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How ‘woke’ Ben & Jerry’s took its owners to court in a conflict over corporate ethics

The i 09/08/2022 David Connett

The ice cream maker Ben & Jerry’s is no stranger to controversy. It is a company which prides itself on doing things differently.

It creates weird and wonderful flavour combinations such as cherry garcia and chocolate chip cookie dough, some of which fly high while others – like wavy gravy – fly like Icarus and end up in the flavour graveyard.

The Vermont-based company was founded by childhood friends Ben Cohen and Jerry Greenfield in a converted petrol station in 1978.

As their brand prospered, both men agreed to use their success to support social causes. Both have said that people advised them against speaking out and taking activist positions warning that it would hurt their bottom line. It wasn’t something businesses did.

But the two men pushed on regardless. They honed their philosophy of linked prosperity, the simple idea that as the company benefits, its community should too. They created the Ben & Jerry’s foundation which receives 7.5 per cent of the companies pre-tax profits to fund community projects.

It didn’t appear to hurt profits. Its cash-generating qualities attracted the multi-national conglomerate Unilever to enter into negotiations to buy the company. Adding one of the world’s premium ice cream brands to its own Wall’s range, which includes Magnum and Solero, was another reason why Unilever paid $326m for the company in 2000.

Co-founders of Ben & Jerry’s Ice Cream Ben Cohen (left) and Jerry Greenfield (Photo: Alberto E. Rodriguez/Getty) © Provided by The i Co-founders of Ben & Jerry’s Ice Cream Ben Cohen (left) and Jerry Greenfield (Photo: Alberto E. Rodriguez/Getty)

When the deal went through, Cohen and Greenfield, both self-proclaimed “hipster capitalists”, expressed their surprise, saying: “Neither of us could have anticipated 20 years ago that a major multinational company would some day sign on, enthusiastically, to pursue and expand a social mission that continues to be an essential part of Ben & Jerry’s… But Unilever has done just that.”

Under the deal, Unilever signed up to a governance structure which Cohen and Greenfield describe as “the magic” of Ben & Jerry’s success. The “magic”, they say, is that while they love making ice cream, they are using the business “to make the world a better place” and giving “our work its meaning”.

They explain: “Guided by our core values, we seek in all we do, at every level of our business, to advance human rights and dignity, support social and economic justice for historically marginalised communities, and protect and restore the Earth’s natural systems. In other words: we use ice cream to change the world.”

Under the 2000 deal, Unilever allowed Ben & Jerry’s to have its own board with nine independent members and two seats given to Unilever nominees. This board is mainly responsible for the firm’s social mission, while Unilever controls the operational and financial matters.

Unilever, a firm with its own strong sense of social responsibility, says it encourages its brands, which number more than 400, to have social missions that the company says help drive sales.

It has until recently lived comfortably with its independently minded subsidiary, which this year reported a profit of $1bn (£830m). When Ben & Jerry’s have made statements in support of causes Unilever have been happy enough to point out that these are not issues that concern the wider company.

That laissez-faire approach ended last year when Ben & Jerry’s said that it no longer wanted to sell its products in the occupied Palestinian territories because it was “inconsistent” with its values. When the manufacturing licence ended at the end of year, the ice cream maker did not renew it.

More than 440,000 Israeli settlers live uneasily among three million Palestinians in the West Bank – land that Israel captured and occupied in 1967 but which Palestinians say is the heartland of a future Palestinian state. Most countries consider Israeli settlements on Palestinian land to be illegal. Israel disputes this.

Unilever responded by selling its Ben & Jerry’s business interests in Israel to Avi Zinger, the current Israel-based licensee. When the executive board members at Ben & Jerry’s objected, Unilever stopped paying them. Last month, the independent board members filed a US lawsuit against Unilever seeking an injunction to block the sale.

Jeff Furman, who helped build Ben & Jerry’s and served its board for about 40 years, said the company hadn’t sued Unilever before, but once considered it after finding quality issues in the ice cream, which were later resolved. “We have our fingers in – that’s part of the job – to be vigilant and concerned about everything,” he said.

The case has sparked a wider debate about business ethics. Many observers have made a strong case for companies to act responsibly and embrace wider corporate citizenship, human rights and sustainability. After the Me Too# campaign and the killing of George Floyd by white police officers in Minneapolis, Minnesota, many have taken more strident position.

Critics say otherwise. The Conservative MP for Saffron Walden, Kemi Badenoch, singled out Unilever when she made Ben & Jerry’s the focus of her “war on woke” campaign to launch her candidacy for the party leadership. She claimed that the growing trend for bosses to focus on purpose over profit had contributed to “an underlying economic, social, cultural and intellectual malaise”.

Professor Jesse Fried, of Harvard Law School, told The Wall Street Journal that the case would boil down to who had the contractual right to make decisions about the Israeli licensee.

He questioned how sensible Unilever had been in handing power to the brand, because organisations without a clear chain of command ended up empowering people who might have totally conflicting views, creating chaos and making it impossible to run a company.

“This is a very weird arrangement,” he said. “It’s not just that I haven’t seen it – it’s that I don’t think it exists anywhere in the world except for at Ben & Jerry’s.”

Both companies last month tried to reach an out-of-court deal over the spat but when these failed the matter went to court.

The US judge hearing the case appeared sceptical that Ben & Jerry’s deserved an immediate injunction against its parent Unilever plc to restrict the marketing of its ice cream in the Israeli-occupied West Bank.

US District Judge Andrew Carter said in the Manhattan court he was unsure Ben & Jerry’s had shown it faced “imminent harm” following Unilever’s June 29 sale.

“This is an American institution that for the last 40 years has built its credibility on this authenticity of social mission,” Ben & Jerry’s lawyer Shahmeer Halepota Halepota said.

Unilever says 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.

“There is just no reason to believe … that the continued sale of ice cream could cause irreparable harm,” Unilever’s lawyer David Marriott said.

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