This article first appeared in Forum, The Edge Malaysia Weekly on March 11, 2024 - March 17, 2024

Web 2.0 made it easier for anyone to debate, share opinions, and connect with like-minded individuals and groups like never before. This gave corporations the extraordinary opportunity to participate in the same way, and convey their values and personality beyond the mere utility of their products and services.

While businesses previously may have believed that it was best not to air their opinions on social matters, the cultural shift of a participatory internet has encouraged corporations to speak out on injustice and other matters of concern to their buying public — particularly as the buying public is increasingly made up of multiple generations of digital natives who consciously gravitate towards high-key or low-key brands that they connect with beyond product utility.

The social web has also enabled the public to view the violence currently being committed in Gaza in unparalleled detail, and the response to this has revealed deep divisions between and within countries. Knowing how to respond to the concerns of employees and customers is a genuine dilemma for corporations.

Some, like Starbucks and McDonald’s are furiously backpedalling on stances taken last year. However, instead of analysing those examples for any insight, this piece will look at the issue through the lens of Ben & Jerry’s — a brand that many would cite as the poster child of the conscious consumption movement. What does its rupture with parent company Unilever over the Israeli-Palestinian conflict mean for both these companies, and for the conscious consumption movement? And what implications might this case study have for prospective founders, and for sustainability professionals?

The story of Ben & Jerry’s ice cream began in 1978, when New York school friends Ben Cohen and Jerry Greenfield started their venture out of a dilapidated petrol station in Burlington, Vermont.

They pivoted to wholesale in 1979, realising not many people went out for ice cream when it was -20° in winter! The growth that came from this move made them uncomfortable. “We were not ice cream guys any more. We were becoming businessmen, which was not our idea of a good time as children of the 1960s. We felt like our business was becoming a cog in the economic machine and we wanted to get out.”

Instead of abandoning the project, they embodied the 1960s by placing their product mission and their social mission on an equal footing — an approach that would later be dubbed the “Double Dip”. “We love making ice cream — but using our business to make the world a better place gives our work its meaning.”

The company’s social mission is expressed internally through a commitment to limit the wealth gap, where initially the highest paid employee was not able to earn more than five times the salary of the lowest paid employee (now up to 15:1 due to the realities of recruiting talent for a fast-growing company in a competitive job market), and through its adoption of science-based emission reduction targets as part of their climate impact strategy.

Science-based targets are precise and measurable targets designed to reduce emissions by a specific amount, and was a deliberate move away from making net-zero claims through vague promises of tree-planting and purchasing carbon offsets popular in the corporate world. Their commitments include 100% renewable energy by 2025 and 40% greenhouse gases (GHG) intensity reduction by 2025 (80% by 2050) based on measurement of 1.5kg of GHG emissions per pint of ice cream.

Externally, its social mission is expressed by setting aside at least 7.5% of its pre-tax earnings for donation through the Ben & Jerry’s Foundation, and by either initiating or getting actively involved in social issue campaigns, including those that are often seen as divisive or risky for a business to address.

For example, the company has launched multiple campaign flavours and joined advocacy efforts that have addressed the ecological crisis — “Rainforest Crunch” in 1988, “One Sweet Whirled” in 2002, and “Save Our Swirld” in 2015. In 2005, it campaigned against the proposed oil drilling in the Arctic National Wildlife Refuge, and in 2006 campaigned for the reduction of corporate jet travel.

In 2011, it stood with the Occupy movement, which was rallying against economic inequality, mortgage fraud and too much corporate influence in American politics.

And in 2020, when many corporations attempted to address racial inequality after years of ignoring the issue, Ben & Jerry’s emerged as one of the most credible supporters of the Black Lives Matter movement because of its long-standing track record of advocating against white supremacy, police brutality and structural racism, starting with the 2014 campaign protesting the killing of teenager Mike Brown by a Ferguson, Missouri, police officer.

Ben & Jerry’s Homemade, Inc went public in 1984, and its sales increased from US$4.1 million to US$77 million between 1984 and 1990. By the time they reached US$150 million in 1995, Cohen stepped down as CEO and Robert Holland Jr was hired after the company held a “Yo! I’m your C.E.O.” essay writing contest as part of the search. In 2000, it agreed to be acquired by Unilever for US$326 million, and in 2022, revenue sales reached US$450 million.

It had an exemplary product — a delicious super-premium ice cream in abundant flavours with quirky names that brought in the customers — and the wholehearted commitment to social and environment consciousness resonated with these customers and brought in others.

“The most amazing thing is that the part of our company mission statement that calls us to use our power as a business to improve the quality of life in our local, national and international communities has actually helped us to become a stable, profitable, high-growth company. Once you start figuring out how to put these things together, the old way just doesn’t make sense anymore,” the 1990 annual report says.

This intention, however, has not always been straightforward. Sometimes, something had to give. For example, Robert Holland resigned as CEO in late 1995 over Cohen and Greenfield’s objections to his plan for market expansion into France because of the country’s policy on nuclear testing, as well as his plans to expand into the sorbet market because the frozen desserts diminish one of the chief missions of Ben & Jerry’s, which was to support Vermont’s dairy farmers.

When Ben & Jerry’s was acquired by Unilever in 2000, there were immediate questions regarding what exactly had occurred. The New York Times framed the news as an interesting question — “Did Ben & Jerry sell out, or is the Ben & Jerry’s culture invading the corporate world?”

When details of the deal emerged, it did NOT look like Ben & Jerry’s had sold out!

Both companies announced that the brand would continue as it always had — the ice cream would be made in the same way with growth-hormone-free milk from family farmers in Vermont, and all jobs were safe. Ben & Jerry’s would operate separately from Unilever’s other businesses and an independent board of directors, of which Unilever appoints only two of the 11 seats, would be responsible for overseeing the brand, its image and its objectives. Unilever was able to choose the Ben & Jerry’s CEO, but that person is supposed to defer to the independent board when it comes to matters related to the social mission of the company.

Some 7.5% of pre-tax profit would continue to go to the foundation, which in fact would be enhanced by a US$5 million contribution by Unilever. Unilever also agreed to set aside another US$5 million for a fund to help minority-owned businesses.

On top of all this, Cohen would evaluate and contribute to Unilever’s involvement in activities such as protecting the environment.

Over the following 20 years, the answer to the question posed by the NYT article became clear — Unilever had indeed been invaded by the Ben & Jerry’s culture.

This decisive shift in priorities was especially evident during the tenure of Paul Polman as Unilever CEO (2009-2018). In the Sustainability Leaders rankings run by GlobeScan and SustainAbility, Unilever was 7th in 2009, 5th in 2010, 1st in 2011 — and it retained the top position for 12 consecutive years.

In July 2021, Ben & Jerry’s announced that it was not going to renew the licence agreement with the Israeli distributor for the region because it felt sales of its ice cream in illegal Israeli settlements in the Occupied Palestinian Territories (OPT) was inconsistent with its values. Most fans of the company would have immediately recognised that this announcement was in line with its long-standing commitment to advocating for peace.

One of the company’s oldest campaigns was over the growth of militarism. In 1985, Ben & Jerry’s helped found the organisation 1% for Peace, which acted as a lobbying and educational group for an alternative approach to US national security issues by advocating that 1% of the national defence project be diverted towards promoting international peace efforts.

As part of its stance on Israeli action in the OPT, the founders wrote an opinion piece for The New York Times explaining that as Jews and supporters of the State of Israel themselves, the action taken by the company in protest of the policies adopted by the Israeli government was neither a contradiction nor anti-Semitic, and neither was it a part of the wider Boycott, Divestment and Sanctions (BDS) movement.

However, parent company Unilever capitulated under the pressure from Israel and some investors. Israeli prime minister at the time, Naftali Bennett, warned Unilever CEO Alan Jope that the “clearly anti-Israel step” would have “serious consequences” as Israel “will act aggressively against all boycott actions directed against its citizens”.

Unilever never implemented the withdrawal, and a year later it sold the Ben & Jerry’s subsidiary in Israel to the distributor that the Ben & Jerry’s board wanted to break away from, thereby ensuring the continued sale of its ice cream in the OPT.

Ben & Jerry’s took Unilever to court, arguing that the action taken by the parent body was contrary to the promises it made to uphold the social mission of the company as part of the acquisition agreement signed in 2000. Unilever said it retained the right to make operational decisions for Ben & Jerry’s, and that the sale could not be undone because it has irrevocably closed.

CEO Jope (2019-2023) confirmed that Unilever was “fully committed” to Israel in spite of being told that the Israeli government does not differentiate between Israel and the occupied territories, and that Israeli law prevents local companies from not servicing the illegal Israeli settlements in the OPT.

At the beginning of his tenure, Jope firmly retained social purpose at the centre of Unilever and pledged to sell off brands that “are not able to stand for something more important than just making your hair shiny, your skin soft, your clothes whiter”.

However five years later, new CEO Hein Schumacher reversed Jope’s stance on the importance of the social purpose of its brands and implemented a growth plan that included a €1.5 billion (RM7.67 billion) share buyback this month. Chief financial officer Graeme Pitkethly claimed the new business structure has delivered “bigger and bolder investment decisions”, and Schumacher said that board member and activist investor Nelson Peltz, who has a record of shaking up consumer goods companies, was “very much in line” with this growth strategy.

Unilever’s 9th biggest shareholder, Fundsmith Equity Fund, said that the company’s focus on sustainability and brand purpose “is ludicrous” — citing Ben & Jerry’s refusal to sell its ice cream to settlers in the West Bank “as the most obvious manifestation of this”. Only time will tell whether influential investors like these will continue to influence the direction that Unilever appears to be taking, or whether the global outrage at the events taking place in Gaza will lead the company to reevaluate its tacit support of the Israeli occupation of Palestine, and recommit to a strong social and ethical mission.

Either way, this case study brings to the surface interesting questions to ponder:

(i) For prospective founders of social enterprises or those who want to adopt a similar vision set certain social and ecological commitments as part of the organisation’s DNA: Was the strategy taken by the founders of Ben & Jerry’s in negotiating its unique acquisition arrangement with Unilever in fact the right one and the problem was with their legal counsel? Are there better models to adopt — the strategic acquisition of Method in 2012 by Ecover, or Patagonia’s model of remaining private for 50 years and transferring all of its voting stock to a trust as a succession plan, or is Tesla’s open-source philosophy the better strategy for the 21st century? Or is opting for an alternative legal structure — for example, a Low-profit Limited Liability Corporation (L3Cs), Benefit Corporation, or Flexible Purpose Corporation — the best way to protect and build a social and ecological legacy.

(ii) For sustainability professionals and the conscious consumption movement: How much of the success of sustainability and social efforts undertaken by a company rely on the personality and personal integrity of the leadership of the company, and what does that say about succession planning? Where are the gaps in the approach of sustainability professionals when macroeconomic or geopolitical factors come into play? Is the obsession with targeting investors through corporate reporting paying ecological or social dividends or has it primarily yielded increasingly sophisticated greenwashing and whitewashing? Is the Triple Bottom Line the right paradigm? Have the sustainable living and conscious consumption paradigms surfaced because of failing sociopolitical systems (particularly in two-party states), thereby putting an undue burden on consumers and companies to address systemic issues? If the conscious consumption movement and the branding of purpose-centric brands were largely driven by the participatory internet (Web 2.0), what will happen when the technology of Web 3.0 is fully implemented and what adjective will be its description? From Web 1.0, a skeuomorphic read-only internet, to Web 2.0, the participatory internet to Web 3.0 — the ??? internet? Will it help rescue humanity from the existential threat faced equally by everyone, or will it make things worse and take us to the edge?

Steve McCoy has worked in the sustainability field for 15 years, and has been a long-time member of the International Society for Sustainability Professionals, the Association of Climate Change Officers and the International Living Futures Institute. In a previous life, he read medicine, music and theology at London and Cambridge (not at the same time!), and worked in the business, education and non-profit sectors in the UK, Poland and Malaysia.

This column is part of a series coordinated by Climate Governance Malaysia, the national chapter of the World Economic Forum’s Climate Governance Initiative. The CGI is an effort to support boards of directors in discharging their duty of care as long-term stewards of the companies they oversee, specifically to ensure that climate risks and opportunities are adequately addressed.

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