Green Bananas
By Charlene Dy ’03
J. Gary Taylor ’57 had a front-row seat for one of the most dramatic turnarounds in recent corporate history. Surprisingly, it didn’t involve oil, manufacturing or accounting scandals. Rather, it involved fruit. More specifically, it involved bananas.
If bananas seem benevolent, consider their history. In the first half of the 20th century, huge corporations like the United Fruit Company controlled the banana industry in Latin and Central America. With vast amounts of real estate, they often exercised enormous, if indirect, influence on the economies and politics of the countries in which they planted (thus the term “banana republic”). Run more like colonizing empires than businesses, these companies used their economic power to quash local protests, playing the banana game according to their own rules. Although their political and economic behaviors moderated over the years, they were still known in the 1990s as poster children for environmental recklessness and irresponsibility. Banana companies cleared thousands of acres of irreplaceable tropical rainforests in the name of expanding banana cultivation. They used extremely toxic pesticides and chemicals, often applying them indiscriminately (“like water,” says Chris Wille of the Rainforest Alliance), in quantities that led to water contamination, worker poisoning and the death of marine life. For years, the most distinctive feature of Central American banana plantations was the blue plastic bag that covered each banana bunch. Saturated with pesticides to protect the fruit during growth, the discarded bags often were heaped on the ground, or near waterways, leaking poison into local ecosystems.
In 1998, The Cincinnati Enquirer published an exposé on Chiquita Brands International (formerly the United Fruit Company), announcing “Enquirer investigation finds questionable business practices, dangerous use of pesticides, fear among plantation workers.” The articles were later retracted, after Chiquita threatened to sue the paper for using private company information, but the stains of the accusations lingered. Chiquita became the very model of a corporate villain. It beggars belief, then, that five short years after the Enquirer article, Chiquita had utterly transformed. This great corporate sinner had completely changed its operation and its orientation, not only providing a new model for successful corporate responsibility, but actually earning approval from respected environmentalists and labor activists.
How Chiquita made that transition is the subject of J. Gary Taylor’s book, Smart Alliance: How a Global Corporation and Environmental Activists Transformed a Tarnished Brand.
Tall and broad, with a bushy white beard that would look equally at home on a philosophy professor or a lumberjack, Taylor is a former corporate climber and a current environmental journalist. After graduating from Amherst, he worked at Time Inc., then did a brief stint in luxury retail. Longing for a profession that he could really care about, Taylor recalled a childhood happily spent in the Colorado Rockies and decided to cast his lot with the environmental movement. Degrees from Yale Forestry School in the 1970s led to consulting projects with the Environmental Protection Agency, Tufts University’s Center for Environmental Management and the Sierra Club, most involving water conservation. His voice low and gruff, exuding the authority of one who knows his own mind, he explains, “I didn’t just want to be a tree hugger, I wanted to be an informed tree hugger.”
In 1985, Taylor formed The Environment Group Inc. with his wife, Patricia Scharlin, an environmentalist with a deep commitment to global issues. For the next 11 years, the pair published a successful commercial newsletter, Environment, Health and Safety Management, in order to address the concerns of environmental managers at many Fortune 500 companies.
However, a decade of churning out a high-quality, biweekly publication got to be a bit of a grind. “We wanted the freedom to travel, and to ask more interesting questions,” Taylor says. So they developed a new project called Ground Truth, in which they planned to investigate how five major multi-national companies from different industries addressed environmental responsibility, workers’ rights, and health and safety, among other things. When funding for the project failed, they decided to focus on just one company: Chiquita.
Along with its rivals Dole and Del Monte, both American companies, Chiquita exerted tremendous control over the global banana trade. Political upheaval in Europe—especially the consolidation of markets under the European Union and the fall of the Iron Curtain—meant that there was a huge, untapped banana market in the 1990s. Bananas are the most popular fruit in the world, and fresh fruit was in high demand, especially in Eastern Europe. To meet the demand, the banana companies borrowed huge amounts of capital in order to expand their plantations. But they soon were confronted by a number of organizations with demands of a very different nature—the kind that could severely undermine the fruit-growers’ expansion.
The loudest voices in the anti-banana chorus were those of the international conservation community. Enraged at the loss of rainforests and their concomitant fauna, groups from all over the globe led postcard- and letter-writing campaigns against the big three banana companies. Catholic Church leaders and activists in Costa Rica and nearby countries also organized protests. And in a protective political maneuver, the European Union passed a series of quotas, tariffs and licenses designed to favor former colonies in Africa and the Caribbean, bypassing American bananas altogether.
Chiquita, Dole and Del Monte were being tarred and feathered by all sides when they were approached by the Rainforest Alliance, a relatively small group of conservationists with a bright idea: to use on-site certification of banana farms according to a set of environmental, health and safety principles as a marketing tool to improve public perception of the companies by changing the way they did business. It was an audacious suggestion, to say the least, requiring corporations to be completely open with conservationists, who to that point had been their loudest opponents. Of all the companies approached, only Chiquita accepted the challenge.
Taylor describes the Rainforest Alliance as a “comparatively tiny and outspoken defender of tropical rainforests” outraged over forest destruction, overuse of pesticides and the damage to the ecosystem caused by banana companies. Taylor praises their plan of attack as a pioneering vision that combined old-fashioned campaign tactics with a new tool: independent, on-the-ground assessment of banana production to ensure equitable treatment of workers and environmental protection. “In our brand-driven global economy,” he notes, “banana customers and activists in northern Europe cared about how bananas are grown and how workers are treated thousands of miles away in the tropics.” These consumers fully supported the trade rules that were barring Chiquita from expanding its market. While green-labeling was nothing new, the Rainforest Alliance’s idea of on-the-ground certification was groundbreaking—simply because it was more comprehensive, more hands-on and more ambitious than any other program before it.
According to Tensie Whelan, executive director of the Rainforest Alliance, certification is an extremely involved process that involves working over a period of time with stakeholders including NGOs, corporations, the government, scientists and others. “We start with nine broad environmental and social principles,” Whelan says, like waste management, soil and water conservation, and lack of pesticides. “Then from those principles we design indicators. In the case of bananas, I think there are 250 indicators. Auditors then go out in the field and review farm by farm against these indicators.”
When Taylor and Scharlin began researching Chiquita’s environmental performance in 19xx <to come>, they were particularly struck by the incongruity of Chiquita’s new partnership with the Rainforest Alliance. “Chiquita was a secretive, lawyer-driven, monolithic company. They were the big guy in town,” Taylor says. “Thus, it was all the more intriguing why they, of all people, would choose to expose themselves to close scrutiny.”
Whelan offers some clues to the company’s motivations. “They were responding, in part, to the fact that they had expected, as had other companies, an expansion of the European markets for their bananas, and that wasn’t happening. Part of the concern being raised in Europe was their environmental and social record. So they were responding to a business concern. There was some negative publicity in the United States that they were unhappy with. So I think they decided that rather than continue to try to avoid the problem, they would fix the problem.”
From the Rainforest Alliance’s perspective, Taylor says, this new endeavor was also an act of trust. Partnering with one of the 20th century’s most notorious environmental offenders was tantamount to sleeping with the enemy, and was likely do to some damage to the environmentalists’ street credibility. Also, they had to trust that Chiquita would hold up their end of the bargain. Whelan notes, “I think that we needed to trust that they were indeed committed to achieving certification, and that it was going to take a while. [We needed to know] that there wasn’t going to be an attempt to paint themselves green before they achieved those credentials, that they would be open with us about the problems that they confronted, and we would then help them to solve those. I think we had to trust in those things. But that’s the good thing about certification: It’s very hard for a company to do pretend work, because we’re out there seeing whether or not they’re doing things.”
The obvious question is whether the certification process can be considered successful. For the workers and tropical rainforests in Latin America, the answer is a resounding “yes.” Chiquita has reduced its chemical use by 80 percent and now recycles 85 percent of those once-ubiquitous plastic bags—what Taylor calls “conspicuous symbols of banana-baron intransigence.” Taylor adds, “What we saw, in fact, were generally well-managed, well-maintained storage areas for chemicals and tools; composting of organic waste; recycling of some (but not all) pallets; clean and relatively orderly packing stations; landfills that had replaced piles of inorganic waste; a program for pulping and reprocessing discarded bananas; and some replanting of forested corridors and stabilization of a number of riverbanks.” In addition, Taylor points out that certification has implications beyond sustainability. He also sees it as a catalyst for technological improvement: Setting higher standards for workers and banana production means having to innovate to meet those new standards.
For Chiquita’s stockholders, the success of certification must be considered in a different light. Developing and implementing the certification process cost Chiquita millions of dollars, and re-engineering their growing procedures cost millions more, driving the company into bankruptcy. To the amazement of environmental watchdogs, Chiquita stuck with its commitment to environmental sustainability throughout the difficult period of rebuilding its financial health. That effort has paid off: In 2003, the company reported that it had saved more than $8 million from reduced chemical use and pallet recycling, the number of days on strike had fallen 70 percent since 2001, and BB&T Capital Markets issued a “strong buy” recommendation for Chiquita, with a target share price of $29.
Another startling outcome of this process was that Chiquita, a company known for its secrecy, lawyers and spin doctors, developed an open-book approach with the public market. It now publishes annual Environmental Performance Charts, which include audits conducted by the Rainforest Alliance, evaluating the company in areas such as ecosystem and wildlife conservation, fair treatment and good working conditions, integrated crop management, integrated waste management, and water and soil conservation.
What is most incredible to environmentalists like Taylor, however, is the level of honesty found in the charts. When a farm fails to meet the alliance’s standards, the company gives itself a red mark. Taylor seems flabbergasted as he scans the reports, his finger jabbing at the record of a farm in Santa Maria, Colombia. It has been given four “reds” for failing to conform to standards on occupational health, agrichemical storage, river protection and rational water use. Notes indicate that “A fungicide mixing station had several irregularities: lack of an effective barrier to prevent spills, inadequate equipment to clean spills, a leaking water tank and another water tank without a fence to prevent accidents.” The language pulls no punches, and listening to Taylor, one gets the idea that such transparency from a corporate behemoth is a supernatural phenomenon.
In order to write their book, Taylor and Scharlin traveled for months all over the United States, Latin America and Europe, interviewing key players (including international policy makers and Costa Rican clergy), and observing first-hand the changes resulting from certification. It was a challenging experience, and Taylor and Scharlin drew on one another for support. Having published a newsletter together for 11 years, they were partners in every sense of the word. During their research, Taylor was the primary interviewer, but as a self-professed curmudgeon, he notes that Scharlin’s gracious presence was invaluable in putting his subjects at ease. He wrote Smart Alliance, and Scharlin edited it—something readers will no doubt appreciate, since Taylor describes his writing as Henry Jamesian in its fondness for lengthy, somewhat convoluted turns of phrase.
Taylor and Scharlin knew that in order for their book to be valuable, it had to be objective, or their credibility as environmentalists and journalists would be lost. This was made more difficult by the fact that Scharlin had been on the board of trustees at the Rainforest Alliance, a position she resigned when she and Taylor began research for the book, in order to avoid a conflict of interest. By the end of the research, Taylor says, neither Chiquita nor the Rainforest Alliance emerged “unsullied.”
Clearly, Chiquita was transformed by its work with the Rainforest Alliance, but the impact of the certification process extended beyond the company. The Rainforest Alliance has since expanded its certification process to other industries, including lumber, tourism and particularly coffee. And Taylor? He pauses. He’s never been asked how documenting Chiquita’s story has affected him. Slowly, thoughtfully, he muses aloud, “What it convinced me of is that in these developing-country settings, for whatever reason—it’s usually economic, sometimes corruption—governments can’t be relied on to enforce policies, even if the books are OK. In these situations, the company is the angel, a de facto regulator, or enforcer. This makes big companies potentially powerful engines for positive change. Even Kofi Annan recognizes that. You can’t have sustainable development without companies.” He pauses again, his curmudgeonly integrity rising: “Companies can be, not will be, engines for social change.”
Photos: Top right: Chiquita Brands International; Left: Gary Taylor and Patricia Scharlin photo: Frank Ward; Bottom three: Chiquita Brands International