How Ben & Jerry’s CEO Solheim Got Bought Out Without Selling Out by Knowledge@Wharton
When people hear the name “Ben and Jerry’s,” they think of three things: First, the high-quality ice cream, heavy on the mix-ins and the butterfat; second, the pun-riddled names of flavors such as Cherry Garcia, Karamel Sutra or Americone Dream; and third, the company’s longstanding social, environmental and corporate justice missions.
But when co-founders Ben Cohen and Jerry Greenfield agreed to sell the business in 2000 to Unilever, a multinational food giant, plenty of people expected that those missions wouldn’t survive. To a remarkable degree, they were mistaken.
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In a recent interview with Katherine Klein, vice dean of the Wharton Social Impact Initiative, current Ben & Jerry’s CEO Jostein Solheim talked about how the ice cream company has managed to hold onto its original social missions, despite its absorption by Unilever.
An edited transcript of the conversation appears below.
Katherine Klein: We’re here to talk about the social mission of the company and how you have maintained it even as Ben & Jerry’s has become part of Unilever.
Jostein Solheim: Ben & Jerry’s is now 36 years old as a mission-led company. I think the key thing in the whole transition to one shareholder from multiple shareholders was a governance structure that was put in place. Unilever was very visionary in recognizing that it says “Ben & Jerry” on the packaging. If Ben and Jerry go out and say, “Well, this is all not really true anymore and [social justice is] not a mission of the company anymore,” that would really undermine the value of the acquisition.
Klein: So Unilever acquired Ben & Jerry’s in 2000, and this was a company where the social mission was baked into the brand.
Solheim: That is integral to how we do business.
Klein: And Unilever saw this and its investors saw this from the beginning, and saw value?
Solheim: Yes. That’s why they and the then-sitting board together agreed to set up an independent board of directors that acts basically like our benefit corporation director. They are responsible for the social mission, for the integrity of the Ben & Jerry’s brand, our policies. They even get involved in basic things like wage-setting in the factories, where we have a livable wage policy that is overseen by the board of directors. And the directors are self-selecting. Unilever appoints just two seats out of 11 board members.
Klein: Fascinating. And so unusual.
Klein: You had a career in ice cream at Unilever before coming on five years ago as CEO of Ben & Jerry’s. How was the transition from the larger entity of Unilever to this interestingly different mission-driven company?
“It’s very hard to be angry and eat ice cream at the same time. It’s very tempting to stop and sign a petition, if there’s free ice cream.”
Solheim: I don’t know whether that transition was tougher for them or for me. But Unilever as a company is very aligned in its values. It actually has a lot of diversity in it in terms of management styles, personalities. It has a history of quite a lot of autonomy in its senior leaders, so it wasn’t a super stark contrast. You know, I worked in Italy, I worked in Sweden — the culture of Ben & Jerry’s is actually similar to typical Scandinavian companies. It’s a flat, un-hierarchical sort of approach to business. The biggest thing for me was I felt a big sense of responsibility.
Klein: Have Ben Cohen and Jerry Greenfield stayed involved?
Solheim: Yeah, they are involved, but they do more of their own things. They have the best jobs in the world. Their job is to be Ben and to be Jerry, and they basically just have to deliver on that. Day-to-day operations are really in the hands of the management team and the board of directors.
Klein: Ben & Jerry’s describes itself as a values-driven company. You celebrate your social, environmental governance values on the website. Can you tell us how that plays out in action? How do you move from words to deeds?
Solheim: Well, I think that’s the key point. A lot of companies would say they’re consumer-led, whether that’s in product development or in a mission. Similarly, when companies come to the world of corporate social responsibility, they ask themselves, ‘What do people really care about? And how can we be a part of that?’ At Ben & Jerry’s, we come at it the other way. We actually ask ourselves, ‘What do we truly believe in — us?’ And then we execute well, because we truly believe in it, and hence, convince others to join us. So that’s what we mean by that: It starts with our values, and then we apply and join in movements with other partners to make change.
Klein: So talk to us about some of those specific values and how they are enacted through your products, through your employment practices and partnerships.
Solheim: We can take one we just won. Let’s take same-sex marriage. That came on the agenda in the 1980s at Ben & Jerry’s. Ben & Jerry’s was one of the first companies to offer same-sex partners the same rights — health care, etc.
When that started to come into the public domain and become a debate, it was very clear for the company — we couldn’t just say, “You’re OK if you’re at Ben & Jerry’s, but if you’re not, you’re not.” So it was very natural for the employees to join in and campaign for same-sex marriage. Then, as we grew bigger, we scaled that campaign up. And now, we finished in the U.S. with the Supreme Court decision this year.
We also won in Ireland. We put it on the map in Australia, in France — in multiple countries where this comes up. It’s something that we believe in. We don’t do an assessment if this position is popular or unpopular. When we started a same-sex marriage campaign in Australia, not a single political party there supported same-sex marriage. Everybody came to us, saying “What are you doing? You shouldn’t do this.” Well, sorry, this is something we really believe in.
Klein: You’ve had individual employees involved in these campaigns. But Ben & Jerry’s as a company, is it active as a major donor, or leading campaigns?
Solheim: The amazing thing is that selling ice cream and running campaigns [use] the same set of skills. You want to get people’s attention, you need social media, you need events. And one great thing that we have, of course, is ice cream. It’s very hard to be angry and eat ice cream at the same time. It’s very tempting to stop and sign a petition, if there’s free ice cream. So ice cream plays a really important role in how we connect with our fans.
We treat those campaigns in exactly the same way as we would treat a new product launch.
Klein: And sometimes they actually appear on your products, right?
Solheim: “I Dough, I Dough” was our celebration of the same-sex marriage act.
We just launched a product, “Save Our Swirled,” which is in support of a binding climate agreement in Paris, where the U.N. [held talks]. We launched that with Tesla out on the West Coast. And then, we launched a European version in Bonn … inside the climate negotiations at the U.N. So we had the opportunity to feed all those people who are trying to work this out for us.
“We have a livable wage policy that is overseen by the board of directors.”
Klein: You actually use ice cream as a metaphor for global warming, right?
Solheim: Correct. We show what ice cream looks like if it’s just two degrees warmer. It’s a bit of a mess.
Klein: It’s a fabulous metaphor: This is what happens to your ice cream after two degrees [and] what happens to the world if it’s warmer by two degrees.
Are there instances where you as a CEO, or as a company, have said, “Yeah, we care about that issue, but we can’t go there. That’s too hot, that’s too controversial”?
Solheim: There are many issues where we’ve had to say we can’t go there, not necessarily because they’re too hot or too controversial, more because we don’t judge that we have a real ability to make an impact, or that we are prepared. You know, we believe you’ve got to walk the walk — not just talk. So we want to align our internal programs with the external campaigning.
There are issues that come up that are important — legitimate issues — but we haven’t built an internal program. So we’ll start that, and then join in. But controversy is not something that scares us. Maybe it should, but it doesn’t. We were the only corporation to support Occupy Wall Street at Zuccotti Park, which was a surprise to them, as well. And you know, nothing bad really happened to our business as a result of that.
Klein: We’d like to hope in the social impact space that companies can actually achieve a positive financial return and a social return on investment, and on social impact strategies. What’s your sense of how this pays off or doesn’t pay off for Ben & Jerry’s? I mean, it sounds terribly crass, but is there money to be made through corporate social responsibility in this kind of values-driven company?
Solheim: There is. There is because people want to make a difference with … actions and activities that they can do. What you buy and how you buy it is a big part of your everyday life, and increasingly, consumers are saying, “I don’t want to waste my money on products that don’t try to make a difference.”
Now there’s a lot of “greenwashing” out there, so people are rightly skeptical and demand real evidence, and [validation from] some other authorities, so they’re not just relying on what a company says. But it’s the fastest-growing area of fast-moving consumer goods by far: Socially responsible companies are making up 60% of the growth in fast-moving consumer goods in developed markets. If you look at a Nielsen study that just came out, which was across 14 countries, what you’re seeing is the rate of change is really picking up. In 2013, 50% of respondents said that they would pay more for a socially responsible product. Today, that’s already at 66% and accelerating. And obviously, a big driver of that is our wonderful millennials.
Klein: Do you see this as something that any company can do? Ben & Jerry’s could be criticized on some level for the healthiness of its ice cream. I’m thinking of other products that we may look at and say, “That’s not a healthy product, that’s not a product that’s good for the environment.” And yet, can any company find ways to live this mission?
Solheim: Absolutely. Not every company will become an activist company or a campaigning company like Ben & Jerry’s. I wouldn’t think that’s appropriate for every company. But every company can make those decisions that optimize their social impact and their business impact in any industry, anywhere, that benefits their employees, their communities, the environment — whichever constituents that they address. I don’t think that this is something unique to specific companies.
On the healthy vs. non-healthy products, in good products and bad products — for us, it’s all about transparency. I always say when you’re tucking into a Ben & Jerry’s and you’re on a diet, you know there are no hidden calories here — they’re right there for you to enjoy. And the world needs all sorts of different things to function. But I think transparency is critical. People should understand what they’re trying to get into, and we shouldn’t try to fool people. We shouldn’t have hidden sugars or hidden fats.
“We were the only corporation to support Occupy Wall Street at Zuccotti Park, which was a surprise to them, as well.”
It’s got to be transparent and open. It goes the same for all other industries. So again, I think it’s hard to say, “Oh, I’m in this business and this product, hence, I can’t have a social impact strategy.”
Klein: As you think about the social impact that Ben & Jerry’s has had and the places where you’ve tried to make a difference — I’m particularly interested in your own operations, whether this is your supply chain, your HR practices — can you talk to us about something that you’re particularly proud of — perhaps something relatively recent — and then, areas where you say, “We haven’t cracked this nut, we still have work to do in this area”?
Solheim: We did an assessment around what are the really big and important issues [to us] and … [after] a lot of internal discussion, it was very clear to us that there were two big topics that we needed to address over the next to five to 10 years and that’s climate and climate justice and inequality.
Racial and income … inequities that we’re seeing are creating such a tension in society, it’s hard even to operate businesses. … So we’ve embraced these two topics and what I’m the most proud of is just to see how our teams, our partners, embrace it and scale and throw themselves into making a difference. That’s probably what makes me the most proud.
What we haven’t cracked is, how do you reduce your carbon footprint by 80%? There’s a lot noise out there [about] a way [of doing business] that will be carbon neutral — well, the carbon footprint of a business goes end to end. It starts on a farm and finishes with the waste product. And you need to take responsibility for the whole thing — we need to reduce that by 80%. Fifty percent of our carbon footprint is in ingredients.
Klein: On the inequity/inequality front, maybe two questions. What is the connection you’re seeing between business success and inequality? What is that negative relationship you are seeing? And how might you take action in this space?
Solheim: That’s typically the first question you get when you’re getting involved in structural racism and some of these other deep-rooted social issues — and what’s in it for a business. If you actually look at the correlation of success, of economic success and inequality, it is highly correlated. We have an inherent value and belief that a society where everybody is treated justly and equally is just a better community to be in. It maps out very nicely, as well, in terms of economic opportunity and success.
It comes from our human values; it comes from the values we have in our company. But we also see those communities thriving and doing better and being better for our business. Climate justice is about climate change, but it’s also about the fact that poor people, disadvantaged people, get hurt first. The wealthy can move, they can shift around; the poor cannot. That has an equity component in it. But as we’re moving into the next phase, for us, we have to recognize that we’re a terribly white company. You know, we come from Vermont, and Vermont is 96% white.
We’ve had to do a lot of work in our company to really, really understand it. And we’ve partnered with a whole host of different, amazing partners, we’ve had a lot of NGOs and activists that have taken their time and invested in us to get a better understanding of this.
I think 2016 will be exciting. It’s an election year, it’s a great opportunity to rearrange the lighting [and] get a disproportionate impact on certain key issues like voter rights and minority participation in our democracy.