Socially Responsible Ice Cream – Ben & Jerry’s

Executive Summary

The firm that we are focusing on is Ben & Jerry’s ice cream. We highly recommend that the Virginia Tech Foundation invest in this company as they go above and beyond when it comes to their corporate social responsibility. They have taken it upon themselves to make sure their products are not harmful to the environment and to their customers. For example, they have eliminated genetically modified organisms (GMOs) from their products and have worked to create ice cream with natural plants and ingredients while still maintaining great taste. Ben & Jerry’s conducted a Life Cycle Analysis (LCA) on their company in order to adjust their product and factories to ensure that they reduce their harmful impact on the environment. Due to the results of this study, they modified their dairy farms, packaging plants, and distribution centers, significantly reducing their negative impact on the environment.

Furthermore, Ben & Jerry’s has launched many social and environmental initiatives to better our world. In addition to making their company environmentally friendly, they also launched protests and initiatives that were aimed to combat harmful environmental practices by the government, such as oil drilling in the Arctic National Wildlife Refuge, offsetting carbon emissions from travel, eliminating GMOs, and the FDA’s 2007 decision to allow people to consume dairy and meat from cloned animals. Additionally, they have participated in movements that encourage people to vote, rally against economic inequality, and bring children’s needs to the attention of Congress. Most recently, they have launched a new ice cream flavor that celebrates activists resisting regressive policies put in place by the Trump Administration. Even when they were purchased by Unilever, the largest ice cream manufacturers in the world, Ben & Jerry’s remained committed to striving to make the world a better place. They are a shining example of an ethically responsible and proactive company. We recommend that the Virginia Tech Foundation (VTF) begin to transition into more socially responsible investing, and this company would be a great place to start.

Ethical Issues Facing the Firm

Ben and Jerry’s has not come under much attack over its practices or any controversial issues over their product. They have always had a great reputation within the media and the public eye. However, Ben and Jerry’s was unsure whether or not their actual practices were holding up to their reputation, so they underwent a Life Cycle Analysis (LCA) on their product. An LCA provides in depth research to see how much a product was saving, polluting, and or harming the environment and social communities. This company is a staple of how business should be owned and operated in today’s climate.

Ben and Jerry’s began doing research that extended into their dairy farms, packing plants, and places where their product was being distributed: ultimately trying to understand how much waste or climate damage one pint of ice cream can cause. From this information it could be better understood the potential for the damage done, considering that Ben and Jerry’s produces millions of ice cream pints per year. The studies showed that a single pint of ice cream was generating roughly the same amount of carbon emissions as a car driving for a mile, resulting in massive amount of air pollution as a result of Ben and Jerry’s ice cream production. The main source of emissions were all the cows and dairy farms, which amounted to about 53% of all emissions. The remaining percentages came from distribution centers and transportation of the product itself. After this research was complete, major changes were made to make the ice cream less pollutive to the environment. The main change that occurred to remedy the situation was with the cows manure. It was negotiated that the farmers would recycle the manure into cow’s bedding. This would eliminate an estimated 50% of the emissions from the cattle and allow for a much cheaper alternative for the standard bedding, ultimately saving the environment and the farmers a large sum of money.

Ben and Jerry’s is an excellent example of a responsible, ethical and proactive company. Instead of waiting for social outcry to change their habits, they had the forethought to do the research and solve the problem on their own. They are an outstanding company and an obvious choice for Virginia Tech investors.

Pressures Facing the Firm

The main pressure the firm felt responsible for acting on was environmental pollution. Fortunately, Ben and Jerry’s took it upon themselves to conduct research and correct as many problems as they could before activists arose. Ben and Jerry’s also created the Vermont Community Action Team (CAT), that funds social service projects throughout the community.Regarding legislation, Ben and Jerry’s has committed to supporting the mandatory declaration requirements of European regulations and the GMO labeling law passed in their home state of Vermont. The GMO labeling law states that if food is genetically modified, there must be labeling in the package informing consumers. Ben and Jerry’s has taken this law a step further, knowing that the citizens of Vermont and many across the United States are passionate about avoiding genetically modified food. They have pledged to use only non-GMO products in their ice cream, and recently were able to modify all flavors so they would only contain natural plants and ingredients but still retain the same great taste. We believe that profitability and shareholder value will only increase as a result of Ben and Jerry’s proactivity in preventing pressures that could have been placed on them. They have set an example for future companies by incorporating values that citizens of their home state hold, and by establishing environmentally friendly policies that help the entire world.

Corporate Social Responsibility Analysis

Ben & Jerry’s has a three-part mission statement that focuses on their product, economic and social missions. Their social mission states, “Our Social Mission compels us to use our Company in innovative ways to make the world a better place. To operate the Company in a way that actively recognizes the central role that business plays in society by initiating innovative ways to improve the quality of life locally, nationally and internationally” (Ben & Jerry’s). Ben & Jerry’s is a company that is not only known for having a great product but committed to going above and beyond to help communities outside of their own. For the past three decades, Ben & Jerry’s has launched multiple initiatives aimed at improving others’ lives. For example, in 1988, they founded 1% For Peace, which aimed to redirect 1% of the national defense budget to peace-promoting activities and projects. To coincide with this initiative, Ben & Jerry’s launched the Peace Pop, with proceeds going towards 1% For Peace. In 1992, Ben & Jerry’s joined with nonprofit Children’s Defense Fund to campaign to Congress to bring children’s basic needs to the top of their agenda. Due to their efforts, over 70,000 postcards concerning children’s wellbeing were sent to Congress.

In 2005, Ben & Jerry’s created a 900-pound Baked Alaska using their “Fossil Fuel Ice Cream” on the United States Capitol lawn to protest the proposed oil drilling in the Arctic National Wildlife Refuge. Most recently, on October 30th, 2018, Ben & Jerry’s launched a new ice cream flavor called “Pecan Resist”. The company described their new flavor as, “a movement to lick injustice and champion those fighting to create a more just and equitable nation for us all […] created with the intention to resist the current administration’s regressive agenda, celebrating activists who are continuing to resist oppression, harmful environmental practices and injustice” (New York Times). Ben & Jerry’s work has shed light on a variety of different issues. They do not stick to one cause, as they focus on issues ranging from the environment, to voter turnout, to children. Despite being acquired by Unilever, the world’s largest ice cream maker, Ben & Jerry’s remain committed to their ambitious social and environmental goals (New York Times). Ben & Jerry’s corporate social responsibility blows other ice cream brands out of the water. Although another Unilever brand, Breyer’s Ice Cream, is committed to the Rainforest Alliance, Ben & Jerry’s diverse commitment to philanthropy is unmatched. Their responsibility goes above and beyond, outshining all other ice cream brands when it comes to corporate social responsibility.

Social and Ethical Investment Policy Recommendation

Virginia Tech should equally contemplate corporate social responsibility and ethical issues when considering new investments, as they are a prominent institution for higher education. The reasons for this are both financial and ethical, as investments can reflect the ethical viewpoints of the university which can influence the amount of money brought in. We believe that although the correlation between corporate social performance and corporate financial performance is small (Margolis), the reputation and image that come about through acting socially responsible is beneficial for the university as it can attract potential applicants or donors.

Students should be a top priority at Virginia Tech. It is therefore appropriate for Virginia Tech to turn down financial opportunities that are not in the best interest of the student body. We recommend that the Virginia Tech Foundation begin to include investment in companies as a critical part of their policy. VTF should invest in companies and movements that mirror their mission and values of the school and have the best interest of students in mind. Examples could include local recreation opportunities that could enrich student experiences, new dining options that all students could enjoy, or opportunities that could allow students to learn new information. These correspond with Virginia Tech’s central mission of discovery of new information. We support the current plans of VTF to improve cellular service at Lane Stadium (VTF) and continuing support of the Corporate Research Center.

Right now, the Virginia Tech Foundation supports students by offering internships and student investment teams through three different programs: SEED, BASIS, and COINs (VTF). Our team believes that to enhance student support, VTF should implement scholarship programs with the endowed gifts that currently make up the majority of their assets.

Similar initiatives have been undertaken at other institutions such as North Carolina State University, where a $50 million donation from an alumnus was received and part of the money was put towards “need-blind, merit-based scholarships for undergraduates,” with the rest invested in a ‘socially responsible fashion.’ NC State used seven general principles for what they considered to be responsible investing, including “environment and natural resources, labor rights and supply chain management, human rights, community impact, product quality and safety, corporate governance, and companies that don’t test on animals for nonmedical purposes (Dubb)”.

While we believe that the current community initiatives including supporting Hotel Roanoke, the Corporate Research Center, we urge the Virginia Tech Foundation to begin investing in Socially Responsible Companies using similar guidelines.

Implementation of Social and Ethical Investment Policy

Virginia Tech Foundation serves to promote innovation and respectable investments. For the last 70 years, VTF has served a mission to “receive, manage, and disburse private gifts in support of VT programs” (The Virginia Tech Foundation). With the purpose of managing private funds to support the university’s growth, VTF currently does not practice socially responsible investing. By transitioning VTF’s investment practices from solely focusing on real estate and VT-affiliated research efforts, to consider companies with social and financial impact, the foundation will be able to expand its fulfillment of its mission to support the growth of the university.

To implement SRI practices within VTF, the foundation will have to initiate many changes within the organization. In terms of structure, the team recommends VTF to expand the governing of the foundation from a 35-member Board of Directors and 4 Ex-Officio positions, to include more students – undergraduate and graduate, as well as faculty members to be part of the decision-making process. Yale University practices this strategy by not only including Board of Directors and staff members, but by being governed by a student cabinet, made up of representatives from each constituent group (Dwight Hall Socially Responsible). Yale University Fund is currently managed by 20+ students (Dwight Hall Socially Responsible). The team recommends VTF to adapt a similar structure of not only inviting students but being managed by students. With this structure, VTF will meet its mission of supporting the university’s growth by not only modeling student leadership and activism, but also by incorporating transparency into its investment practices. Yale University’s foundation, Dwight Hall, is the first university fund to adapt SRI and has become a model of success (Armitage, 2010). In implementing SRI policies, it will be beneficial for VTF to adapt Dwight Hall’s core values, specifically its “Commitment to the Common Good,” “Diversity”, and “Reflection” components to lead the organization. By giving students power in voicing their opinions, and relating and advocating to VTF’s investment interests, Virginia Tech will empower the student body and strengthen its mission, similar to Yale University’s direction.
In addition to analyzing and adapting practices of Yale University, the team also recommends VTF to adapt San Francisco State University’s investment policies. San Francisco State University (SFSU) unveiled its SRI policies in 2017, which details how they will proactively invest and disinvest in firms with specifically defined traits. Similar to SFSU, VTF should outline traits or create categories that will guide the foundation to make decisions on investing or staying away from investments. SFSU’s three “Portfolio restrictions” consist of staying away from companies that (i) sell tobacco products, (ii) operate in countries that deny human rights, and (iii) are significantly related to the use of coal or tar sands (Investment Policy Statement). By effectively defining traits that the Foundation’s governing body will consider, VTF’s socially responsible investing policies can be implemented proactively.
When discussing best practices of SRI, the team found implementation guidance from one of the most renowned foundations. Bill and Melinda Gates Foundation funded over $7 million in grants in 2017 (Annual Report 2017). In addition to their four program strategies that specifically define how the foundation justifies their investments, the foundation also lists out criteria in considering firms to invest in, which will be beneficial for VTF to consider as well. The Gates Foundation’s criteria consists of analyzing the organization’s (i) impact with underserved communities, (ii) sustainable practices, (iii) financial competitiveness, among other things (Our Strategy).

Virginia Tech Foundation also has the benefit of having access to expansive databases. VTF should particularly pay close attention to CSRWire for reports and resources on corporations practicing or ignoring CSR. By keeping a close watch of CSRWire, VTF will gain the benefit of finding an archive of a company’s ethical history. When initiating new investment projects, it is also recommended to get a wide read of corporate practices, which can be gained by paying close attention to market analysis conducted by MarketLine. By utilizing such resources and by involving a larger student body, the foundation will benefit from increase in diverse analyses.

It is crucial for VTF to rely on sound research and fact-checks, which can be achieved through a diverse and dedicated student base, full-time staff, and the Board of Directors. By implementing SRI policies to screen and find companies that are conducting favorable business, VTF will gain a better knowledge in determining who is deserving of their investment.

Firm Investment Recommendation

We strongly believe that VTF should invest in Ben and Jerry’s Ice Cream based on its proactive nature, charitable donations, and responsible social and environmental impact. In 1985 Ben and Jerry’s established a foundation that “supports grassroots businesses that help their communities.” This foundation looks to help much smaller businesses in order to keep them going in their communities and keep benefiting the people in their communities. As previously mentioned, Ben and Jerry’s is one of the most ethical and environmentally responsible companies that exists. They are proactive in their CSR in the sense that they do research to ensure that their practices are as responsible as possible. The Life Cycle Analysis on Ben and Jerry’s ice cream products allowed them to make swift adjustments that halved the amount of emissions that the product generated. Also, Ben and Jerry’s have little to no controversial issues, fraud cases, etc. the company has a very clean track record. Such a track record should give comfort to those looking to make a stake in the company and confidence that Ben and Jerry’s will continue this ethically responsible behavior. These are just a few of many examples that demonstrates how great of a company Ben and Jerry’s is. A company that is fit and deserving of Virginia Tech’s investment.

References

Annual Report 2017. (n.d.) Retrieved from https://www.gatesfoundation.org/Who-We-Are/Resources-and-Media/Annual-Reports/Annual-Report-2017

Armitage, Sarah. (2010, March, 8).  First Investment of Dwight Hall at Yale SRI Fund. CSRWire. Retrieved from http://www.csrwire.com/press_releases/29035-First-Investment-of-Dwight-Hall-at-Yale-SRI-Fund

Ben & Jerry’s Corporate Social Responsibility. (n.d.). Retrieved from https://bjsocial

responsibility.weebly.com/

Ben & Jerry’s is a values-led company. (n.d.). Retrieved from https://www.benjerry.com/values

Dubb, S. (2018, June 11). Donors Require Socially Responsible Investments at Universities.

Retrieved October 29, 2018, from https://nonprofitquarterly.org/2018/06/11/donors-

require-socially-responsible-investments-at-universities/

Dwight Hall Socially Responsible Investment Fund. (n.d.) Retrieved from https://dwighthall.org/dwight-hall-socially-responsible-investment-fund

Causes Ben & Jerry’s has advocated for over the years with their corporate social responsibility |

Ben & Jerry’s. (n.d.). Retrieved from https://www.benjerry.com/whats-new/2014/

corporate-social-responsibility-history

Gelles, D. (2015, August 21). How the Social Mission of Ben & Jerry’s Survived Being Gobbled

Up. Retrieved from https://www.nytimes.com/2015/08/23/business/how-ben-jerrys-

social-mission-survived-being-gobbled-up.html

Investment Policy Statement for Restricted Funds. (2017, December, 14). Retrieved from

https://sfsufdn.sfsu.edu/sites/default/files/assets/pdf/Restricted_Investment_Policy_12142017_FINAL.PDF

Kravitz, M. (2018, October 30). Ben & Jerry’s Launches New Resistance-Themed Ice Cream

Pints. Retrieved from https://www.forbes.com/sites/melissakravitz/2018/10/30/ben-

jerrys-pecan-resist-trump/#4bc76436649a

Margolis, J. D., & Elfenbein, H. A. (2009, March). Does it Pay to be Good… and Does it Matter?

A Meta-Analysis of the Relationship Between Corporate Social and Financial Performance. Retrieved October 29, 2018, from https://www.researchgate.net/

publication/228273506_Does_it_Pay_to_Be_GoodAnd_Does_it_Matter_A_Meta-Analysis_of_the_Relationship_between_Corporate_Social_and_Financial_Performance

Our Strategy. (n.d.) Retrieved from https://sif.gatesfoundation.org/our-strategy/

The Virginia Tech Foundation: About Us. (n.d.) Retrieved from https://www.vtf.vt.edu/about-us

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