Banana Split

Banana Split

Aside from producing two of the world’s favorite foods -- ice cream and bananas, which just happen to work well together -- Ben & Jerry’s and Chiquita are seemingly poles apart in every way. How is it then that these two ended up as co-winners of an award for sustainability reporting? By Penny S. Bonda and Katie Sosnowchik



Ben & Jerry’s is the quintessential do-gooder corporation founded by two school chums in a renovated gas station in Vermont that has captured the environmental mantle in the food industry. Chiquita Brands, a huge multi-national corporation, has had a long and sometimes unsavory history that includes accusations of unfair labor practices and bankruptcy. Aside from producing two of the world’s favorite foods -- ice cream and bananas, which just happen to work well together -- they are seemingly poles apart in every way. How is it then that these two ended up as co-winners of an award for sustainability reporting?

In November 2002, the Coalition for Environmentally Responsible Economies (CERES) and the Association of Chartered Certified Accountants (ACCA) initiated their awards for sustainability reporting in the U.S. The program’s goal was to reward transparency; completeness, credibility and communication were the core of the judging criteria. Nineteen companies submitted sustainability, environmental and social reports and, at the end of the day, the judges selected the Ben & Jerry’s and Chiquita entries, though very different in style and approach, as most credible and worthy of winning the Outstanding Sustainability Reporting Award.

Both CERES and ACCA have a long history of promoting accountability as a corporate governance issue through each organization’s work on the Global Reporting Initiative (GRI). Companies that have signed on as signatories to the CERES principles have been obligated since 1992 to complete an annual report, and ACCA has promoted transparency for over a decade in many countries in Europe, Africa and the Asia Pacific region. It has always stood for and promoted the highest levels of accountability within the accountancy profession, but had not made sought-after inroads into North America. For its part, CERES recognized that U.S. corporations have not embraced GRI as robustly as in other countries. Each organization found the other to be a good fit, a partnership was born and the 2002 competition was launched.

One of the ways to draw attention to quality disclosure and transparency among companies is to reward good behavior. Encouraging better reporting and providing guidance to others are among the aim of these awards. The judges were also cognizant of the messages they were sending: sustainability reporting is not a reflection of company size or name recognition. “We weren’t just going for the Fortune 500 companies, nor were we looking at the little companies that can, in a sense, afford to do things in a different way than a great big enterprise could,” said Julie Fox Gorte of the Calvert Asset Management Co. and a CERES board member. “We wanted to make sure that everybody understands that there’s a way to be sustainable, no matter how big or how small or what business you’re in.”

Another of the judges, Joseph Uehlein of the AFL-CIO and also a member of the CERES board, had a particular challenge. He had, for years, been helping human rights groups target Chiquita to improve its corporate behavior vis-à-vis workers; consequently he approached the Chiquita report with quite a bit of skepticism. “I read the report and was amazed,” he remembers. After verifying its credibility, he now admits that the company has changed. “It’s equally important that we reward and recognize corporations that improve,” he believes. “If we don’t do that I think we’re missing part of the incentive for corporations to clean up their act. This company clearly did, and made quantum leaps. I argued strongly for Chiquita to get an award.”

Gorte positioned it this way. “One of the things we’re trying to say is, ‘It ain’t much of a church if you don’t invite in the sinners.’ These two companies -- one that everybody thinks is good and one that everybody thinks is bad -- really stood out as having the best sustainability reporting.” Whereas Ben & Jerry’s was commended for continuing to set an example of impressive reporting, the judges recognized Chiquita for its pioneering efforts by a relatively new reporter.

Intrigued by this “banana split,” [email protected] interviewed both the CEO and the individual within each company most responsible for producing their reports in order to gain insights on how two very different companies -- Luke Skywalker and Darth Vader as Gorte characterized them -- ended up on the same pedestal. The contrast is pronounced in every area but one -- through their transparency they are contributing to the advancement of best practices for all of corporate America.

BEN AND JERRY’S

[email protected]: Why did you add the title of director of social mission to your responsibilities as CEO?

Yves Couette:
There was a senior director of social mission, and when she decided to move on, I had two options. One was to replace this person right away, and the other was to say, “I’m going to do it.” I wanted to show a real commitment from the top. With Ben & Jerry’s being bought by a big multi-national -- Unilever -- people were maybe a bit skeptical about whether our social mission would continue. I said, “Look, I’m going to make it part of my job, and I’m going to show that I’m committed to it.” I think I have done so, but it keeps me very busy.

[email protected]: Did you or Unilever find Ben & Jerry’s commitment to social responsibility intimidating?

YC:
Not really. It was more about having a lot to learn, including a very different way of doing things. I’ve been working 26 years now with Unilever, and it’s very clear to me that Unilever is completely committed to corporate social responsibility and to the environment, and it has done a lot of things with great results. It’s just not being publicized too much. Ben & Jerry’s is much more visible.

The major difference between a big corporation and a company like Ben & Jerry’s is that in a lot of big corporations, actions are more centralized; there might be a corporate social responsibility person in the corporate head office. At Ben & Jerry’s, everybody’s involved -- from the factory and line production workers to people in purchasing and marketing. What I like at Ben & Jerry’s is that when you believe something is right, you go for it. I think bigger companies, sometimes, are a bit shy because they feel that they want to know everything before they start acting.

[email protected]: Ben & Jerry’s mission statement talks about the inter-relationship between product, economics and social responsibility. Can you provide examples of how the company walks that talk?

YC:
I think we do it every day. Look at the product -- I’ve never seen such commitment to quality in other companies. It’s something that’s top-of-mind for everybody, and we will never change that.

On social responsibility -- I think most people joining Ben & Jerry’s do it for a purpose. They do it because they like the company, they are very, very creative and they are very, very committed and active in this area. What I’ve done in this area is to bring more focus, to pick one or two or three big things, and do it deeply.

The last part, which is the economics, this is the area where I have to intervene a little bit more. I think I have to make sure everybody understands what good business practice is, what acceptable levels of profit should be. And I think we’ve made good progress.

[email protected]: Why did Ben & Jerry’s choose to focus on global climate change?

YC:
If you look at our values, it’s all about the environment and social justice. So I wanted to pick something big for the environment. We started looking at global warming, and the more information we got, the more we thought it was very important and very relevant, not only for us today, but for future generations.

I’ve also learned that everybody can help; everybody can have an impact through day-to-day activities. So it becomes a grassroot activity. We asked what we could do at Ben & Jerry’s to educate people, to try to help raise awareness. And so we created our campaign on global warming called One Sweet Whirled, where we teamed up with the Dave Matthews Band and Save Our Environment, a leading coalition of scientists. We went back to the roots of Ben & Jerry’s -- music and activism -- for an issue that’s quite important. And it was a huge success.

It wouldn’t have been complete without a real company commitment, though. What we did within the company was first raise awareness. We also committed the company to reduce the CO2 emission of our factories and our sites by 10% by 2007. And we have offset, for the last two years, the emissions from our factories by buying wind energy from Native Energy.

The last thing we did, which is linked with Unilever, is to sponsor and help fund thermal acoustics refrigeration -- creating cold through sound. Our dream is that, a few years from now, everybody will have a freezer or refrigerator at home that is based on sound and not on polluting gas.

[email protected]: Do you believe the public cares about a company’s social mission?

YC:
Oh, yes. If I travel anywhere and I start talking to somebody and tell them I work for Ben & Jerry’s, people want to talk about the company; they say they love the business, they love the product. We know from our own research that, of course, a lot of consumers buy our products because they are absolutely outstanding. But it’s also true that many of our consumers are very, very interested in what we do. Over the years, Ben & Jerry’s has built a brand with value. It means something.

[email protected]: Are you setting standards for other companies to emulate?

YC:
Not consciously. We do things because we believe it’s right. It’s a priority for us. Maybe sometimes we set benchmarks because people look at us and say, “Wow, what they’re doing is cool. Let’s do it, too.” But, in the same way, we are always looking outside at other companies, what they are doing, because we are trying to improve.

For me, it’s an ongoing process. It’s always a moving target. If there’s one benchmark that I wish we could set, it’s that we would all be open to share. If people look at us and say, “I want to do that,” they are free to come to us, to talk to us -- we share everything.

[email protected]: Which of Ben & Jerry’s achievements are you most proud of?

YC:
I can probably give you four, which are all very different. I said earlier that I had to look carefully at the economics of the company. One thing I had to do, which is something nobody likes to do, is manufacturing restructuring. It didn’t make sense to me for the company to have so many sites. We operated two sites in the south of Vermont that were opened years ago for social reasons, because the south of Vermont was a bit depressed -- there weren’t many jobs there. So, it was a real social decision to do that. But a couple of years ago, this was hard for the company to justify. So I needed to close them, but I wanted to do it in the Ben & Jerry’s way. And we did. When we eliminated the jobs, we gave employees the best severance package we could. We also managed to sell both sites to other companies that are now operating them and are hiring back most of our employees. So, between the employees that are being hired back at those sites and the jobs created in our factories in the north of Vermont -- we managed to basically put the company in a better financial situation for the long-term and do something good for the communities. For me, that was very important.

The second one we’ve also talked about already -- raising awareness of global warming. I think it’s right that we are focusing on it.

We also launched this year a range of products that we called For a Change, products in which the ingredients are sourced from small co-op farms all over the world -- from Latin America, to Indonesia, to other countries. Last, we are testing this year and hopefully going national next year with a line of organic products, which I believe is long overdue for Ben & Jerry’s -- it fits with the brand.

[email protected]: What are your biggest environmental challenges?

YC:
In the next couple of years, I would say it’s distribution and transport -- we have to move products around the country, and we have a lot of refrigerated trucks going everywhere. It’s something that’s difficult for us to impact, because it’s a bit outside of what we do. Hopefully, the Thermal Acoustic Refrigeration project is going to have some good results.

The second area is packaging. In many companies, certainly for us, it’s about 30% of our product cost. We are always looking at ways of getting more efficient and better packaging. Then, if you look at landfill waste, 35% of everything you find there is packaging as well. So, it’s a major issue. We have a project now to see how and when we can have compostible packaging.

[email protected]: Were you surprised by being named a joint winner of this Reporting Award? How do you feel about being paired with Chiquita?

YC:
The award means a great deal to us. It recognizes exactly what we are trying to be and trying to do, which is all about transparency. We believe that transparency is the way to make progress -- recognizing what’s going well and what is not going so well, and accepting the fact that nothing is perfect, but we can improve. If there’s something that we are doing wrong, we are prepared to recognize it and change it.

We’re always surprised when we get an award because everything we do in this company we do out of passion -- it’s part of our every day life. Everything we report here is as much for ourselves as for the outside world; it’s a way of benchmarking ourselves against ourselves. So, we just do it and we report it. Then suddenly we get this nice reward. We are very honored.

I think it’s great to see companies, such as Chiquita, committing themselves to become socially responsible businesses. Chiquita is in a unique position to lead the way -- it is dealing with the developing world where it can have a huge impact. And it has done that through very, very difficult times. I believe it shows their commitment; I wish that many, many more companies were doing that as well.

By having a social audit and more transparency, it is going to help everybody in the long run. If we and other businesses are more open and more transparent and do a better job every year, the world can be a better place. I know we’re going to change the world one pint at a time.

CHIQUITA

[email protected]: 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.

[email protected]: Chiquita has been the target of much environmental criticism. Do you cringe at how you used to be perceived?

CF:
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.

[email protected]: Corporate social responsibility has great appeal to stakeholder groups: consumers, employees and shareholders. Have you found this reflected in your bottom line?

CF:
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.

[email protected]: 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?

CF:
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% 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.

[email protected]: As a multi-national company, Chiquita is continually challenged to adapt to a changing world. How has this contributed to your challenges and success?

CF:
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.

[email protected]: Do you believe you are setting benchmarks for others in the food and beverage sector?

CF:
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.

[email protected]: Were you surprised by being named a joint winner this Reporting Award? How do you feel about being paired with Ben & Jerry’s?

CF:
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.

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This article has been reprinted courtesy of [email protected] magazine. It first appeared in the July/August 2003 issue of that publication.
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