Chiquita cleans up its act

(Fortune Magazine) -- Starting in 1992, Dave McLaughlin used his two Costa Rican farms as test beds to rein in environmental abuses. The changes he eventually made - and their impact on the bottom line - persuaded Chiquita in 1996 to allot $20 million to overhaul the environmental and employment standards at all its 127 farms, which employ 30,000 workers in seven Latin American countries. "It would be a challenge to find a company that has come so far and so fast," says Chris Wille, sustainable-agriculture chief for the New York City-based environmental group Rainforest Alliance, which certifies Chiquita's progress.

For decades the $3.9-billion-a-year fruit giant was synonymous with the notion of the rapacious multinational. Farmworkers toiled long hours in dangerous conditions, agrochemical runoff contaminated water, and tropical forests were cleared for expansion, says J. Gary Taylor, coauthor of Smart Alliance, a book about Chiquita. "We had a problem that could impact our brand," McLaughlin says.

Enter Rainforest Alliance, which had previously worked with timber companies in Indonesia to lessen the impact of logging. In 1992 the Alliance sent banana companies a list of environmental and worker-rights standards required to gain its certification. During the next two years, McLaughlin says, Chiquita spent $40,000 to overhaul the Costa Rican farms, phase out toxic pesticides, and build new warehouses to store chemicals. McLaughlin began monitoring water quality and providing workers with better safety equipment. The farms also started recycling programs.

Today all 110 of Chiquita's (Charts) company-owned farms and the vast majority of its independent farms are certified by the Rainforest Alliance. Things are getting better for its Latin American employees, who can now join unions. "Clearly there've been improvements, but it' s far from perfect," says Stephen Coats, executive director of U.S. LEAP, which advocates for worker rights. Still, Chiquita is just getting started, and the results are beginning to show. The company now saves $5 million a year on pesticides, while productivity is up 27%. "Our CEO said, 'This is the first time I've made an investment decision without having a spreadsheet in front of me, and it's been one of the best,'" McLaughlin says."I agree totally."

1. Chiquita now recycles 100% of the plastic bags and twine used on its farms.
2. The company cut pesticide use by 26% while providing better protective gear for workers.
3. Improved working conditions include Chiquita-built housing and schools for employees' families.
4. Buffer zones along farm borders help prevent chemical runoff and erosion.

Watchdogs To learn more about environmental standards and worker rights, visit rainforest-alliance.org and usleap.org.