How Ben and Jerry's Social Mission Survived Acquisition By a Huge Global Corporation

David Gelles reports in the New York Times:

Unilever had been inspired by Ben & Jerry’s ambitious social and environmental goals. Unilever has even thought about what it would take to become a B Corporation — a radical consideration for one of the biggest companies in the world

Big food companies have an endless appetite for smaller brands that make local, organic and socially responsible products. Over the years, Danone acquired Stonyfield Farm yogurt, General Mills bought Annie’s Homegrown and Campbell Soup swallowed up Plum Organics.

Each time such a deal is announced, fans of the target company ask whether its cherished products will be safe under the new owner, or if the integrity will disappear in the belly of the beast.

There is reason for concern. Starbucks acquired La Boulange, a San Francisco bakery chain that made healthful organic breads, in 2012. This year Starbucks announced it was shutting down the bakeries but keeping the brand name alive.

And before it became a case study on how such marriages can succeed, Unilever’s takeover of Ben & Jerry’s got off to a rocky start.

Ben Cohen and Jerry Greenfield founded their gourmet ice creamery in 1978 and were pushing the boundaries of conventional business from the beginning.

Shortly after setting up shop in Burlington, they offered stock to Vermont residents only, hoping “to spread the wealth” in their community. After a national stock offering in 1985, the company set up a foundation and committed to funding it with 7.5 percent of the company’s annual pretax profits.

Mr. Cohen and Mr. Greenfield then devised a three-part mission statement: to make the world’s best ice cream, to run a financially successful company and to “make the world a better place.”

Ben & Jerry’s went to great lengths to fulfill its mission, according to Antony Page and Robert Katz, Indiana University law professors who wrote a paper on the Unilever acquisition. The company sourced from regional organic dairy farms. It used only milk that did not contain artificial growth hormones. It went to court for the right to label its ice cream hormone-free. It developed chemical-free containers. It made fair-trade and organic ingredients priorities. And it reduced its garbage output.

When Unilever, the Anglo-Dutch consumer goods conglomerate, offered to buy the company in 2000 for a rich 25 percent premium, neither Mr. Cohen nor Mr. Greenfield wanted to sell. They worried that Unilever would abandon the progressive aspects of the business and run it as a soulless subsidiary.

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But as a public corporation, Ben & Jerry’s had a fiduciary duty to its shareholders. After much hand-wringing, it agreed to a deal with Unilever for $326 million. And despite handsome paydays — Mr. Cohen’s stake was reportedly worth about $40 million, while Mr. Greenfield’s was worth about $10 million — the founders said in a statement that they would have preferred to remain independent.

Very quickly, some of their worst fears were realized.

Ben & Jerry’s had almost never fired an employee, but Unilever, the world’s largest ice cream maker, had manufacturing and supply-chain acumen and wanted synergies. A production plant and a distribution center were shuttered, workers at the two sites were laid off, and sales representatives at headquarters were fired.

“There were redundancies and consolidation,” said Rob Michalak, who has worked for Ben & Jerry’s on and off for 26 years and is now director of social mission. (He met Mr. Greenfield while hitchhiking in 1978.) “That created unease and suspicion.”

Then, shortly after the deal, in an affront to the company’s political sensibilities, Unilever reportedly prevented employees from emblazoning the Ben & Jerry’s logo on a bus driving them to a protest.

Kevin Havelock, president of refreshments at Unilever, likened the takeover to a new marriage. “There was a lot of learning that had to take place,” he said. “Where there have been challenges, we’ve talked them through.”

But today, 15 years after the deal, Mr. Michalak said Ben & Jerry’s remained as mission-driven as ever, and was having a bigger impact than before because of its increased size. (Since the acquisition, Unilever has nearly tripled Ben & Jerry’s revenue and added hundreds of jobs.) And instead of watching Ben & Jerry’s simply disappear into Unilever, Mr. Michalak and his colleagues have pushed their new parent company to become a more progressive multinational.

The recipe for this amicable partnership was written into the acquisition agreement. Unilever, not wanting to squander its purchase, chose to operate Ben & Jerry’s with more autonomy than any of its other subsidiaries. To ensure middle managers did not contaminate the unique culture, Unilever established an “external board” charged with overseeing Ben & Jerry’s culture and social mission.

That board, initially comprising five longtime Ben & Jerry’s supporters, including Mr. Cohen and Mr. Greenfield, has the authority to set aggressive new social impact targets and to push back against Unilever.

The external board still exists. According to the legally binding merger agreement, the board does not report to any authority other than itself, nominates its own members, has the right to sue Unilever and will exist in perpetuity. (Mr. Cohen and Mr. Greenfield, who are no longer on the board, declined to comment for this column.)

Even with the external board in place, a question remained: How many of Ben & Jerry’s ambitious initiatives could a multinational like Unilever reasonably be expected to support?

The answer, it turned out, was most of them. After the initial layoffs, Unilever largely gave Ben & Jerry’s the autonomy to pursue its own agenda, so long as the ice cream kept flowing.

When Mr. Michalak took over the social mission in 2006, he worked with the external board to redouble commitments to local farmers, press for national labeling of genetically modified organisms and set even more ambitious goals for reducing energy consumption and waste.

The company now offers its lowest-paid workers more than twice the national minimum wage. According to its website, it uses only cage-free eggs. And recently, Ben & Jerry’s became a B Corporation, a voluntary certification by a nonprofit group called B Lab designating companies that uphold high social and environmental standards.

Mr. Havelock said Unilever had been inspired by Ben & Jerry’s ambitious social and environmental goals. Unilever has even thought about what it would take to become a B Corporation — a radical consideration for one of the biggest companies in the world — but believes that it’s unfeasible right now.

Protesters occasionally

still descend on Ben & Jerry’s. Recently, 120 activists marched outside the flagship store in Burlington demanding better conditions for migrant workers on suppliers’ dairy farms.

But over all, Ben & Jerry’s is proceeding with its activism-infused capitalism, one pint of Chunky Monkey at a time. Indeed, Ben & Jerry’s has even rediscovered its political spirit.

The company supports marriage equality and campaign finance reform. And it recently introduced a flavor, Save Our Swirled, intended to raise awareness about climate change. The label is illustrated with cows perched atop melting icebergs, and Ben & Jerry’s is urging customers to lobby government leaders to embrace clean-energy standards.

“Even before Unilever, the company was always going to the uncomfortable edges of advocacy and activism,” Mr. Michalak said. “We are doing more now on the social mission than we ever have in the company’s history.”