Ben & Jerry’s was founded by Ben Cohen and Jerry Greenfield in Vermont in 1978. As the ice cream brand evolved from a small start-up to a household name, its mission to “advance human rights and dignity” became an integral part of the brand’s identity. When Unilever PLC bought the Ben & Jerry’s brand in 2000 for $326m, the parties agreed upon an unusual governance structure whereby Ben & Jerry’s independent board retained authority over the brand’s social mission.
Fast forward 22 years and Ben & Jerry’s have issued proceedings against its parent company, Unilever, in a dispute over the direction of Ben & Jerry’s social mission. In July 2021, Ben & Jerry’s announced it would end sales in the occupied Palestinian territories on the basis that it did not want to be complicit in an occupation deemed illegal under international law. The announcement placed the brand at odds with Unilever, which came under pressure from the Israeli government to continue sales in the occupied region. Unilever subsequently opted to sell the Israeli arm of Ben & Jerry’s to local licensee Avi Zinger, effectively circuiting the boycott and making the ice cream available to all consumers in Israel and the occupied West Bank. As a result, Ben & Jerry’s applied to the District Court of Manhattan to stop the sale, which they say usurps the authority of the independent board and is not consistent with the brand’s social mission. At the end of September 2022, Ben & Jerry’s expanded its legal action to target Unilever in London as well as its US subsidiary. Unilever has until the start of November 2022 to respond formally to Ben & Jerry’s latest claim so watch this space.
In a wider context, the dispute demonstrates that environmental, social and governance (ESG) priorities are taking on an increasingly important role in the way companies conduct their business. The Ben & Jerry’s/Unilever dispute serves as a warning to both acquiring and target companies that a lack of harmony on ESG priorities can lead to significant divisions within group companies. The need for companies to specify the extent of a subsidiary’s independence is more significant than ever before amid amplified ESG concerns.