Ed Lonergan, the sophomore CEO of Chiquita Brands International, says this about himself in the introduction:
“Long before I joined Chiquita, I was aware of this effort to lead an industry with a controversial history into a new era of high ethical standards — and it was a key factor in my decision to join Chiquita.”
Lonergan’s statement is impossible to accept at face value. His expertise is as a turnaround specialist. His job is to set financially troubled companies straight, which is the reason why Chiquita hired him a year ago in October 2012.
What’s more, the company was not out to lead the “industry”. Chiquita was distancing itself from a dark past. The company had aspirations for prospering in the 21st century and wanted to go in a new direction.
Over the course of 114 years, Chiquita Brands had ventured into places far beyond “controversial”. The company was linked to the most nefarious activities recorded in the annals of American business. We’re talking here about historic events like a bloody suppression of labour protests in Colombia, the overthrow of the government of Guatemala, and covert support for the US invasion of Cuba at the Bay of Pigs. Ordinary bribery and scandal were appetizers on this company’s menu.
Chiquita’s collaboration with the Rainforest Alliance began 20 years ago. The partnership was a brave step for both parties. It led to independent, on-site audits of Chiquita’s social and environmental performance through the NGO’s Better Banana Project. The arrangement set a standard for similar deals between public groups and private firms.
Recognition of Chiquita’s efforts came in 2003. The company shared first place (with Ben & Jerry’s) for the best corporate sustainability report in the US. The contest was the first to be jointly sponsored by the London-based, global Association of Chartered Certified Accountants and Ceres, the Boston-based group of social investors.
Chiquita’s initial reports in 2000, 2001, and 2002 came as the company was emerging from bankruptcy. They were done under the tutelage of Jeffrey Zalla, the company’s first corporate responsibility officer and the treasurer. He became CFO before leaving in August 2009 to start a private equity firm.
The trio of initial reports included colour-coded tables depicting levels of conformance with the criteria of the SA 8000 social accountability standard. Each corporate division charted scores as measured against Rainforest’s environmental metrics. Graphs illustrated how employees rated the company’s adherence to core sustainability values.
Goals were identified as achieved or not, and the reasons explained. Outsiders gave attestations about Chiquita’s accomplishments against voluntary initiatives. The reports were peppered with frank comments of this nature: “…while all divisions earned recertification, our scores were 1 to 4 percent below the previous year in six of our seven divisions. This decrease was primarily due to stricter standards and the divisions’ failure to correct some previously observed problems.”
Except for a page or two in its annual accounting to the US Securities and Exchange Commission, Chiquita didn’t publish again until 2008. Yet another long interval of silence followed. The latest report is intended to cover the years from 2009 through 2012. It doesn’t hold a candle to the old ones.
Chiquita serves up a relentless recitation of their activities— a boatload of them: the COBAL registry for handling employee concerns; the GAIN program for lettuce farming; Target Zero for occupational safety; carbon footprinting for bananas calculated with the help of a research team at MIT; water footprinting with the help of WWF; a 7 Steps of Prevention program for salad products; the Pulse program for employee empowerment; a committee formed with international trade unions to improve conditions for women workers; a system for biodigestion in Costa Rica; Pro Planet product labelling from the German retailer REWE Group; and much more.
Of course, the Rainforest Alliance is also mentioned — scores of times on 19 different pages, or 30% of the report.
Other information is thrown in for good measure.
All the company’s memberships and partnerships are listed. The corporate responsibility officer, Manuel Rodriguez answers questions in a canned interview. General priorities are mentioned (of this ilk: “maintain farm certification programs”; and “build new and strengthen existing alliances”). Two targets are set: 15% reduction in water use; 30% in carbon emissions. The objectives are from a baseline of 2007, not as once promised from 2000. Along the way hot links connect readers to short videos.
At the back of the report, cross-references are made to indicators from the Global Reporting Initiative guidelines. Chiquita is careful, though, to conclude: “Our Corporate Social Responsibility Report is not a full disclosure of all of the company’s social, economic, and environmental projects that took place during the reporting period. Please refer to other sources ….”
The titles of Chiquita’s reports have provided a glimpse into the corporation’s frame of mind. The first one was officially just a “Corporate Sustainability Report”. But the CEO headlined his introductory statement, “A New Spirit of Openness”. This was followed in successive years by reports titled “Our Continuing Commitment” and “Sustaining Progress”.
After a long absence from the reporting scene, in 2008 Chiquita changed the style and content of their previous disclosures. The report was tagged, appropriately, with an innocuous title: “Our Company. Our Communities. Our Planet.”
This latest report follows same formula used in the 2008 edition. It is called “Our Renewed Purpose”. The intent seems to be just that: present as convincing a case as possible to prove that Chiquita is ploughing ahead with its previous commitments. The report amounts to an almanac of Chiquita’s environmental, social, and economic initiatives.
The activities are described one after another, relentlessly and in detail but with no overarching context. Readers who stick with it from start to finish might be dazzled by Chiquita’s accomplishments and want to run off to work on a plantation in Central America. More likely, they will be inclined to pat themselves on the back for persevering through it.
Chiquita Brands acknowledged their legacy — and more or less apologised. But the inherently tough job of managing ESG affairs under the conditions that prevail in banana-growing countries is made doubly difficult by detractors with political agendas and social media critics with no special credentials. They show no inclination to stop.
The company still has its hands full rebutting allegations about dealings with Colombian terrorist groups during the 1990s. Chiquita cooperated with the US Department of Justice and paid a fine of $25 million in March 2007 while pleading guilty to having made illegal payments to a right-wing para-military group. Suffice it to say that the situation was not black-and-white, and at stake were the lives of Chiquita growers and farmer workers. Chiquita gave a two-page interpretation of the affair in the 2008 social responsibility report.
The question here, though, is not about which side is right or wrong. The issue is transparency and how well Chiquita presents information in corporate sustainability reports. If the company has a credibility gap, it is not related to the factual presentation of ESG activities. Any fair analysis will find the efforts are real and rigorous.
But Chiquita stopped reporting ESG matters after 2002 and then again after 2008. The company does not have a word to say why. Stock in the company fell about 45% during the period covered by this sustainability report. Are the environmental and social initiatives really good for business as Chiquita claims?
The company says it is in the throes of yet another transformation. Headquarters were just transferred to Charlotte, North Carolina, from Cincinnati, Ohio — less than a 500-mile drive but light years away. The new CEO has sharpened his cost-cutting knives. How does the reappearance of sustainability reporting fit the current situation?
There is a limit on how many bites of the banana investors and other parties interested in sustainability are willing to let Chiquita take.
1. You say you intend to report annually. Don’t do another one like this.
2. Strive for consistency and continuity.
3. Where is Jeff Zalla when you really need him?
William D’Alessandro is president of Victor House News Co., an independent agency reporting on law and the environment for trade publications and executive newsletters. He also edits Crosslands Bulletin http://www.crosslandsbulletin.com
covering strategic corporate environmental management and sustainability issues.