Daniels Fund Ethics Initiative

University of New Mexico

http://danielsethics.mgt.unm.edu

Managing Social Responsibility and

Growth at Ben & Jerry’s
INTRODUCTION

Ben Cohen and Jerry Greenfield opened their first ice cream shop on May 5, 1978, in a converted
gas station in Burlington, Vermont, investing $12,000 in secondhand equipment. Their business
credentials consisted of much enthusiasm and a $5 Pennsylvania State University correspondence
course in ice cream making. Driven by Cohen and Greenfield’s 1960s ideals, Ben & Jerry’s
Homemade, Inc., has grown to be a very successful business, with an enviable level of brand-name
recognition for the firm’s internationally distributed frozen dessert products, including ice cream,
frozen yogurt, and sorbets. In addition, there are 337 franchise or company-owned “scoop shops” in
the United States, United Kingdom, Holland, France, Israel, Spain, and Lebanon.

From the beginning, Cohen and Greenfield incorporated into their business a strong sense of social
responsibility—to their employees, the community, and the world at large. Unlike most companies,
Ben & Jerry’s Homemade has three mission statements—product, economic, and social. According
to the company, it is “the belief that all three parts must thrive equally in a manner that commands
deep respect for individuals in and outside the company and supports the communities of which
they are a part.” Although Ben & Jerry’s has experienced some trying times, it remains firmly
grounded in its original, socially responsible corporate vision.

THE STORY OF BEN & JERRY’S

Cohen and Greenfield’s converted gas station served rich, all-natural ice cream, which quickly
became popular with local residents. During the winter months, however, the customers turned to
warmer treats, so Cohen and Greenfield had to come up with new ideas to survive their first year.
Soon they were packaging their ice cream and hauling it around to local restaurants. Gradually, they
began to include grocery stores among their customers, soon gaining shelf space in 150 stores
across the state. The first franchise store opened in 1981, and by 1985, the company was selling
pints in stores outside of New England.

Ben & Jerry’s has always been a bit unorthodox in its business practices, ranging from Greenfield’s
executive title of “Big Cheese” to its products. For example, a popular Ben & Jerry’s ice cream flavor
is Cherry Garcia, named after (now deceased) guitarist Jerry Garcia of the Grateful Dead. Another
flavor, Wavy Gravy, was named after the master of ceremonies at Woodstock and, naturally, was
packaged in a tie-dyed container. Another perennial favorite is Phish Food, named in honor of a
popular band from Vermont. The company has also employed some unconventional promotional
tactics, like the “Cowmobile,” a modified mobile home that Cohen and Greenfield drove cross
country distributing free ice cream scoops.

This case was prepared by O.C. Ferrell, John Fraedrich, and Terry Gable and edited and updated by Harper Baird under the direction of Dr.
O.C. Ferrell and Dr. Linda Ferrell. This case is provided for the Daniels Fund Business Ethics Initiative, University of New Mexico, and is
intended for classroom discussion, rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by
management. Users of this case are prohibited from converting to digital format to email or place on the Internet. Call O.C. Ferrell at 505-
277-3468 for more information.
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When the company went public in 1984 as Ben & Jerry’s Homemade, Inc., Cohen initially limited the
sale of the company’s stock to Vermont residents. His idea was that if local residents were part
owners of the firm, the community would share in the success of the business. In Cohen’s words,
“What a strange thing we’re discovering: As our business supports the community, the community
supports us back.” A national stock offering followed two years later, but the company has
continued its philosophy of supporting the local community.

CARING CAPITALISM

When Cohen and Greenfield first went into business together, they wrote their own rules. Their
corporate mission statement listed not only the goals of making and selling the finest-quality
natural ice cream and operating in such a way as to not only achieve success for both shareholders
and employees but also the requirement that they initiate “innovative ways to improve the quality
of life of a broad community—local, national, and international.”

In the early 1990s, Ben & Jerry’s was selling more than $100 million worth of ice cream products
annually, and Cohen and Greenfield felt they were losing control of their company—its growth,
creativity, organization, and values. When Greenfield even dropped out of the business for a while,
Cohen considered selling the company until a friend pointed out to him that he could make it into
whatever he wanted. Cohen then developed the concept of “caring capitalism,” which he applies by
donating part of the company’s profits to worthy causes as well as by finding creative ways to
improve the quality of life of the firm’s employees and of the local community. Greenfield soon
rejoined the company.

Shortly after Greenfield rejoined, Cohen set up the Ben & Jerry’s Foundation, which is dedicated to
encouraging social change through the donation of 7.5 percent of the company’s yearly pretax
profits. Ben & Jerry’s social concern can also be seen in some of its products. One of the firm’s
ventures was the Peace Pop, an ice cream bar on a stick, from which 1 percent of the profits were
used to build awareness and raise funds for peace. The company purchased rainforest nuts for its
Rainforest Crunch ice cream, thus providing a market for goods from the rainforests that did not
require their destruction. Additionally, sales of Rainforest Crunch were funneled back into
rainforest preservation efforts. Ben & Jerry’s environmental concern was also apparent when it
switched to the “Eco-Pint,” a more environmentally friendly unbleached paperboard container.
Standard paper uses chlorine compounds for bleaching, a process that discharges millions of
gallons of organochlorine-laced water daily. Chemicals found in this water are considered to be
hazardous to human health. The company also joined in sponsoring the Rosebud Sioux Tribe Wind
Turbine Project in South Dakota, the first large-scale American-Indian-owned wind farm. By
purchasing credits in the project, the company can neutralize some of the effects of carbon
monoxide generated by the energy used in its facilities.

Cohen and Greenfield extended their social awareness to their own employees. A salary ratio at the
firm limited the salaries of top executives, which helped give all employees a sense of working
together as a team. And when it seemed that the company was expanding too quickly (the company
went from 150 employees to 300 almost overnight), company executives made a conscious decision
to slow growth to ensure that the company’s family atmosphere and core values would not be lost.
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Additional benefits employees receive include three pints of ice cream a week, free health-club
memberships, and use of a partially subsidized company child care center.

Another effort to utilize the “caring capitalism” concept was in advertising techniques. Rather than
buying television, radio, or newspaper advertising, Ben & Jerry’s promotes things and events of
value to the community. The company has sponsored peace, music, and art festivals around the
country—including the Newport Folk Festival, FarmAid, and its own One World, One Heart
festivals—and tries to draw attention to the many social causes it supports. One such cause is the
founders’ opposition to the bovine growth hormone (a substance injected into cows to increase
milk production), which they fear will drive small dairy farmers out of business. A venture targeted
directly to Burlington residents is the Giraffe Project, which recognized people willing to stick their
own necks out and stand tall for what they believe. Local residents and customers of Ben & Jerry’s
scoop shops nominate the recipients of Giraffe Commendations.

AUDITING SOCIAL PERFORMANCE

As a public corporation operating on a much-publicized socially responsible platform, Ben & Jerry’s
must answer to many stakeholders not only for its financial performance but also its conduct.
Although a relatively small firm with fewer than 1,000 employees, Ben & Jerry’s was one of the first
corporations to formally report on its performance with respect to its social responsibility vision
and goals. The company began reporting on its activities and publishing auditing results in 1999.

Ben & Jerry’s Social and Environmental Assessments examine the firm’s performance in a number
of significant areas, including social missions, sourcing, environment, workplace, giving back, and
consumer services. For example, in the area of “workplace,” Ben & Jerry’s audits analyze the firm’s
benefit programs for employees, including its livable wage policy, diversity, employee wellness,
recognition programs, and total time donated to community service. Ben & Jerry’s has long taken a
proactive position on environmental issues, so the social audit devotes considerable space to
measures of environmental performance, such as use of water, discharge of waste water, and
overall energy conservation.

Ben & Jerry’s social audits also report on the company’s philanthropic efforts, especially with
regard to the Ben & Jerry’s Foundation, which the company provides with large grants to support
various social causes related to children and families, environmental restoration, sustainable
agriculture, and peace. The reports also identify numerous organizations and programs supported
by the foundation’s donations, such as the Vermont Dairy Farm Sustainability Project and Grounds
for Health, Inc. in the U.S., and to The Children’s Society, ChildLine, and the National Missing
Person’s Helpline in the United Kingdom.

Additionally, each Jerry’s Social and Environmental Assessment is reviewed by an independent

auditor. The auditor looks at the claims contained in each report and verifies whether or not they
are legitimate. Ben & Jerry’s includes a summary letter from the auditor in each report, regardless
of the results.
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CHALLENGES TO BEN & JERRY’S SOCIALLY RESOPONSIBLE CULTURE

David Korten, a former Harvard Business School professor with experience in international
development and citizen action, has argued that long-term-oriented, socially responsible companies
often face challenges in today’s fast-paced, often shortsighted, and profit-minded economic system.
According to his perspective, the economic system focuses on the current value of a company’s
stock and rewards cost efficiency and punishes inefficiency. Thus, firms that can outsource or
otherwise shift their costs to other parties are rewarded, whereas socially responsible
organizations are often considered inefficient and wasteful. Consequently, the stock price of such
firms suffers and they may be labeled as “in trouble.” According to Korten,

With financial markets demanding maximum short-term gains and corporate raiders
standing by to trash any company that isn’t externalizing every possible cost, efforts to fix
the problem by raising the social consciousness of managers misdefine the problem. There
are plenty of socially conscious managers. The problem is a predatory system that makes it
difficult for them to survive….They must either compromise their vision or run a great risk of
being expelled by the system….Corporate managers live and work in a system that is
virtually feeding on the socially responsible.

Ben & Jerry’s has certainly faced its share of difficulties while striving to live up to the ideals
established by its founders. One of the firm’s biggest challenges occurred when the company was
acquired by Unilever, an Anglo-Dutch conglomerate, in April 2000 for $326 million. Under the
terms of the sale, Ben & Jerry’s retained its independent board of directors in order to provide
leadership for the company’s social mission and brand integrity. The transaction also rewarded
shareholders for their investment, protected Ben & Jerry’s employees, maintained agreements to
purchase from local, socially minded suppliers, and continued to encourage and fund the firm’s
social mission. The agreement also provided an opportunity for Ben & Jerry’s to contribute to
Unilever’s social practices worldwide. Both co-founders of the company were to continue to be
involved.

In November 2000, Yves Couette was named the new CEO of Ben & Jerry’s. One of Unilever’s
leading ice cream professionals, Couette had worked in the United States, Mexico, Indonesia, and
the United Kingdom. Vowing to build on Ben & Jerry’s achievements, he said, “I am determined to
deliver on Ben & Jerry’s social mission commitment.” However, Ben Cohen expressed
dissatisfaction not only with Unilever’s choice of Couette but that a co-CEO had not been named.
Threatening to leave the company he co-founded, Cohen declared, “The only way the social mission
of Ben & Jerry’s and the heart and soul of the company will be maintained is to have a CEO running
the company who has a deep understanding of our values-led social business philosophy, who had
experience with the company and with how that worked in practice.” Cohen also expressed concern
that a promised “social audit” of Unilever’s operations had not been completed. He was also upset
that Unilever would not allow a $5 million fund established to help new businesses with a social
agenda get on their feet to carry the Ben & Jerry’s name.

Unilever countered Cohen’s claims by pointing out that Couette had the needed experience. While
he was working in Mexico, Unilever had established an ice cream shop, run by a nonprofit
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organization, to support disabled children. Couette said, “Working in countries like Mexico and
Indonesia, I have seen first-hand the glaring social problems people face every day. This has
strengthened my belief that business has an important role to play in achieving social progress.”
Unilever also offered a list of the company’s social objectives for 2001, which included helping to
build playgrounds and launching a new flavor tied to that effort; lobbying to extend the life of the
Northeast Interstate Dairy Compact, which provides more income for farmers; and developing
more environmentally friendly packaging. As for Cohen’s concern about the $5 million fund not
carrying the Ben & Jerry’s name, a Unilever spokesman replied that Unilever wants to protect the
Ben & Jerry’s brand name and indicated the fund could be called “Ben’s Venture Capital Fund” but
not “Ben & Jerry’s.” The spokesman said, “We understand that Ben’s very concerned. He’s a founder
of the company. He has a huge emotional stake in the company. Our view is, judge us by our
actions.”

James Heard, who some of Ben & Jerry’s social report, also sounded a note of cautious optimism:
“There is definitely an irony to a counterculture company such as Ben & Jerry’s being acquired by a
global behemoth such as Unilever, and many members of the Ben & Jerry’s family are acutely aware
of the irony. But fears that Ben & Jerry’s would abandon its commitment to caring capitalism have
so far proved unfounded.”

IS BEN & JERRY’S STILL SOCIALLY RESPONSIBLE?

Over a decade since Unilever acquired the company, Ben & Jerry’s continues to honor their socially
responsible origins. Ben & Jerry’s is the only Unilever brand with its own board and its own CEO.
CEO Jostein Solheim says the company will remain in Vermont and continue to be socially
responsible and committed to their corporate values.

Ben & Jerry’s continues to create unique products and events to show their support for various
social causes. In 2005, the company took a stand against oil drilling in Alaska by making a 900-
pound baked Alaska dessert and serving it from the U.S. Capitol lawn. Ben & Jerry’s lobbied for
same-sex marriage in Vermont, renaming Chubby Hubby into Hubby Hubby for one day. The
company also protested against the FDA’s approval of cloned meat and dairy products by marching
on Washington, D.C., in cow costumes. As a 2009 April Fool’s Day prank, Ben & Jerry’s created a fake
website for Cyclone Dairy, a fake company specializing milk from cloned cows.

The company also engages in more serious activism. Ben & Jerry’s founded the Caring Dairy™
program that helps dairy farmers in Vermont and the Netherlands move towards more sustainable
farming practices. The company also strives to educate people about global warming and about
peace through several outreach activities including their Peace, Love, and Ice Cream Festivals. The
Ben & Jerry’s Foundation continues to support non-profit organizations across the country. In 2009,
the company contributed over $2 million to the Foundation.

Ben & Jerry’s also strives to use environmentally and socially responsible ingredients and materials
in their products. The company currently uses fair trade vanilla, cocoa, and coffee, and plans to have
all fair trade ingredients by 2013. They are also including more cage free eggs in their ice cream; 83
percent of the eggs used in the company’s American products come from cage-free farms. Ben &
 6

Jerry’s is also switching to sustainable packaging where possible, using Forest Stewardship Council
(FSC) certified paperboard for U.S. pint containers starting in 2009. FSC certified paperboard is
sourced from forests that are managed for the protection of wildlife habitat, maintenance of
biodiversity, avoidance of genetically modified tree species, and protection of traditional and civil
rights.

However, Ben & Jerry’s faced criticism for labeling their ice cream “all natural.” The Center for the
Science in the Public Interest sent Unilever a letter requesting that Ben & Jerry’s remove the phrase
from flavors that contained alkalized cocoa, corn syrup, and partially hydrogenated soybean oil.
Although the FDA does not define the phrase, Ben & Jerry’s changed the labels in order to avoid
conflict. Jostein Solheim, Ben & Jerry’s CEO, maintains that the company uses the most natural
ingredients possible and that calling Ben & Jerry’s “all natural” is accurate for reasonable
consumers.

For over 30 years, Ben & Jerry’s has strived to remain true to the vision of its founders. Although
the company has faced difficult challenges as it has crow, Ben & Jerry’s continues to serve
shareholders and the community. Solheim recognizes the Ben & Jerry’s is more than a business. "It's
not an ice cream brand,” he says. “It's a company with a mission.”
(Discussion questions above are just guide for you to understand the case.
QUESTIONS You are not limited to these questions when you discuss, write, and present the case)

1. Discuss how the corporate culture at Ben & Jerry’s, as described in this case, influences the daily
implementation of ethical decision making.

2. Visit Ben & Jerry’s web site and find its most recent social audit. In what other ways could Ben &
Jerry’s demonstrate to stakeholders its commitment to ethical and socially responsible
conduct?

3. Like Ben & Jerry’s, many small businesses were founded and grew successful on a platform of
ethics and social responsibility. However, more than a few of these companies became so
successful that they were acquired by larger firms that may or may not respect the principles
and values on which they were founded. How can such companies protect their core values as
they grow from small firms to large ones and/or are acquired by multinational conglomerates?

Sources for 2011 Update:

“Ben & Jerry’s 2009 Social and Environmental Assessment Report,” Ben and Jerry’s website,
http://www.benjerry.com/company/sear/2009/index.cfm (accessed January 13, 2011).
April Fulton, “Ben & Jerry's Takes 'All Natural' Claims Off Ice Cream Labels,” NPR, September 27, 2010,
http://www.npr.org/blogs/health/2010/09/27/130158014/ben-jerry-s-takes-all-natural-claims-off-ice-cream-labels (accessed
January 13, 2011).
“History,” Ben and Jerry’s website, http://www.benjerry.com/company/history (accessed January 13, 2011).
Dan McLean, “Ben & Jerry's new CEO promises to keep it in Vermont,” USA Today, March 24, 2010,
http://www.usatoday.com/money/industries/food/2010-03-24-ben-and-jerrys-ceo-solheim_N.htm (accessed January 13, 2011).
“Who We Are,” Benn & Jerry’s Foundation, http://www.benandjerrysfoundation.org/who-we-are.html (accessed January 13, 2011).

Sources for Original Case:

Mark Albright, “At Ben & Jerry’s, Social Agenda Churns with Ice Cream,” St. Petersburg Times, Nov. 11, 1995, p. 1E.
“Ben & Jerry’s 2001 Social Audit,” Ben & Jerry’s Homemade, May 2002,
http://www.benjerry.com/our_company/about_us/social_mission/social_audits/2001/letter01.cfm.
 7

“Ben & Jerry’s & Unilever to Join Forces,” Ben & Jerry’s Homemade, April 12, 2000, http://lib.benjerry.com/pressrel/join-forces.html.
“Ben & Jerry’s Announces Environmentally-Friendly Packaging Innovation,” Ben & Jerry’s Homemade, Feb. 22, 1999,
http://lib.benjerry.com/pressrel/unbleached.html.
“Ben & Jerry’s Appoints Yves Couette as Chief Executive Officer,” Ben & Jerry’s Homemade, Nov. 20, 2000,
http://lib.benjerry.com/pressrel/press1120.html.
“Clif Bar Forms Wind-Farm Partnership to Offset CO2 Footprint,” GreenBiz.com, Mar. 26, 2003,
http://www.greenbiz.com/news/news_third.cfm?NewsID=24244.
Simon Goodley, “Ben & Jerry Frosty over Unilever Choice for Key Job,” Electronic Telegraph, Dec. 4, 2000, http://www.telegraph.co.uk.
David Gram, “Ben Worried Ben & Jerry’s Good Work Is Melting Away after Merger,” Register Citizen, Dec. 1, 2000, http://www.zwire.com.
David C. Korten, When Corporations Rule the World (West Hartford, Conn.: Kumarian Press, 1995), pp. 212–214.
Erik Larson, “Forever Young,” Inc., Jul. 1988: pp. 50–62.
Maxine Lipner, “Ben & Jerry’s: Sweet Ethics Evince Social Awareness,” Compass Readings Jul. 1991, pp. 22–30.
Peter Newcomb, “Is Ben & Jerry’s BST-free?” Forbes, Sep. 25, 1995, p. 98.
Hanna Rosin, “The Evil Empire: The Scoop on Ben & Jerry’s Crunchy Capitalism,” New Republic, Sep. 11, 1995, p. 22.
Andrew E. Serwer, “Ben & Jerry’s Corporate Ogre,” Fortune, Jul. 10, 1995, p. 30.
“TimeLine,” Ben & Jerry’s Homemade, http://www.benjerry.com/our_company/about_us/our_history/timeline/index.cfm (accessed
Apr. 18, 2003).
Blair S. Walker, “Good-Humored Activist Back to the Fray,” USA Today, Dec. 8, 1992, pp. 1B, 213.
Eric J. Wieffering, “Trouble in Camelot,” Business Ethics 5 (Jan.-Feb. 1991): 16–19.