Case studies on social, environmental and economic impacts.


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Presentation by Tensie Whelan, Executive Director - Rainforest Alliance - USA

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Case studies on social, environmental and economic impacts.

  1. 1. Does Sustainability Certification Improve the Triple Bottom Line ? Triple Bottom Line Investing Conference November 3, 2005
  2. 2. Workshop Agenda <ul><li>Rainforest Alliance overview on impacts of certification </li></ul><ul><li>Case studies: </li></ul><ul><li>Chiquita </li></ul><ul><li>Kraft </li></ul><ul><li>DaTerra </li></ul>
  3. 3. Rainforest Alliance Mission Our mission is to protect ecosystems and the people and wildlife that live within them by transforming land-use practices, business practices and consumer behavior.
  4. 4. <ul><li>Forest Products Industry </li></ul><ul><li>Pioneered sustainable forestry certification…have certified 22 million hectares world-wide. </li></ul><ul><li>Instrumental in creating Forest Stewardship Council, international forestry certification accreditation body </li></ul><ul><li>Tourism </li></ul><ul><li>Launched Sustainable Tourism Stewardship Council, Network on Sustainable Tourism in the Americas, training SMEs in BMPs and certification </li></ul><ul><li>Agriculture </li></ul><ul><li>Started with bananas (15% of all bananas in international trade are from Rainforest Alliance-certified farms), now working with shade coffee, flowers & ferns, citrus, and cacao producers </li></ul><ul><li>Created the Sustainable Agriculture Network, a coalition of nine leading conservation groups in Latin America </li></ul>Our Experience & Success with Certification & Accreditation
  5. 5. What is Certification? Certification is… A procedure by which a third party gives written assurance that a product, process, service or management system conforms to specific requirements. Strengths: Provides standards, indicators and accountability, market-based, works at scale. Weaknesses: is complicated and difficult to implement.
  6. 6. Designing Better Business Practices Collaboratively <ul><li>Wildlife Conservation </li></ul><ul><li>Ecosystem Conservation </li></ul><ul><li>Soil Conservation </li></ul><ul><li>Conservation of Water Resources </li></ul><ul><li>Integrated Management of Wastes </li></ul><ul><li>Integrated Pest Management </li></ul><ul><li>Fair Treatment and Good </li></ul><ul><li>Conditions for Workers </li></ul><ul><li>Community Relations </li></ul>Conservationists Scientists Communities Industry
  7. 7. Ensuring Accountability: The Certification Process Pre-Assessment Assessment Certification Committee Annual Audit Surprise Audit Continual Improvement
  8. 8. Columbia Study on Economic Benefits of Certification <ul><li>Cost reductions </li></ul><ul><li>Access to new markets </li></ul><ul><li>Improved regulatory relationships </li></ul><ul><li>Risk management </li></ul><ul><li>Corporate reputation & brand impact </li></ul><ul><li>Corporate governance </li></ul><ul><li>Competitive advantage </li></ul><ul><li>Access to capital </li></ul><ul><li>Financial market reactions </li></ul>
  9. 9. Cost Reductions <ul><li>Cost of Goods Sold </li></ul><ul><ul><li>Chemical usage </li></ul></ul><ul><ul><li>Recycling benefits </li></ul></ul><ul><ul><li>Decreased energy usage </li></ul></ul><ul><ul><li>Reductions in water usage </li></ul></ul><ul><ul><li>Labor </li></ul></ul><ul><li>Selling, General and Administrative </li></ul><ul><ul><li>Insurance </li></ul></ul><ul><ul><li>Financing </li></ul></ul>
  10. 10. Cost Reductions <ul><li>Labor Costs </li></ul><ul><li>RA certified firms report significantly lower employee turnover </li></ul><ul><li>Decreased injury claims and associated costs </li></ul><ul><li>Increased employee satisfaction </li></ul>
  11. 11. Access to New Markets <ul><li>Increases available markets </li></ul><ul><li>Enhanced relationships with customers </li></ul><ul><li>A ticket of entry to some markets </li></ul><ul><li>Consumer demand growing </li></ul><ul><li>Innovative marketing strategies </li></ul>
  12. 12. What Difference Does Rainforest Alliance Certification Make? Garbage properly disposed, or recycled, coffee pulp used for fertilizer, workers use latrines Farms littered with garbage, coffee pulp dumped into rivers, workers defecate in coffee fields Waste Management Natural ecosystems and their flora and fauna well protected Hunting, or extraction of orchids and other flora commonplace Wildlife Protection Forests protected and degraded areas reforested Completely deforested or with little natural forest, which lacks protection Forest Conservation Abundant shade trees of varied species and sizes, native species to conserve soils, provide habitat for wildlife and firewood, materials, etc. for workers and neighbors No shade trees, or only scattered shade of only one, or few tree species, often exotic species of no use to local wildlife Tree Cover RA Certified Farms Common Problems Farm Aspects
  13. 13. Farm policies posted and explained, environmental education provided, Schools supported with materials, teacher salaries, hot lunches, etc Workers ignorant of farm policies, environmental laws, no school, or ill-equipped/managed school for workers’ children Education Contracts for permanent workers, hiring practices monitored, above-minimum wages paid, freedom to organize, complain, strike No contracts, pay below minimum wage, hiring through exploitative middlemen, anti-union policies, worker intimidation Worker Rights Decent housing with cement floors, showers, toilets, cooking and laundry washing areas Rustic, run-down housing often with dirt floors, insufficient latrines, showers and other facilities Worker Housing Safe working conditions, first-aid kits available, farm-supported clinics, or regular doctor visits, health education Insufficient worker safety regulations, no first-aid kits at work sites, no ongoing medical care Occupational Health
  14. 14. Farms are good neighbors helping steward shared resources, contributing to conservation programs, construction and maintenance of roads, water systems, etc. supporting local health care, education and other services Farm provides no benefits for neighboring communities and region beyond employment Community Relations Water conservation practiced, watersheds protected, sewage and mill wastewater channeled to septic tanks and treatment lagoons, riverbanks reforested Excessive water use, streams and rivers polluted with runoff from coffee mills, sewage and garbage, riverbanks and watersheds deforested Water Resources Erosion decreased with barriers, manual weeding, soil enriched with compost No soil conservation measures, heavy reliance on chemical fertilizers and herbicides Soil Resources “ Dirty dozen” pesticides banned, pesticide use cut to minimum, handled only by trained workers wearing protective gear, stored in locked sheds far from housing Dangerous, “dirty dozen” pesticides in use, excessive pesticide use, workers unaware of dangers, don’t wear protective gear when applying them, pesticide storage and transport unsafe Pesticides
  15. 15. Certification’s Benefits for the World’s Forests <ul><li>RA report analyzes 129 forestry operations in 21 countries. All have won SmartWood/Forest Stewardship Council certification. As a result, these forested lands now have:   </li></ul><ul><li>Better protection of aquatic, riparian and ecologically sensitive areas (63% of operations were required to make changes to this effect) </li></ul><ul><li>Improved worker safety and training (64%) </li></ul><ul><li>More effective communications with local communities and conflict resolution with stakeholders (75%) </li></ul><ul><li>Greater accountability and transparency </li></ul><ul><li>Better management controls (93%), monitoring (86%) and chain-of-custody practices (64%). </li></ul><ul><li>The study and all auditor reports of SmartWood Certified operations are available on the Rainforest Alliance Web site: </li></ul>
  16. 17. Corporate Responsibility at Chiquita Triple Bottom Line Investing Conference November 3, 2005 Michael Mitchell Director, Corporate Communications Chiquita Brands International
  17. 18. Our Company <ul><li>International producer and marketer of high-quality fresh and value-added produce </li></ul><ul><ul><li>106-year-old company </li></ul></ul><ul><ul><li>$4 billion in annual revenues </li></ul></ul><ul><ul><li>Premium brand </li></ul></ul><ul><ul><ul><li>Healthy, convenient, high-quality, fresh </li></ul></ul></ul><ul><ul><li>Operations in more than 60 countries </li></ul></ul><ul><ul><li>25,000 employees worldwide </li></ul></ul><ul><ul><ul><li>More than 14,000 farm workers, about two-thirds unionized </li></ul></ul></ul><ul><ul><li>June 2005 acquisition of Fresh Express, U.S. market leader of packaged salads </li></ul></ul>
  18. 19. Our Model for Corporate Responsibility <ul><li> Community </li></ul><ul><li> Suppliers </li></ul><ul><li>Transparent Reporting </li></ul><ul><li>Performance Measurement </li></ul><ul><li>Employee Participation & Training </li></ul><ul><li>Organization & Accountability </li></ul><ul><li> Engagement </li></ul><ul><li>Verifiable Standards </li></ul><ul><li>Core Values </li></ul><ul><li>Leadership </li></ul>Responsibility Opportunity Respect Integrity
  19. 20. Verifiable Standards Labor <ul><li>Costa Rica (2002) </li></ul><ul><li>Colombia and Panama (2003) </li></ul><ul><li>100% SA8000 certification owned farms (2004) </li></ul><ul><li>14% independent growers (2004) </li></ul>Food Safety <ul><li>Colombia, Panama and Costa Rica (2003) </li></ul><ul><li>63% owned farms (2004) </li></ul><ul><li>47% independent growers (2004) </li></ul>Environmental <ul><li>Initial Engagement (1992) </li></ul><ul><li>First owned farms in Costa Rica (1994) </li></ul><ul><li>100% certification owned farms (2000) </li></ul><ul><li>83% independent growers (2004) </li></ul>Certification to Leading Standards
  20. 21. Labor Engagement <ul><li>Landmark IUF-COLSIBA-Chiquita Agreement </li></ul><ul><ul><li>Signed June 14, 2001 </li></ul></ul><ul><ul><li>Based on core ILO conventions </li></ul></ul><ul><ul><li>Collaboration on worker health and safety </li></ul></ul><ul><ul><li>Fair dealing and continuous improvement </li></ul></ul><ul><ul><ul><li>Negotiate in good faith </li></ul></ul></ul><ul><ul><ul><li>Communicate in open, honest and straightforward manner </li></ul></ul></ul><ul><ul><ul><li>Avoid public international campaigns or anti-union retaliatory tactics </li></ul></ul></ul><ul><ul><li>Committee to review serious or systemic violations </li></ul></ul>“ We have seen real progress as a result of the Agreement in a number of Chiquita operations. … I remain impressed with the good faith and serious intent Chiquita has brought to this process.” Ron Oswald General Secretary International Union of Foodworkers
  21. 22. Organization & Accountability <ul><li>Corporate Responsibility Officer reports to CEO </li></ul><ul><ul><li>With significant interaction with the Nominating and Governance Committee of the Board of Directors </li></ul></ul><ul><li>CR Steering Committee </li></ul><ul><li>CR specialists in all divisions </li></ul><ul><li>Management systems </li></ul><ul><ul><li>CR integrated into company strategy & planning </li></ul></ul><ul><ul><li>Annual CR objectives and bonus for managers </li></ul></ul><ul><ul><li>All managers sign annual code of conduct compliance statement </li></ul></ul>Manuel Rodriguez
  22. 23. Employee Participation & Training
  23. 24. Measurement & Reporting
  24. 25. <ul><li>Children plant trees in Bocas, Panama, at an Environmental Awareness Fair </li></ul><ul><li>Chiquita Nature & Community Project in Costa Rica </li></ul>Community Engagement
  25. 26. Benefits of Corporate Responsibility <ul><li>Sound agricultural practices from Rainforest Alliance certification reduce costs </li></ul><ul><ul><li>Reduced agrichemical use – savings of more than $5 million annually </li></ul></ul><ul><ul><li>Pallet recycling in European market reduced costs by $3 million annually </li></ul></ul><ul><li>Other environmental benefits of RA certification </li></ul><ul><ul><li>Reforestation conserves water and soils – more than 1 million trees planted </li></ul></ul><ul><ul><li>Groundcover reduces herbicide use </li></ul></ul><ul><ul><li>Better storage and closed systems to avoid agrichemical runoff and improve safety </li></ul></ul><ul><ul><li>Improved waste management reduces pollution </li></ul></ul>
  26. 27. 3,000+ Tons of Plastic Recycled <ul><li>Worker gathers twine on a farm for recycling </li></ul><ul><li>Twine and plastic are stored in warehouses prior to shipment in recycling facilities </li></ul><ul><li>Workers compress plastic for recycling </li></ul><ul><li>The company used recycled plastic to construct this pedestrian bridge in Costa Rica </li></ul>
  27. 28. Other CR Benefits <ul><li>Improved reputation & brand image </li></ul><ul><ul><li>Chiquita brand is associated with high levels of corporate responsibility </li></ul></ul><ul><li>Lower risk profile </li></ul><ul><ul><li>Lower risk of supply disruptions due to labor unrest </li></ul></ul><ul><ul><li>Lower risk of NGO or consumer activism </li></ul></ul><ul><li>Higher employee satisfaction </li></ul><ul><li>Broadens investor base to SRI funds </li></ul><ul><ul><li>Chiquita on SB20 Index for 4 consecutive years </li></ul></ul>