Corporate governance issues at Ben & Jerry’s
Corporate governance issues at Ben & Jerry’s (which is owned by Unilever) have made news around the world. The Ben & Jerry’s brand released a statement in July 2021 saying it will no longer sell its ice cream in the Occupied Palestinian Territory and this caused a political storm for its bigger parent company.
Why does Ben & Jerry’s want to stop selling ice cream in the Occupied Palestinian Territory (OPT)?
The founders of Ben & Jerry’s said in the statement: ‘We’re a values-led company with a long history of advocating for human rights and economic and social justice. We believe [selling in the OPT] is inconsistent with our values for our product to be present within an internationally recognised illegal occupation.’
Is this true of all Unilever products, is Unilever boycotting the OPT?
No, and this is where it gets complicated.
When Unilever bought Ben & Jerry’s in 2000, it agreed to the notion that the founders wanted to ‘preserve the spirit’ of their company even after selling out to a multinational.
The agreement meant that Ben & Jerry’s would retain an independent board of directors charged with “preserving and enhancing the company’s social mission”.
So the Ben & Jerry’s desired boycott of the OPT is not a Unilever policy, even though Unilever owns Ben & Jerry’s?
In a nutshell, yes, and this is where it gets tricky for Unilever.
Although Ben & Jerry’s has a history of taking stances on controversial issues, it has never faced such a fierce reaction.
Israel’s prime minister Naftali Bennett warned Unilever that Ben & Jerry’s stance would have severe consequences, including legal action.
In America, supporters of Israel took to the streets and began dumping tubs of Ben & Jerry’s ice cream.
Social media channels lit up, and the proposed boycott made headlines around the world.
From a corporate governance standpoint, what can be done?
It remains to be seen. As a case study in corporate governance, it is interesting because under the year 2000 merger agreement Ben & Jerry’s maintains its board of directors and its CEO, Matthew McCarthy.
Unilever’s CEO Alan Jope said that the withdrawal had been a decision “by Ben & Jerry’s and its independent board” that was “in line with the acquisition agreement that we signed 20 years ago”.
This, however, was met with a furious reaction by politicians and commentators around the world who quickly jumped to accuse Ben & Jerry’s Jewish founders of anti-semitism.
What can Unilever’s board do?
The situation is a political minefield for Unilever. It could wait and see and monitor the impact of the proposed boycott.
The Unilever board of directors and its CEO will closely monitor the political and public ‘long reaction’ to Ben & Jerry’s position. Will the proposed boycott affect Unilever’s other brand sales? What about its share price? And what about the reputation of Unilever as a whole? These will be big agenda items at the next few Unilever board meetings.
If there is a broader impact on other Unilever brands, we can expect to see the parent company take action, perhaps even make a ‘tough decision’.
However, it does appear that Ben & Jerry’s board of directors and its CEO are not for turning.
In an interview in January, Christopher Miller, Ben & Jerry’s head of global activism strategy, said the “strongest bond you can create with customers is around a shared set of values.”
Currently, it looks likely that Ben & Jerry’s will stay the course. However, from Unilver’s standpoint, its board and CEO have a tough decision to make – they must defend what Ben & Jerry’s is doing or publicly challenge the proposed boycott.
Ben & Jerry’s boycott leaves a sour taste. If you were sitting on the board of Unilever, what would you do?