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Ben & Jerry: CSR challenges and opportunities when creating a business and making it grow
Ben & Jerry: CSR challenges and opportunities when creating a business and making it grow
Ben & Jerry: CSR challenges and opportunities when creating a business and making it grow
Ben & Jerry: CSR challenges and opportunities when creating a business and making it grow
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Ben & Jerry: CSR challenges and opportunities when creating a business and making it grow

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Case Corporate Excellence …

Case Corporate Excellence

The focus on CSR enables companies to become conscious of the environment but at the same time may lead to problems related to competition and the viability of the model itself.

History has many lessons and conclusions in store: the first lesson is that it is possible to challenge the myths and demonstrate that one can be competitive and socially responsible at the same time. The second lesson is that it is not easy and that the way to success is full of obstacles. In the business world where corporate social responsibility adepts are still trying to convince companies about potential profits, Ben&Jerry’s showed that the answers to many questions are not as difficult as we thought and that it’s not needed to reinvent the wheel. What’s needed is true and genuine commitment.

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  • 1. Cases Strategy documents C04/2011 Public Affairs CSR challenges and opportunities when creating a business and making it grow: the case of Ben & Jerry’s When you set up a business, if you have a CSR based approach, this means that you will build on sound social and environmental principles. But at the same time it may also mean that problems relating to competition and the viability of this model will arise later on. When Ben Cohen and Jerry Greenfield opened conscious principles underlying the concept of their first Ben & Jerry’s store for homemade CSR, in the opinion of Joan Fontrodona, lecturer in ice cream in a old petrol station in Burlington, Ethics at IESE Business School (Barcelona, Spain): Vermont (USA) in 1978, they did so after completing a five dollar correspondence business 1. Socio-political course with the University of Pennsylvania and 2. Ethical with very little capital, but faithful to their ideals 3. Economic (laid down in their hippie days in California at the end of the 60s) and mapped out a three-fold It is true that Ben & Jerry’s was one of the first mission for their business. They both realized from firms in the US that from its outset applied the the beginning that the business only be successful concept that would later be known as Corporate if all the product goals (social, environmental and Social Responsibility to its business model. When financial) were reached together. they decided to found an environmentally and financially sustainable company that would create These aims represent what John Elkington, in 1998, the development they sought for all their interest first called the “triple bottom line” (also known groups, they put in place criteria that took account as the “triple balance”) together with the three of the impact that these activities would have onDocument prepared by Corporate Excellence with reference to, among other sources, the intervention of Joan Fontrodona during thesessions of the Executive Education Program “Making Social Responsibility Work: The Cornerstone of Sustainable Business” organizedby the IESE Business School in Barcelona in July 2011.
  • 2. CSR challenges Ben & Jerry’s: Triple Misión The counter-cultural, anti-business image of the twoand opportunities hippie college friends, together with their idealism,when creating a Social Product Economicbusiness and making became extremely popular with the American mission mission missionit grow: the case public. They were seen a model of commitment andof Ben & Jerry’s To operate the To make, To operate the responsibility, promoting socially beneficial causes, Company in a distribute and Company on way that actively sell the finest a sustainable such as refusing to use cloned animals to supply recognizes the quality all financial basis their commodities, or transgenetic products. central role natural ice cream of profitable that business and euphoric growth, increasing plays in society concoctions value for our But the more the business grew, the more internal by initialing with a continued stakeholders innovative ways commitment and expanding and external commitments they took on. In to improve to incorporate opportunities for personnel management, and as a result of their policy the quality of wholesome, development and of equality and joint decision-making, a policy was life locally, natural ingredients career growth for nationally and and promoting our employees. introduced that forbade directors’ remuneration to internationally. business practices exceed five times that of the lowest-paid worker: the that respect the Earth and the so-called 5-1 policy. Environment. The question of coherence vs. reality Fuente: Ben & Jerry’s, 2011. In many US companies in the 70s the ratio between top and bottom salaries was 90-1. Today, because of the financial and real estate crisis that affected society, on the environment (especially animals) the whole world in 2008, the debate is still open, and on corporate responsibility. especially in the boardrooms of large firms and financial bodies. This debate does not only concern From the start, the mission and it goes without the comparison with employees’ base rate pay, but saying, the vision, and ethical values of Ben & Jerry’s profits, cut-backs, hiring and firing, re-locating and were social. The corporate culture of the company using public money to rescue large businesses. was imbued with a spirit of social engagement based on a clear-cut idea: a caring and supportive form of capitalism with a human face, which at the time ‘From the beginning the some called ‘anti-establishment’. mission, and it goes without The underlying principles brought to their values saying, the vision, and and behavior became concrete practices and policies. ethical values of Ben & Ben & Jerry’s decided from the beginning that their business approach would be based on introducing Jerry’s were social, based on an ethical vision into the venture, to ensure the a clear-cut idea: capitalism firm’s sustainability and cost effectiveness, rather than the traditional approach which, at most, with a human face’. shares out profits or repairs environmental damage after carrying out its activity normally, as many The reason that Ben & Jerry’s began to have other businesses do. problems with their remuneration policy in the 80s (when the atmosphere in the States was marked by the yuppies and neo-liberal revolution of the From beginnings to the first problems Reagan era) was the following: the salaries for the Since the moment it began to operate, the firm upper echelon of directors was not competitive bought only natural and organic products, and in in market terms and the business had problems the 70s and 80s was already recycling all the paper in hiring professional people from outside the and cardboard it needed to make its own containers. market. At the same time, the lower echelons It was actively involved in the farms, which supplied were earning more than the going market rate. raw products, to ensure that the animals were well This had a secondary effect: many of the people fed and cared for. at an intermediary level did not want promotion because then their responsibilities would rocket But over time the business grew massively and while their salary barely changed. extremely rapidly, and it became necessary to fight off the unfair attempts of its competitors to In this situation, the ability of the people joining prevent this. Ben & Jerry’s took Boston’s Haagen the company to adopt the culture and values of Dazs to court for trying to obstruct the distribution Ben & Jerry’s was vital: only those who shared the of its products, and won people’s sympathy with its company’s mission and vision would be able to direct, informal and politically incorrect grassroots understand and live out the spirit of this American campaign, that asked “What’s the Doughboy afraid ice-cream manufacturer. Hence the importance of of?’ (a reference to Pillsbury Doughboy, the firm selection and value management, especially for an that owned Haagen Dazs). organization based on a socially responsible model: Cases 2
  • 3. CSR challenges Ben & Jerry’s: Development From fair trade to the buy-out by Unileverand opportunities In the 90s Ben and Jerry’s began to promote fairwhen creating a of remuneration policybusiness and making trade in the supply chain and in production andit grow: the case marketing, with a view to establishing fair dealingof Ben & Jerry’s 5-1 7-1 with all the agents involved, from the suppliers Maximum salary Maximum salary of a senior of a senior of the ingredients to the end consumer. The Ben & Jerry’s Foundation was set up to participate in activities in the community, with 7.5% of pre-tax x5 x7 profits devoted to this end. And prices were kept Salary of an Salary of an employee employee 20% below those of their competitors. under under Their model, clearly based on the ethical concept 1978 -1990 1990 -2000 of theories of justice versus utilitarianism, which integrated all their social, legal, cultural, economic Source: Author, 2011. and environmental concerns into a single vision, in line with one set of policies and one ideal: namely that the success of a company cannot be reduced to in addition to not wanting to focus their employees’ a single dimension. Sustainability, success, must be motivation on such a mechanic element as salary. kept in the balance between the other dimensions (the business as a good operator: quality and results, But behind the important debate this generated the business as a good colleague and citizen: social at all levels of the organization, what was at risk, attitudes and commitment), even though this may what was in danger of being lost, was something far create problems for leadership and management. more serious, particularly for Ben Cohen, the heart and soul of the company. In his opinion, the 5-1 But in 2000, the news that the two college friends remuneration policy was morally right, because it were retiring and selling the business to a Dutch represented the company’s mission, vision, and conglomerate, with the promise that the new values and was the raison d`être for the huge success owners would respect the ideas and spirit with that they had achieved up till then. which the company had been founded, left their followers aghast. The coherence with this model was basic, but it was also important to exercise pragmatism and Today, Ben & Jerry’s ice-cream company is still take account of reality. So, eventually, the salaried an organic and free trade enterprise, with zero policy was modified and broadened, and the 5-1 Co2 production emissions. A proportion of sales ratio became a 7-1 ratio. The way the company continue to be devoted to the Foundation and it functioned also had to be adapted to corporate is still at the forefront of CSR as later initiatives, standards such as reporting, controls, procedures, such as the three-fold balance between the needs meetings and producing memoranda. It was as if the of farmers, dairy cattle and the environment shows, company went from adolescence to adulthood in as or the cooperation with the World Wildlife Fund short a period of time as its growth had been. and the explorer Marc Cornelissen to initiate the Climate Change College. The company still is doing what it says. ‘The 5-1 remuneration policy was morally right, Conclusions: simple answers because it represented the to being successful company’s mission, vision, History offers us many lessons and many learning opportunities. The first is that myths can be and values and was the overturned, demonstrating that it is possible to raison d’être for the success be competitive and successful while being socially responsible at the same time. The second is that that had been achieved’. this is not at all easy and that the road is full of obstacles. In the corporate world where CSR is Occasionally one must change and adapt policies still trying to convince firms of its benefits, Ben in order to maintain one vision alive, and take & Jerry’s proved that answers were simpler than into account the conditions and circumstances of we thought and that we did not need to re-invent the surrounding culture. Flexibility is a necessary the wheel: we only need to make a true, genuine condition for socially responsible companies too. commitment to this ideal. Cases 3
  • 4. ©2011, Corporate Excellence - Centre for Reputation LeadershipBusiness foundation created by large companies to professionalize the management of intangible assets and contribute to the developmentof strong brands, with good reputation and able to compete in the global market. Its mission is to be the driver which leads and consolidatesthe professional management of reputation as a strategic resource that guides and creates value for companies throughout the world.Legal NoticeThis document is property of the Corporate Excellence - Centre for Reputation Leadership and has as its objective to share businessknowledge about Brand, Reputation, Communication and Public Affairs Management.This document is directed exclusively towards its addressee and contains confidential information, subject to professional secrecy, whosedisclosure, copy or non-authorized use is against the Law. If you receive this document by mistake, let us know immediately and erase itwithout keeping a copy.Corporate Excellence - Centre for Reputation Leadership is the owner of all the intellectual property rights of the images, texts, designsand any other content or elements of this product and has the necessary permission for its use, and therefore, its copy, distribution, publicrelease or transformation is prohibited, without express authorization from the owner.

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