June 16, 2014
Seminar Considers Impacts when Small Socially Responsible Companies are Acquired
by Robert Kropp
At the annual Slow Living Summit in Brattleboro, VT, managers from Ben & Jerry's and New Chapter
discuss how their firms maintained social mission after being acquired by multinationals. First of
a two-part series.
My home state of Vermont is unique in many ways. The outspoken US Senator Bernard Sanders is the
only member of the Senate who is a self-proclaimed socialist. The state has perhaps the most
aggressive greenhouse gas (GHG) reduction plan in the country, and it is currently under siege from
food and beverage industry trade groups for legislating the labeling of products containing
genetically modified organisms (GMOs).
Many of Vermont's home grown companies
are unique as well, publicly emphasizing their social missions and demonstrating that social and
environmental considerations need not impact their bottom lines negatively. Ben & Jerry’s is the most widely known of these
companies; New Chapter, a vitamin and
supplements manufacturer headquartered in my home town of Brattleboro, is another.
companies are B corporations, companies
that embed their social and environmental missions into their corporate charters. New Chapter was
the first supplements company to ensure that their entire multivitamin line is third-party
certified as organic; Ben & Jerry’s mission statement highlights its commitment to social justice
by developing business models that are truly sustainable.
The two companies share another
unique characteristic as well. In recent years, both have been acquired by major multinational
corporations—Ben & Jerry's by Unilever, and New Chapter by Procter & Gamble—whose commitments to
sustainability may not be as far-reaching. At a recent seminar held during the Slow Living Summit in Brattleboro,
former SocialFunds.com writer and sustainability architect Bill Baue moderated a discussion
addressing the challenges and successes of the acquisitions.
The company representatives
in attendance come to their current positions via different routes. Rob Michalak, the Global
Director of Social Mission at Ben & Jerry’s, had been an original member of the its management team
and returned after its acquisition by Unilever. Kyle Garner, the CEO of New Chapter, was a member
of Procter & Gamble's management team before moving to New Chapter after the merger.
Notwithstanding the different routes taken by each, both reported that in their cases the
merger of a small socially conscious company with a large multinational corporation was largely
successful. That both are certified benefit corporations (New Chapter actually began the process of
becoming a B Corp after the merger, Garner noted) helped enshrine and protect their social
missions. In the case of Ben & Jerry’s, Michalak said, “We wanted to maintain the social mission.
We have an entire board of directors that has jurisdiction over Ben & Jerry's social mission.”
The ice cream maker also prepared a legal document in advance of the acquisition that further
protected the integrity of its social mission. And, Michalak added, “The parties will set up a set
of social metrics that will increase at a rate greater than the increase in sales. By the end of
the year we will be fully fair trade and fully non-GMO.”
Not surprisingly, both managers
highlighted the positive aspects of the mergers. For Garner, simple economies of scale meant that
substantial savings could be realized through reduced shipping costs and raw material procurement.
For Michalak, Unilever’s global reach gave Ben & Jerry’s the opportunity to reproduce the
small-scale model it perfected in Vermont, and it has already done so in the Netherlands.
It’s likely that most such mergers end up less well for the small company being acquired.
Garner acknowledged as much, stating that replacing management and destroying the core of the small
company to make a lot of money for a couple of years are common reasons. But both managers argue
that not only is the independence of their firms respected; there is evidence also that the parent
companies may be adopting some of their sustainability efforts.
Unilever is generally
considered among the top sustainable corporations in the world, and its largely successful efforts
to decouple GHG emissions from financial growth probably can’t be traced to the Vermont company’s
influence. On the other hand, the parent company’s decision to use only cage-free eggs in its
Hellman’s mayonnaise products sounds like the kind of smaller scale effort that Ben & Jerry’s often
Next: Slow Living Summit hosts seminar on context-based sustainability
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