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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.

Both 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 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 undertakes.

Next: Slow Living Summit hosts seminar on context-based sustainability metrics.


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