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Corporate Social Responsibility (CSR) is an idea that corporations have to consider the interests of customers, employees, shareholders, communities, and ecological considerations in all
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green@work : Magazine : Back Issues : July/Aug 2003 : Cover : Chiquita

Adapting to a Changing World

By Penny Bonda and Katie Sosnowchik
Cover and Portrait Photography By Jim Robinette

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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 to achieve.

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 performance standards.

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 America.

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

Jeff 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 performance standards.

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 it.”

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...

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