The Corporate Social Responsibility Story of Chiquita

184
The Corporate Social Responsibility Story of Chiquita GuiléAcademicAssessment HEC Lausanne

Transcript of The Corporate Social Responsibility Story of Chiquita

GuiléAcademicAssessment
HEC Lausanne
Dr Dorothea Baur Dorothea Baur is a CSR researcher and analyst and a lecturer at the Univer- sity of St. Gallen. She has previously taught and researched at ESADE Business ^ Eh ^ , - , ^Z ^Z
Mrs Doris Rochat-Monnier ZD & h>,hE/>t D &'^ Z ^ &
Prof. Guido Palazzo 'WW&- h>,hE/>, /D /E^ / d - ^, , Y :D^ DZΘ^'W Dt, ^Z- ^ss, t,K&>t^hE- lity related topics.
HEC Lausanne
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/ s .................
/ W' ................................................................... 41
II. Stakeholders .................................................................................................................................................................................................... 57
// 'Z ......... 58
// ^ ........................................................
// W ............................... 71
// ...................................................................
III. Managing CSR .............................................................................................................................................................................................
/// D^ZE'K
^Z .................................................................................................................... 114
/// D^Z> ........
IV. Reaping rewards from CSR ............................................................................................................................................................... 147
/s D^Z ..................................................................................................................... 148
/s DZZ ..................................................................................................... 155
/s ^Z ............................................................................................................................................
> .......................................................................................................................................................................... 179
Table of contents
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d^Z / ^Z scholars alike. The study is based on an ‘open book analysis’, in which Chiqui- ta opened their doors to a team of dedicated and independent experts who carried out an assessment of the company’s CSR policy. d &'- d ^Z d ^Z -
Conclusions
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Methodology and goal of the study
d ^Z- t ^Z expressive story ^Z /- Kcontextualised analysis ^Z
dcomprehensive- / customized approach- ^Z
replicablet ^Z - ^Z ^Z
dgovernance &' &- '
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dgenuineunprejudiced in-
terest^Z &' strong commitment
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d^Z- d ^Z d d of the evidence
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Structure of the study
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1. Premises W ^Z ^Z ^Z
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Historical premises:d ^Z d - ^Z
Economic premises: ^Z &
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2. Stakeholders t
4. t - d d ^Z - E'K
5. t - &'
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- dE'K ^Z ^Z/ ^Z
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Suppliers: ,- ^Z
Employees: - ,t-
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3. Managing CSR /^Z dexternal dimension E'K ^Zd
d internal dimension ^Z - ^Zt ^Z^Z ^Z
&sZ >^Z - ^Zt ^Z ^Zt ^Z ^Z
5. Conclusions across issues and stakeholders /
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^Z/ ^Z
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tbananas &
D ^Z- producing, trading and selling
bananast^Z D ^Z .
/ - Europe.
d not an audit ^Z- d D- understand rather than recount ^ZK & - pelling story.
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I. Premises of Chiquita’s CSR
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I.1. Historical premises:
past
Abstract
d CSR engagement today. t ^Z/ ^Z z - t-
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Lessons learned
- ^Z W
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Our analysis shows that in contrast to many other companies Chiquita does not deny its dark past.
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^Z- /- strate a in the past.
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1 W : ^''Z. >
DD- h& Business History, 50
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W W ^ΘZD K case. W
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I.2. Economic Premises: s
in the Banana Industry
Abstract
In this chapter we clarify the premises under which Chiquita operates its CSR. d ^Z/ ^Z&D - ^Zt ^Z ^Z-
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2. The banana industry
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As one of the biggest ba- nana companies in the world, Chiquita’s busi- ness model relies on in-
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CEO Lonergan empha- sises that not owning - tempt to deny responsi- bility.
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Table 1: Chiquita’s Net Income 2011-2013

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4. CSR in a low-margin business
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Taking into account the fact that Chiquita decade, we need to ask how CSR can be af- forded in a low-margin industry.
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5. Conclusion
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Despite Chiquita’s un- ^Z which make them the CSR leader in the indus-
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Lessons learned
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Abstract
d company’s CSR./- / t- t h^K-
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Like Shell in Nigeria, Chiquita has been - ment in Colombia.
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d- &Zh / 4 According to George :^ZW- há- ^> &Zh- t-
/ - money» to two major players in the Colom- years.
44 d^Z^
h^^h^:- h h^ 5z h / ^t there is no conclusive evidence against it.
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h the governmen/ ^> DZt- hE- K- D - / ^ ^ d^-
leave the country - making
d- that the life of Chiquita managers and workers was at risk.
48 d^Z^
their dilemma public Z^< - Z z - - ^ D
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d which would indeed - mely d was not considered by Chiquita.
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/- of making the payments by looking for help. D try to hide.
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once it became clear that the legal circums- tances were forcing them to do so if they
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h returned to their ancestral lands.
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Lessons learned
dpaying - in good faith. Zaintain standards such as Rainforest Alliance cer- ^.
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Our analysis shows the complexity of decision d is no doubt that paying itself immoral. It might, - lable.»
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II. Stakeholders
Abstract
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// 'Z rule of law, tax paying and responsible lobbying
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Chiquita has made legal compliance part of the
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d - trically contradicts the essence of CSR.
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Lessons learned
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- bates around Chiqui- ta’s CSR and the way it discussed separately from each other, the antagonism between threatens to harm the Chiquita’s CSR engage- ment.
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Abstract
d ^Z Therefore, in this chapter, we ^Z- t & ^ - t -
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II.2. Suppliers: Contracts and
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2. Contracts
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- pendent producers’ are highly dependent on Chiquita and that their than those directly em- ployed by Chiquita.
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d &KZEE- Z producers.1 dZKZE ,d KZE
d dd- - d dd & d
, d Group4 ', d- /E ' - ted price in the contract has increased every year since then.
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We found that under certain circumstances, Chiquita can in fact be rather than disempowe- ring for independent producers.
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Despite these success stories, not all suppliers contracts with Chiquita.
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4. Conclusion
t - t Z d
d - literally lock-in their suppliers in 10 years contracts with no -
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d- Z d d
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Lessons learned
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Abstract
- d d & t d E-
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d - D>ZD>Z/Z- Z EZ/ DE , - other industries.
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// W being and empowerment of workers
The fact that its opera- regions means that se- curing the well-being of workers and their families is a more cen- tral responsibility chal- lenge for Chiquita than for companies in many other industries.
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a decent life? This ques- debate on corporate responsibility across many industries.
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«According to our ana- lysis, at least in the past two years Chiqui- - in the countries where
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Z and accordingly pays the highest , ^ E poorest in the country.
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Chiquita has started programs in order to en-
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d- / d t K , Z d
The system of serial contracts is legal and in accordance with workers’ preferences, - goodwill of the compa- ny to re-employ them,
78 d^Z^
Health and Safety
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Decent working and only depend on wages. If workers risk their life at work, wages are put
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CEO Ed Lonergan’s en- of health and safety is outstanding. He is owes it to the families of their workers to send their employees home healthy. The manage- d - gress is documented twice a year.
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Housing: Encouraging Home Ownership
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d - ,/, D dZ> >^/dZdZK,- 4&Fundacion para
Housing is a basic need acknowledged in the h of Human Rights and as such should be af- fordable as part of the
One could argue that se- employment made wor- z the chance to become homeowners their de- pendency on Chiquita decreases because they do not lose their acco- their employment with Chiquita ends.
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company in the bana- acknowledge freedom - sent only company in the sector to sign an In- & /h& / h &
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Whether the rela- Chiquita and trade unions are characterised - depend on the condi- to their workers but also to some extent on the unions in a region.
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Conclusions
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Since its pioneering dis- ^Z d K / >- d & K
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t d ,d live in > t t- ,
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Lessons learned
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t d , t , dW
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Abstract
d d This chapter characterises /- t Z
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// industrial banana farming
The banana industry, like any other industry, has been exposed to
97'
t - - t

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Chiquita’s longstan- the Rainforest Alliance has not only been res- ponsible for its status - strategy.
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The main damaging ef- fects ascribed to mono- - marised as follows: The homogeneity of banana animals and plants.
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Chiquita has underta- ken a number of mea- sures in order to break - nocropping and need for new land.
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and also ensure a proper green life period of the end product.14
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Environmental dimension:
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Economic dimension:- :/ &
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Thanks to its early com- - from the Rainforest Alliance, Chiquita was ways in terms of its en-
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- is no guarantee that people respect the rules and a strict control of hectares, is impossible.
While Chiquita seems - reduce the risks posed by aerial spraying, the problem as such is not
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- t -
- ^E'Kt^,t ,t - E'K- ' t^,- - /- t^,Z ///D^Z
d
Benchmarking against organic bananas
t- t - & '
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' - ronmental and social from the use of herbi- could ask why compa- nies like Chiquita do not -
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z

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d Chiquita bananas stem from regions where or- ganic banana farming is hardly possible due to the high disease pres- sure.
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Greenwashing occurs when companies replace ^Z with CSR communica- ' - ment of Chiquita and its pioneering role with regards to reducing pes- greenwashing accusa- place.
d^Z^
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Lessons learned
d- - /
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In a business with ex- - - self trapped between the economic pressure to maximise its yield, which requires exten- the pressure to protect - ment, which, ceteris pa-
ribus, requires a further
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III. Managing CSR
Abstract
/ the judgment of external stakeholders.t- - E'K- ^Zt Z- ^Z ZD ^Z- K hE''Z/
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d^Z & E'K- ^^Z d ^Zd - ^Z
III.1. Managing external aspects of ^ZE'K ^Z
A company whose CSR fails in the eyes of its stakeholders, quickly loses its license to ope- - rable to consumer boy- E'K a simple lack of goodwill which they operate.
115'
^Z - tE'K ^ - & ^Z-
E'K
E'K Z E'K E'K- t E'K ^Z d
W ttt& tZ&// ^Z Z
Z d ^Z /////D/^Z Z d- ^Z
d ^Z-
Chiquita played quite a unique pioneering role when it started to colla- NGOs back in 1992. At
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dE'K d E'K- d E'K ' tt& - 1tE'K CSR. D
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dZ ZdD seal on products f / Z E'K' Z z Z - 4/ h^& Consultant for Rainforest Alliance in ^Z - Z< &Z <Z - K Z- z-
The main challenge for any partnership between a company and an NGO lies in stri- king the right balance
117'
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- gagement in the most - - from a credibility and from a strategic point of
119'
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^Z t- - d serve to highlight ^Z
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the most intensely deba- ted aspects of CSR and
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- - larly those that are announced beforehand are stage-managed.
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t^,- Rainforest Alliance has t^, results of their audits./ t^,d - /
Z t^, Z^Z
& Z &d Z /W z& Z ^ Z ^- land
d /- / t d-
h Z ^ ^/ Z ^Z - d Z - dZ Z d Z- d Z d- Z-
The fact that so far Chiquita is the only main banana producer with the risk that some see the Rainforest Alliance - - dard for Chiquita only’.
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It is hard to imagine that a company’s CSR could it is not documented in
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The irregularity in their ^Z a member of the UN Glo- hE' - to issue an an- WKW disclosure to stakehold- ers on progress made in principles”.
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ZE'K d h^ E'Kt^,
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dd Z- terally all ^Zd /& /& Z- Z &^,> dE'KZ- d,, z K Z- ^ ^ / pioneer despite all challenges.
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t - - with their stakeholders and to secure their li- cense to operate, their the fact that most pub- - Z
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Lessons learned
that together secure d D ^Z ^Z
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III.2. Managing internal aspects of CSR: Leadership, cultural and structural aspects
In order to understand whether or not a corpora- in CSR, it is fundamental how deep the roots for engagement are within
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Importance of leadership
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CSR that begin in the been possible without and beliefs of the people ^Z
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^Zt ^D'Zd ^Z^t- 7d t /^Z ^Z ^Z^t : ZK D> W sWtt& d-
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The years following Chiquita’s quantum leap ^Z leaders of an organisa- - ^Z
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Cultural aspects: Values management, internal communi-
ÃÖ½ÊùÃÊã®òã®ÊÄ
t^Z t K ^Z d -
Lonergan set out «to make sure that no mat- ter who leads the com- pany, this is part of who we are.» According to him, Chiquita has reached a state in which it is «hard to extract CSR from what we do we do.»
d^Z^
^Z d ^Z
t ^Z t K ^Z ^Z / - ^Z ^Z / > / > - ', D > ^^ZD ^Zd ^Z /WD ^Z d W ^Z
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While the tone from the top is key for the CSR performance of a com- pany, it also turns out to be the greatest risk.
In order to guard against this risk and make their CSR engagement more to embed and make ^Z
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K / and leading the industry. And if there is anything in our strategy that ^Z ^Z^Z / ^Z
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- ment and employees ^Z consequently enacted without the correspon- ding procedures.
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Conclusions
/^Z- E ^Z ^Z d^Z z ^Z z ^Z d
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Lessons learned
W^Z ^Zd- ^Zz - ^Z
> ^Z / ^Z z
The importance of in- ternal aspects of CSR - ted. The proof that com- they preach is not to be found in glossy CSR bro- chures but in the heart- of a company.
K ^Z integrated into and documented across all - comes an inextricable and enduring part of a company’s workings, of greenwashing.
144 d^Z^
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/ ^Z to ^Z ^Zd ^Z
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148 d^Z^
Abstract
Consumers simultaneously present a huge opportunity and risk for Chiquita’s CSR. d^Z d E'K- ^Z - ^Z
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d^Z t ^Z :^Z /s DZZ^Z- / Z - t
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Before the emergence - were marketed as a uni- form mass commodity.
149'
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/ ^Zt Z ^Z
^Z
d ^Z / - z
tZ ^ds- ^ZZ ^Z^^E- E'K- 4d^^E -
Z- '5^- 'E'K ^Z Z Z and transparency./^ - &
/ brands like Chiquita face a hight risk of becoming the target of consumer campaigns, which so- of countercampaign to ^Z from companies.
d^Z^
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/// D - ^Z//^h^E'K t^, Rainforest Alliance.
, ^Z Z - d E'K / -
t^^^- &- 8 &- ding.9d^ ^ZE ^ ^Z ^Z - & & & &
d^ ^Z Z &- ^Z
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151'
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d ^Z
^Z
dE'K - Z^Z D d ^Z- K
/^Z , - E'K d & E t< ^Z d- 14& - &d^Z 15
d - ^Z at a later date.
^Z- Z / &Z^- Z
It seems that Chiquita has not yet found a way CSR commitment as a with consumers.
D fact that Chiquita did not communicate about ^Z they wished to bene- - ments at a later date.
d^Z^
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Z 18: 19 E'Kz E'Kt^,
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Conclusion
^Zd ^Z d- ^ Z - ' &- , ^Z- d ^Z
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t ^Z>
/ / ^Z
/ ^Z- - d s ^Z K- ^Z
Lessons learned
^Z ^ Zz & ^Z
^Z - E -
ÄÄÊãÝ
d /s

s that put their heads openly discuss their CSR engagement become - remain in the shadows and do much less, re-
Chiquita might at least consider communica- and steadily, using a - takes made in the past.
154 d^Z^

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t^Θ<:ZZ/d> K&,'ZZ
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155'
Abstract
In order to be able to follow through with their CSR policy, Chiquita depend z K- ^ZK ^Z ^Z & - ^Z^Z
DZZ
d ^ Z ,ΘDK - / t ^Z^ ^Z
d- d t
/s DZ Retailers
Only recently, a debate has started about the impact of decisions made by retailers and consumers on produc- W producers who control the product brands to retailers who control the point of sale.
d^Z^
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K dW- - d- ^Z E'K ^Z Z d E'K
Z K d K ^Z ^Z
d - ^Z d
Retailers play an ambi- to sustainable banana K hand, they squeeze the prices of bananas, on the other hand they insist produced in a socially - ponsible manner.
157'
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158 d^Z^
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^ - - - ^ZZ- , / W - / ' Zt Z- dZZt d- ^Z
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d - lers to promote CSR are a double-edged sword for Chiquita’s own CSR policy.
d^Z^
^ZWW / Z >t Zt ^ Y D W WZ / Z E Zt
Zt Z ^Z Z Zt Zt Z- - d Z
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Conclusion
Z ^Z d Z ^Z- ^ZD - ^Z t ^Z - d , ^ -
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d- ^Z^Z
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^Z ^Z z- ^Z - t ^Z D ^Z
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^ t ^Z ^Z ^Zd t ^Z ,
/
K^Z - d ^Zt ^Z /s D^Z - Z - ^Z s of all resources entrusted to us and for providing appropriate returns to our / - D- - d^Z - d - ^Z ^Z ^Z d
/s ^Z
d shareholders and CSR should be understood as - factors impact on one another.
d ^Z creates for sharehlders is one of the most intensely
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t ^Z,
^^Z
t ^Z - ^Z^Z / ^Z
, - ^Z/ / ^Z^ - ^Z- rate assets.
, ^Z
, ^Zt d - ^
/ /WW/ - ^Z
/ - h&- ^>/ ^Z - holder interests and CSR.
Chiquita’s sharehol- ders most likely play an ambiguous role when it comes to CSR in that they oscillate between Chiquita’s CSR.
d^Z^
z Ψ D ^>/ h^ : ^Z
d- ^Z
^Z
d- ^Z- ^Z d - 1
^Z- ^Zd /W ^Z / ^Z
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, ^Z ' ^Z ^Z- <^Z
, - ^Z ^Z
' recent years, we need to consider whether its commitment to CSR real- ly is in line with sharehol- der interests. Yet we also what the numbers would look like if Chiquita did not engage in CSR.
'
t ^ZK ^Z //W- ^Z- K& ^Zt K> ^Z ^Z ^Z /s d >^Z ^Z^ Wt -
/ ^Z' ^Z - ^Z, ^ZD^ Z ' /s ^Z
D - ^Z- /- ^Zd^Z /s /s , d ^Z - ^Z^Z ^Z
Conclusion
- ^Z - t ^Z
The more retailers and - ference to companies with a high CSR perfor- mance, the more the shareholders will see the business case and support CSR engage- CSR.
d^Z^
- - ^Z ^Z
Lessons learned
^
- - ^Z
^ ^Z d- ^Z
d ^Z rather scarce.
^Z ^Z
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The goal of these conclusions is to highlight the complexity of designing, man- ^Z / - ^Z- ^
Struggling with a historical legacy
^Z d
^Z - E z t
/ D - ,
Conclusions: Contextualizing Chiquita’s ^Z
171'
/ /& t / d - d
- - Zt-
d
d^ZD W d - W - d ^Z
t ^Zd ^Z ^Z E^Z- ^Z /^Z K ^Z
K ^Zt t^Z
The complexity of Chiquita’s CSR story claims about causal rela- and responsibility.
The company was a pioneer in numerous aspects of CSR within and beyond its indus- E link between CSR and remains unclear
d^Z^
^Zd & ^ZD^Zt'
d t^Z - d / ^Z- d- d^Z
^Z
>d- lure of storytelling
D^Z ^ - d^Z ^Z
^Z ^Z d Z ^ /& t /- ^Z
t - ^Z- ddd
Despite all the problems its CSR engagement, the CSR is indisputable.
'
^Z ^- > ^Z & D^Z':- ^Z - &^Z E'K Z, ^Z- ^Z- ^Zd E'K- , ^Z d
d^Z /
^Z
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d ^Z - / ^Z- &^
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/ understanding among their stakeholders. Chiquita needs to com- - topdown storytelling.
174 d^Z^

^Z ^Z,- - - d
& Zd && not necessarily Z W & d D & &Z&ZZRainfor- est Alliance d ^Z / consultants and standards.
The wickedness of CSR problems
d ^Z- - ^ZW^ZE'K - ^ ^Z
t nor resolved & -
Companies and their - duce complexity when - cial problems, which re- sults in black and white ^Z challenges.
175'

D &- , /- d-
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Many of the problems Chiquita is facing are inherently wicked and to ideological disputes.
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Performing at such a ^Z - our analysis shows the fragility of such a per- formance.
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Mr George Jaksch^ZΘW Mrs Sheila Mc Cann-Morrison^/hD
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