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Pantaleón Sweetens Life in Central America

Pantaleón Sweetens Life in Central America

In reaction to a painful, nine day worker strike in the 1970’s, Pantaleón started a course of improvement that led it to become a world leader in sustainable sugar production and an ethical leader for Central American businesses. The company’s changes improved its operations, its reputation, and its bottom line.

Pantaleón’s early history was primarily family focused. In 1849 Manuel Maria Herrera bought the Pantaleón farm and converted most of its cattle fields to sugar cane fields. In 1870 he built a mill on the property and started exporting sugar. In 1883 he passed away and his children took over. In 1973 they took on the name, Pantaleón. Three years later the company owned the largest mill in Central America and had become the leader of the Guatemalan sugar industry. Now the 165 year-old company, with new acquisitions and modern technology, is the 13th largest cane producer in the world.

In addition to its two mills in Guatemala, the Pantaleón Group owns, co-owns, or administers mills in Nicaragua, Brazil, Honduras, and Mexico. It manages 19,598 hectares (48,428 acres) of its own land in Guatemala and purchases 70% of its cane from approximately 337 external providers. The group produces an average of 1.2 million metric tonnes of sugar (refined, white, brown, and crude), 39% of which is sold locally and the rest shipped overseas. And it produces molasses, alcohol, and biofuels.

“We understand that the world faces significant challenges: climate change, water stewardship, supply of raw materials and food, combined with the growing need for more goods and services that will meet the demands of a growing population,” says Claudia Asensio, Head of Sustainability

Following the company’s acquisition of the Panuco Mill in Mexico, management contracted with multinational consultants, WSP Group, to develop an environmental sustainability plan. The plan included genetic diversity of sugar cane, effective irrigation methods, and wastewater treatment at the mills. Implementation is ongoing and long term, but the company is already more resilient, is saving costs, and is reaching higher margin customers.

During the last several years Pantaleón focused on improving efficiency even more, acquiring international certifications like ISO90001 for quality control systems, ISO22000 for food safety management, and OHSAS 18001 for health & safety at whichever plant/s the certification best fits. All of these certifications require more efficient management of processes, most of which have been implemented as follows.

In all of its mills, plants, and plantations Pantaleón works to operate sustainably on a consistent basis. It has implemented biological pest control in the fields and built greywater systems to irrigate crops. It grows its own wood for biofuel production (using fields that grow sugar cane poorly) and uses sugar cane leavings (bagasse) and wood chips to produce its own energy. Utilising the cogeneration process, Pantaleón’s two Guatemalan plants produce 99% of their own energy from bagasse and wood chips (2%), sending the surplus to Guatemala’s power grid.

Pantaleón’s carbon output is low. Utilising the 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Pantaleón calculated its emissions at less than 0.03 tonnes of CO2 equivalent per ton of cane crushed. The calculation includes the amount of energy consumed from each energy source the company uses (bagasse, wood chips, husk, coal, diesel and bunker oil) as well as direct and indirect N2O emissions from managed solids in wastewater.

An added benefit to producing its own energy was the realisation that molasses could be used to produce ethanol for export. The United States and the European Union have mandated use of biofuels as a component of vehicle fuel supplies, and they offer incentives to biofuels suppliers. Pantaleón built an ethanol plant and started exporting.

Other Pantaleón waste management programs include the installation of wet cyclical traps in their boilers to trap ash and soot particles, and organic fertiliser produced from cane waste and mud sediments. The company’s remaining waste products are sold for recycling or stored in safe containers. The company also ensures that its operations do not threaten critical habitat or endangered species.

To alleviate its 1970’s labour problems, Pantaleón implemented a number of worker sustainability projects, giving workers better working conditions and compensation plans, and integrating them into the company’s decision making process.

For permanent employees the company provides protective equipment and clothing, has built living quarters, medical and orthodontic clinics, healthcare programs, and offers a full scale education program on its premises, available to full time employees and their families.

For seasonal harvesters the company provides temporary housing, food and water, paying special attention to the hydration needs of its workers (cutting cane is sweat-breaking work). Pantaleón has developed health promotion programs for all of its workers in all facilities. It also provides efficient transportation to and from the fields, educational programs, and large recreational areas. (I’m crossing out the above statement because it implies that all our workers suffer from non-related chronic renal insufficiency and that is not a correct statement. In Nicaragua, we do pre-employment medical check-ups, as required by the law, and ensure that all our employees are medically apt for the work they perform. Chronic renal insufficiency is not directly related to cane cutting. The disease has been found in other agricultural and non-agricultural labours including rice picking and dock workers. In addition, it is not limited to Nicaragua, the disease has been found in Sri-Lanka, India, and other south east Asian countries).

An additional on-going objective of the company is to drive each employee towards the best safety standards. Pantaleón significantly reduced its accident severity rates by 52% and its accident frequency rates by 32% for the 2013/14 milling season compared to the 2012/2013 milling season.

Pantaleón benefits the communities in which it operates as well. In 1993 it formed the Pantaleón Foundation (Fundación Pantaleón) financing it with a significant percentage per metric ton of sugar produced. The foundation sponsors programs in Guatemala, Nicaragua, Honduras and Mexico in the areas of health, education, community development, and the environment.

Pantaleón is also involved with CentraRSE (Center for Socially Responsible Action) in Guatemala. CentraRSE is a private, non-political, and non-profit organisation that aims to change business attitudes and trigger implementation of socially responsible practices. In 2007, Pantaleón received an award from CentraRSE for its outstanding working conditions.

Also in 2007 the Organisation of American States (OAS) awarded Pantaleón its Best Corporate Citizen of the Americas Award for the company’s project “Visionary Schools: Building Citizenship.” The project’s goal is to promote the values of democracy and tolerance in public schools.

“We believe that the role of business in society has changed and that part of our long-term success is engaging with the different types of stakeholders,” stated Asensio.

Accordingly, in 2013 Pantaleón developed a “Responsible Development Strategy” that requires identification of emerging issues important to the company’s success and important to its stakeholders. It aims to look for issues related to the company’s team and products, the community, and the environment, developing a proactive approach to seeking joint solutions with stakeholders. This year Pantaleón hired an outside consultant to help them do just that.

There are several emerging issues the company could take on, if it chooses to:
1. Maintaining the company’s vision and values, especially socially responsible ones, as it continues to expand in the global market. It will be vital (and more difficult) for Pantaleón to continue acting ethically as it grows.
2. Pressure suppliers and customers to develop socially responsible practices, so Pantaleón’s values are reflected throughout the production and consumption chain.
3. Pressure local authorities to develop industry regulations that support local community development and healthy environmental practices. This could prevent agribusinesses from acquiring land needed by peasants to grow food – an increasing problem in Guatemala, where 50% of the nation’s children are chronically malnourished (New York Times, 01/06/13).

Pantaleón, as a role model company for Central America, has a unique opportunity to help shape its future. Pantaleón’s programs and the example it sets can motivate regional development from the war-torn image it used to have to the modern, productive, democratic region it is rapidly becoming.

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Written by:

Susette Horspool
TSBR

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