Ben & Jerry’s Social Cause Melts Away
Social enterprises do not aim to maximize their profits but to maximize the reach of their social mission. For some social enterprises, having a greater social reach means partnering with current market systems for accelerated growth. That is what Ben Cohen and Jerry Greenfield decided to do when they brought their company, Ben & Jerry’s, public. However, what they did not know was that their social cause would have no voice in the case of an acquisition. No voice whatsoever…
From Happy Once Upon a Time, to An Unwanted Acquisition
It’s 1978, and Ben Cohen and Jerry Greenfield start up an ice cream store with a social mission to be fair to its double bottom line; people and profit. They became profitable, responsible to the environment, fair to employees, and pretty nice to cows. So with a growing customer base, and the desire to expand the reach of it’s social mission to greater lengths, Ben & Jerry’s goes public.
But in 2000, its outstanding success grabbed the attention of Unilever, the world’s third largest consumer goods company. While Ben & Jerry’s founders and customers were incredibly worried about the security of the Ben & Jerry’s social cause if acquired by Unilever, the company was public – their legal stakeholders are the shareholders, and they wanted an acquisition. As a publicly-traded company, the board was legally required to sell to the highest bidder in order to maximize the profits for the shareholders. When bought out by Unilever on August 3, 2000, Cohen noted that it was ‘just about the worst day of my life’.
Although Unilever made promises to uphold Ben & Jerry’s social mission, evidence of this has been diminishing over the years. In 2010, labels touting that Ben & Jerry’s contains “all natural” had been removed following pressure from a US watchdog who questioned the transition of the ice cream’s ingredients towards corn syrup, and hydrogenated soya bean oil.
Is the B-Corp the Knight in Shining Armour?
Needless to say, this remains one of the horror stories for the social entrepreneurial community. Time and time again, successful social enterprises face the trade-off between accelerated growth and their social mission. We saw a similar story repeat itself in 2006 when L’Oréal acquired the Body Shop. So what can a social enterprise do? Revoke itself from this market system altogether? Remain in the private sector for fear of undermining their social responsibility?
Becoming a Certified B Corporation could be one of the solutions for fearful social enterprises who do not want the legacy of their social mission to become diluted. B-Corporations;
1) Meet comprehensive and transparent social and environmental performance standards;
2) Meet higher legal accountability standards,
3) Build business constituency for public policies that support sustainable business.
In a traditional corporation, shareholders are the stakeholders who legally reign supreme. So while social enterprises can work as hard as they can to look after their various social stakeholders (the environment, the workers, the community), when push comes to shove the shareholders’ interest will always direct the decision making. However, with a B-Corporation the shareholders, the environment, and the social cause are equally given authority in the decision making process. While a B-Corporation can only be registered in few US states, there are now over 600 B-Corporations.
The negative component of a B-Corporation is that it opens social enterprises up to even greater legal liabilities than their business counterparts who are ironically less socially responsible than they are (B-Corporations being legally responsible for environmental and social stakeholders as well as shareholders). Will any of the social enterprises’ legal council really agree to opening their client to greater opportunities of being sued? Only time will tell.
Whether or not a B-Corporation becomes the salvation for social enterprises moving forward – the story of a once small ice cream company can remind us of how delicate the situation is for sustaining a social mission in a for-profit enterprise.
Ice cream scoop photo via Shutterstock
by Dani Thé