a money-losing owned operation
to a long-term purchased fruit contract at competitive prices.
The sale was only possible with the active support of the local
union and the Government of Panama, which we got because of the
stance we’ve been taking on issues of corporate responsibility
both with the workers and with the environment. In this case, we
fairly balanced the needs of our stakeholders, and everyone came
out far ahead, in light of the alternatives. For the company, it
will mean savings of about $14 million a year.
A number of leading customers have begun evaluating us to determine
if we operate in a sustainable manner. The Co-operative Group in
the United Kingdom is one such customer. We recently gained their
business only after the Co-op had an independent firm conduct a
week-long audit of one of our production divisions. Retailers are
beginning to understand that their customers are interested in
the social and environmental performance of the companies and products
they buy. European consumers are already extremely conscious of
the origins of products and the importance of corporate responsibility.
North American consumers are likely to follow this trend.
We welcome this scrutiny; in fact, we hope that retailers and consumers
begin to require social and environmental standards. We believe
that Chiquita will benefit when all competitors are held to rigorous
Your web site states that Chiquita is “dedicated to living
our Core Values, adhering to our Code of Conduct and achieving
high performance standards.” Can you elaborate on the details
of these standards?
FREIDHEIM: The company measures itself against leading standards
of environmental and social performance from the Rainforest Alliance
and SA8000. We chose these standards because they are rigorous,
objective, measurable and credible.
In 1992, the company began working with the Rainforest Alliance,
a non-profit organization that developed agricultural certification
standards for a variety of crops, including bananas. Chiquita set
a target to get all of its owned banana farms certified to the
Rainforest Alliance standards. These standards are tough, covering
both environmental and social performance. In 2000 and in each
year since, Chiquita achieved Rainforest Alliance certification
on 100 percent of our Latin American farms, covering an area of
more than 60,000 acres.
We based the labor rights portion of our code on SA8000, an independent
standard developed by Social Accountability International in collaboration
with a wide range of labor, consumer, business, governmental and
non-governmental organizations. SA8000 is built on the core labor
conventions of the ILO and human rights standards. Its strength
is that it helps companies identify specific issues that require
change in important areas such as child labor, worker health and
safety, discrimination and others. Just a few months ago, our operations
in Costa Rica achieved SA8000 certification and our operations
in Colombia and Panama are on track to earn certification later
this year, which would mean more than half of our farm employees
would work at SA8000-certified divisions.
We also partner directly with labor unions to improve our social
performance. In June 2001, we signed a groundbreaking labor rights
agreement with the International Union of Foodworkers—the
IUF—and COLSIBA, a coalition of banana worker unions in Latin
As a multi-national company, Chiquita is continually challenged
to adapt to a changing world. How has this contributed to your
challenges and success?
FREIDHEIM: The concept of what it means to be a “responsible” company
has changed over the course of our 100-year history. On the positive
side, we created thousands of jobs and contributed to the social
and economic development of many rural areas in Latin America.
Throughout our early history, we built railroads, houses, hospitals,
ports, roads, utilities, electricity generation, water purification
and other infrastructure to bring bananas to market.
But conditions on some of our farms by our standards were frankly
dreadful—even in the late ’80s and early ’90s.
And, as with virtually all multinationals working in Latin America,
the company was closed and defensive, rarely discussing the conditions
on its farms.
I’m proud that Chiquita began in the early ’90s to
change its environmental and social performance. If the mark of
a successful company is the ability to adapt to a changing world,
then we’ve got 100 years of experience that says we’ll
be successful. We’re just getting better with time.
Do you believe you are setting benchmarks for others in the food
and beverage sector?
FREIDHEIM: One of our goals is to become a recognized corporate
leader in social and environmental responsibility, so we are keenly
interested in models of best practice. In fact, we’ve learned
a lot from the experience of other companies. We support the development
of common reporting frameworks, like the Global Reporting Initiative,
but we have also experimented with new approaches, like our charts
on compliance with the Rainforest Alliance and SA8000 standards.
As we adapt our approach, we are simply doing what we believe is
right for Chiquita, but we are also pleased if that serves as a
positive example for others. Perhaps it can help spur a “race
to the top” in which all companies operate responsibly and
report transparently on their performance. If a company like Chiquita
with such a long and controversial history can transform itself,
we think that other companies can, too.
Were you surprised by being named a joint winner this Reporting
Award? How do you feel about being paired with Ben & Jerry’s?
FREIDHEIM: We were both surprised and delighted. Two completely
different companies were selected that have come to the same place,
but from very different directions. Ben and Jerry founded the firm
with a profound commitment to its social mission, its suppliers
and community; Chiquita over the years kind of lost its way, then
rediscovered it and corrected its ways and came to the same end,
i.e., being a very responsible and corporate citizen both in the
environment and on social issues.
Of course, most people have known for some time that bananas and
ice cream are naturally great together.
Driving Cultural Change
Zalla, corporate responsibility officer and vice president
of corporate communications, acknowledges that Chiquita knew
in the late ’90s that the company had a serious image
problem. “We faced a lot of criticism from global media
and from NGOs, particularly in Europe, and we had what we felt
was a credibility crisis. So we launched this focused effort
in corporate responsibility to define
the values that we wanted the organization to live by, to define
the standards that we wanted all Chiquita employees around
the world to uphold, and to measure ourselves rigorously against
clear performance standards.”
Now, he says, transparency is simply “an expression of
our values,” one of which is that the company communicates
in an open, honest and straightforward manner. “We knew
if we were going to be successful in driving the kind
of cultural change that we needed in Chiquita,
the employees have to respect us both for our values and our
standards and the integrity with which we went about achieving
them. So from the very first report that we issued in 2001,
we knew that employees had to see the real Chiquita—the
Chiquita they see every day on
the ground—reflected in our report.”
“Fortunately, other stakeholders have responded well, in the
way we hoped that they would,” Zalla added. “Award
judges were able to confirm with Ron Oswald of the International
Union of Food Workers, for example, or Steven Coats at the
U.S. Labor Education and the Americas Project, that Chiquita
is serious about its standards, it’s engaged in meaningful
dialogue with stakeholders, it’s responding well to criticisms,
and it’s making very consistent progress toward clear
So it’s a wholesale change in the way Chiquita measures
and approaches its performance.”
Chiquita, he said, recognized that it had a hundred years of
history to overcome. “We were a force for tremendous
economic and social development in very remote areas, particularly
in Central America, but we also had helped give rise to the
notion of banana republics. The United Fruit Company history
is well known and we knew from the very first report that we
issued that in order for people to give us the benefit of the
doubt and to recognize that Chiquita was serious and genuine
in its intent to change, we needed to cite these key events
in our history: labor rights suppression in Colombia in 1928,
support in an overthrow of the Guatemala
government in 1954, a bribery scandal in Honduras in 1975.
Those events, when fairly
told, don’t reflect well on the company’s history.
“But that’s not the company that we are today,” he
added. “We haven’t been criticized
for citing negative events in the company’s
history. In fact, most people have simply applauded us for
the honesty and transparency with which we’ve gone about
Zalla is proud of Chiquita’s approach to implementing
corporate responsibility standards and reporting. Its approach,
he describes, is
simple, direct, consistent and logical: define the values;
select the standards; educate employees; rigorously measure
performance; set goals; assess progress; report openly and
honestly; and continuously improve.
“I am proud that we were willing to take a risk and be transparent—telling
it like it is—the whole story. And I am proud that stakeholders
have responded well, as I hoped they would,
so other companies are more likely to follow in our footsteps.”
Ben & Jerry's...