Ben & Jerry’s loss to Unilever is bad for corporate purpose – Vophs.

This week, a New York judge ruled against Ben & Jerry’s in an unusual case brought by ice cream maker Unilever, its owner. Ben & Jerry’s took its parent company to court because it argued that its mission was at risk.

This case sheds light on a question gaining importance in modern capitalism: What is the purpose of companies? For the past five decades, many business people have had a simple answer, as economist Milton Friedman gift-wrapped it for them in 1970. A company’s purpose, Friedman said, was to make money for its shareholders. If it did, like a shark focused on its prey, it would work efficiently, focusing entirely on the one thing it was designed to do.

It has left many complexities—planetary loss, for example, or social inequality, or even wars—to other institutions better suited to address these issues, such as policymakers, activists, and the like. , or the peacemaker. Can’t sell clothes Opposite userAfter all, right? Ice cream on a stick, whether it’s “called”peace pop,“Can’t really stop war.

However, in the last few years, Friedman’s neat thesis has been examined more forensically, and found to be flawed. Company leaders are beginning to recognize that corporate power can be the most powerful lever for changing the direction of our modern societies and reducing harm. Famously, Paul Polman, the former CEO of consumer goods giant Unilever, was one of the most vocal supporters of the company’s cause.

Now, however, Polman’s former company suggests that it is not necessarily ready to stick to its stated values. His model of promoting the cause—buying small brands and allowing them to control their ethics while growing their scale—may not survive a moment of hard, principled decision-making. Exactly the kind of moment, arguably, when purpose is actually put to the test. Unilever may argue that its decision on Israel and the occupied Palestinian territories is fair and balanced, but the fact that it agreed to put a purpose-driven board in place does not reveal this. .

Ben & Jerry’s is in Israel.

In June 2021Ben & Jerry’s has announced that it will stop selling ice cream in the occupied Palestinian territories. A year later, under pressure and criticism, including from some shareholders, Unilever announced its solution: It sold Ben & Jerry’s in Israel to a local distributor, to continue selling as is — flavors, packaging. Colors, and designs—save for changes to the Arabic and Hebrew versions from the English language name.

Ben & Jerry’s took Unilever to court to try to block certain aspects of the sale. A New York judge on Monday Decided against The ice cream maker said it had failed to prove it would suffer “irreparable harm” or that consumers would be confused.

But how is damage measured? If it is on sale, continuing to sell in a profitable market rather than abandoning it can show that no loss has been incurred. But what about reputational damage, and how is it measured? And while customer confusion can be a recognizable business—they may choose a competitor because they no longer understand that their favorite brand is on offer, for example—customer frustration. what will happen? What about consumers who feel cheated?

Ben & Jerry’s had not responded to an email requesting comment by the time of publication. A spokesperson for Unilever reiterated that the company does not comment on issues with legal ramifications.

A tip for purpose-driven companies

Unilever bought Ben & Jerry’s in 2000 with an agreement to allow the brand to retain an independent board. It was the same board that strongly opposed the sale to Israel, and now Unilever says “Power outage“To prevent this. The clue is clear: When a large company buys a small company, it can ignore the wishes of the new subsidiary, whatever commitments it may have made at the outset.

As a result, the path for smaller purpose-driven companies is less clear. Stay independent, and maybe never achieve scale, and therefore never achieve reach? Or sell, and possibly sell out?

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