Thursday, July 12, 2012

Ben and Jerry's: ethical or not

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Extended Essay

Ben and Jerry’s ethical or not?

Word count 756

Extended essay

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In my extended essay I am tackling the question whether Ben and Jerry’s is an Ethical company. For that it was needed to outline what Ethics in Business in the first place means. I stated what a company can do to be possibly viewed as ethical. To compare the behaviour of Ben and Jerry’s with ethical norms I listed down various actions of Ben and Jerry’s which can be viewed as good (ethical) or bad (unethical) actions towards society. My conclusion then states that the company Ben and Jerry’s can be viewed as ethical since they do act in many areas and ways very responsible but on the other side they can be viewed as an unethical company since they failed in certain parts and didn’t stick to their mission statement which should not have happened and might happened accidentally. But in the end it is due to every individual how they want to view Ben and Jerry’s which is made up by their believes how an ethical company should act like.

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Context page

Page 4. Ethics in Business

Page 5. Ben and Jerrys history and goals

Page 6. Corporate Social Responsibility

Page 8. Ben and Jerrys Ethical side

Page 11. Ben and Jerrys Unethical side

Page 1. Conclusion

Page 1. Bibliography

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Ethics in Business

Ethics in general are beliefs how to act which makes people behave in a positive way, where ethics in businesses is how a company applies these ethical believes in their actions and is used to see whether a decision might be right or wrong. To define ethics the different viewpoints of individuals or groups have to be taken into account, because that influences what they identify as ethical or unethical. In many countries the government tries to ensure that companies behave in an ethical manner by putting up laws. But these laws do not ensure fully that a company will behave ethically. Unethical behaviour might be described the following actions; when a company trades with a country where a inhuman regime has the power, or when a big difference between the wages of the head of a company and a normal employee, or the trade in arms. Today more and more companies have set up own codes of behaviour which they try to fulfil with the best intentions.

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1. Ben and Jerry’s history and goals

The successful ice cream company Ben & Jerry’s Homemade Inc. was founded by two childhood friends called Ben Cohen and Jerry Greenfield in 177 on December the 17. They opened their first shop in a gas station in Burlington, Vermont, after completing an ice cream correspondence course at the University of Pennsylvania for 5 dollars. After being extremely successful and very popular Ben and Jerry’s became a leading company, with nearly an 40 percent share of the ice cream market and passing the 00 million dollar mark in 18, with sales in the US, Canada, Europe and Japan. They own around 00 franchises. Although the company made high profits it is acting now as a non-profit making firm, which was the first case in history. Ben and Jerry’s was also a founding member of Business for Social Responsibility (BSR), with more or less 1400 other businesses whose aim it is to help member businesses to sell their products and/or services so that they can be commercially successful and show respect for ethical values, people, communities and the environment.

Today Ben and Jerry’s is trying to be responsible for the welfare of society as a whole but it has not always been like this, fact is that when Ben and Jerry’s began their business they didn’t have the intentions to run a social responsible business, they just saw themselves as ice cream dealer as long as they wouldn’t have any other opportunities. In 18 they were about to sell their company, but Ben Cohen knew that business exploits the community, its employees and the environment, so he thought about it and came to the result that by keeping the firm to do it differently and better. So Ben Cohen and Jerry Greenfield decided to gain enough money to break even and use their business to make a change in society. In 184 they started to sell shares of Ben & Jerry’s but only to the people from Vermont because they felt responsible to give back the people who supported them at the beginning when they opened their first small shop in Vermont.

In 188 Ben & Jerry’s created a Mission Statement, which aims to produce, sell and distribute top quality products, than make profits but also giving career opportunities and financial rewards for their employees and to play a major role in society as a business to improve life quality local, national and international. By achieving this mission they take care of people inside and outside the business and improve the communities of which they are part. Ben & Jerry’s try’s to use its Mission Statement in daily decision making so that the company stays profitable and so that the communities profit of them.

Ben & Jerry’s often dose what they say, even if it reduces the profits, for example, in 188Ben & Jerry’s stopped producing a very popular ice cream made with Oreo because the Oreo supplier is a business called RJR Nabisco, which is big tobacco producer. Another example is when the Japanese offered to introduce their products in Japan, where Haagen-Dazs, a main competition for Ben & Jerry’s, was the leading ice cream supplier, Ben & jerry’s refused to sell their products there because the Japanese corporation had never in its history done anything to improve anything in their community.

The company was awarded a couple of times, for example the Working Mother magazine named the business as one of the best in a hundred for working mothers and in 188 the Business Ethics magazine awarded the company with the third rank out of a hundred.

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. Corporate Social Responsibility (CSR)

In the past it was only important for a company to sell their goods and/or services at high enough prices, which maximise the profits, and the goal of surviving was the only social responsibility. But in the 1870 people started thinking about their behaviour towards people and a couple of years later the government made laws, which were about child labour and workplace safety and other things. In the 10 during the Great Depression made a change from an economy where businesses could do what they wanted to a more mixed economy with more active and organized labour and more influenced by the government. In 15 the Wagner Act made a change to favouring workers over the industry. Court justices, who were geared towards business, were changed into court justices, who are more geared towards labour and social aspects, that gave more power to government and unions. The government than made many socially orientated programs, which aims were to change the countries mind towards more socially thinking. This lead to a big change for the survival of companies because since this change it is now important to be social responsible because the consumers view towards a company is now based more towards the companies behaviour and therefore businesses had to improve their images.

After the world war two the role of a business in society became more important. People created watching unions, which were founded to make sure that the public interest was kept, just like the American Civil Liberties Union, the Sierra Club and the Federal Trade commission. They were made to look after business ethics and for the judgement of corporate and individual behaviour in businesses and society. The government made than more detailed laws, after some individuals made profits from unclear legislations, to the social responsible behaviour by companies just like the Civil Rights Act, National Environmental Policy Act and the Consumer Product Safety Act. From 16 until 17 the government also made the four key regulation agencies, which are the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, the Environmental Protection Agency and the Consumer Product safety. From than on the managing a company became a lot different because of all these demands by society to follow the regulations.

In the 180 business realised that it is important for them to be socially responsible rather than just make as much profit as possible for the shareholders. One factor for this was the public interest in that by the media like newspapers, magazines, television, etc. Another factor was the consumer rights movement which examination the actions taken by businesses and more and more business were taken to responsibility for their actions. During that time the media also published information’s about Ben & Jerry’s, because they did good in terms making their business and did good socially. The publishing of the “mistakes” of the businesses lead to an increasing demand by consumers that the company being social responsible otherwise over /4 of the consumers would change the brand.

In the last couple of years investors increasingly invested in socially responsible investments funds, in 1 it was more than one trillion dollars, just like Domini Social Equity Fund or the Ethical Growth Fund, which received the title of Fund of the Year in 18 for being the best fund over others.

All the laws make sure that businesses are responsible for the society as a whole and not only for its labour and shareholders. Being socially responsible is today essential for every

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business because it is important for its image and therefore a major issue for a company’s success. The company has to act in an economically and environmentally perfectly to not damage their image and to disappoint their shareholders.

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. Ben & Jerry’s Ethical side

Ben & Jerry’s is giving every year 7.5 percent of its pre-tax profits to charity organisations. Compared to the normal American company who usually only give around one percent of their pre-tax profits. A part of the money is given to Community Action Teams (CATs). These groups are spread in many communities in Vermont and they are given money to donate it to groups that do community service, e.g. they gave more than hundred and fifty thousand dollars to organisations such as Wildlife and others. They also give their workers the opportunity to do community service work in their local area, for example in 18 staff from a factory in Springfield build a park with a playground and a picnic place.

Money is also given to the Ben & Jerry’s Foundation which was created by Ben Cohen in 185 with a donation of stock. Its purpose is to improve the world by giving the employees of Ben & Jerry available resources to help organisations that work on solving environmental and social problems. They are fighting to make a change society and to solve problems, which lead to racism, sexism, economic unequally and environmental deterioration. The decision-making is done by the Foundation’s Grant Making Committee which is voted by nine employees of Ben & Jerry’s. The foundation has funded many social institutions for gay rights, youth empowerment and antinuclear campaigns to which big amounts of money were given by this foundation.

Another part of that money is given to the Corporate Giving, therefore Ben & Jerry’s made up a Matching Gift program in 18, which purpose is to place workforce to communities disposal who are being paid by them. They also give money to non-profits just like the Vermont Businesses for Social Responsibility, the Vermont Youth Corporation, etc.

Beside that Ben & Jerry’s also gives half of its revenues gained by its factory tours to the Entrepreneurial Fund, which gives money to organisations and business with a, in their opinion, right mission for the company. They also give the chance to their labour to do and create their own community service and still receiving their normal wages.

Ben & Jerry’s also does a lot good to their employees, with their human resources policies, which they achieve successfully. They even got an Optima Award in the Quality of Life section given by the Personnel Journal for the good relation to their employees and for the great atmosphere in the company. Reason for that is first the communication in the company so that employees have even the chance to speak to Ben Cohen and Jerry Greenfield personally. They also have their own personal supervisor who they can make improvement suggestions and can tell them weather they are treated respectfully inside and outside the company. A good example that shows how much Ben & Jerry’s cares for their workers was in 11 when they had to close down a facility, they gave over 1/ of 100 workers jobs at the factory and in the community. They did mainly paid community service like organising a concert for the children and much more.

Ben & Jerry’s also tries to make the working place more attractive to their employees, for example, they founded the Joy Gang which gets an annual budget of 0000 dollars. The Joy Gang, who are employees who do that in their own time, meet several times a year to discuss what events they could organise. One of the first things they did was a massage and pizza party, which went so well that the company decided to have, massages every second month. The Joy Gang also gives up to 500 dollars to individual departments to make their working place nicer, or they organise dressing days where the one with most outstanding costume wins some prices.

Ben & Jerry’s also offer benefits to their employees after they have been working for a certain for the company. Workers of Ben & Jerry’s receive a 5 percent discount on the ice cream, a 40 percent discount on merchandise and they get food 0 percent cheaper which is sold but not produced by Ben & Jerry’s. Other benefit is health insurance, including baby-care for mothers and x-ray check up for breasts. Than employees get a life insurance, which cost about twice the employers annual salary and they receive a dental insurance. They also get a disability plan, where workers get 60 percent of their normal salary after the disability acquired and for the duration of the disability. Pregnant women get paid their full salary for six weeks and after that they get sixty percent of their salary for the next six months. When a man becomes father he is allowed to leave for twelve weeks, of which he gets paid the first two weeks. Employees are also able to make financial management seminar, they can have a counselling before buying a house and can get a loan program to buy a house. Once a year they get to measure their blood pressure and do cholesterol screening. Employees get every year ten paid holidays. When a employee decides to adopt a child Ben & Jerry’s pay the most 1500 dollars and the new parent of the adopted child gets four weeks of and gets paid his normal salary. Employees have their own smoking are and they all get a free health club membership. Each employee gets an assistance plan, which includes confidential and free counselling for family, marital and personal issues and substance abuse. In their retirement plan they get fifty percent of a workers payment is paid by Ben & Jerry’s. Another very positive aspect about Ben & Jerry’s is that it was the first company that gave benefits to gays and lesbians when they got married.

Ben & Jerry’s also pays their workers a salary which is over the average salary of 8.5 dollars per hour. They calculated the total cost they will have in their live including things such as rent, food, taxes, health, savings, transportation and a few other things which made them conclude that a salary of .5 dollars per hour.

In 1 Ben & Jerry’s was the first company to sign the Coalition for Environmentally Responsible Economies (CERES) principles. The CERES is made out of many different groups such as investors, social, justice and a few other groups and was founded to make companies to act environmental responsible. The ten principles include sustainable use of all natural resources, biosphere protection, energy conservation, reducing and disposal of waste, reducing risks and informing the public and the CERES. By signing that Ben & Jerry’s showed that they take responsibility for the environment and showing the intention to improve and let the public now about it. For being responsible towards the environment also means to Ben & Jerry’s to involve their own staff in making a change. Therefore they founded the Green Team where voluntary workers are involved. They created a newspaper called Eco-Notes in 18 and gave out to all the workers an Employee Waste Awareness, which included a video, and written pieces, which they handed out in some facilities. Than every employee receives a Employee Orientation Handbook where there is a section about Environmental responsibilities, where the CERES principles are shown and how each worker can help the company to achieve them, and than there is a Environmental Awareness Week every October for the whole company.

Each factory of Ben & Jerry has its own Environmental Coordinator, who is there to take care of the environmental practices, like recycling, waste, composting and water management. They also invented new technologies so that energy is won by solar energy and to treat the ice

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cream waste. Ben & Jerry’s also takes care about recycling, waste decrease and machines that

use energy efficiently. They are also taking steps to demonstrate against nuclear power in Vermont and they are also giving money to a research program for cars powered by electricity. A very important issue is that they only do business with company that just as environmental responsible. In 1 Ben & Jerry’s started using paper that is chlorine free for its cartons. They did so because chlorine in paper is a major cause of toxic water pollution in the US. Therefore Ben & Jerry’s is cooperating with Greenpeace so that people become aware of this problem and they are even make the information about the packaging available for everybody.

Other positive aspects of Ben & Jerry’s actions is that they support a brownie supplier called Greyston Bakery for one of their ice cream flavours. Ben & Jerry’s had to change their machinery so that they were able to use this specific brownie brand in their ice cream. Ben & Jerry’s did so because Greyston Bakery is a non-profit making business whose workers are homeless people and other people with a low income. Greyston Bakery also runs a childcare facility, a healthcare centre such as a housing centre for people infected by HIV.

They also made up something called PartnerShops to non-profit organisations whose workers are people who usually do not get a job.

Ben & Jerry’s also make great attempts to involve minority groups and woman into their company and business making. They increased the number of companies, which are owned by woman or coloured people, with who they do any sort of business. They also aim to increase the number of franchises owned by coloured people and woman. Two people in the senior management were coloured and two were woman in 18. One third of the Board of Direction was coloured and/or a woman.

Ben & Jerry’s made and is still making big efforts to do socially good but they still can improve.

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4. Ben & Jerry’s irresponsible actions

In the early 10s Ben & Jerry’s decided to give sugar water, which was the result of cleaning up their ice cream machines, to farmers instead of having such a waste which is polluting. Those farmers were feting the sugar water to their pigs. In the view of Ben & Jerry’s they have done something socially responsible because they found a new purpose for this waste product. Unfortunately the pigs died as soon as they reached the weight of 00 pounds and they never reached the weight of 600 pounds, which is the normal weight for a grown up pig. Probably the worst thing in this case was that Ben & Jerry’s was not talking about it and deleted this case out of the annual report.

In 188 Ben & Jerry’s set up a partnership with Jason Clay to produce a new ice-cream product with an exotic nut. Jason Clay was supporting the rainforest to help farmers in the Amazon to produce rainforest products such as flowers, fruits and nuts. Of Ben and Jerry’s new nut ice-cream product 60 percent were going to charity, and the employees shared 10%. The purpose of it was to give local Amazon people an option to work as farmers rather than cutting down the rainforest or work in mining. Unfortunately problems came up since the producer of the nuts in the rainforest were not able to produce quantity or quality for Ben & Jerry’s product. Another problem was that was not mend to be was that the workers who produced the nuts were not local people. They were mainly Portuguese. To replace the missing quantity of nut for their product they got it of some businesses of South-America who were not acting socially responsible at all. Those companies were not pro labour and some of them even criminal. Only 5 percent of the nuts, which were needed to satisfy demand, came from those native rainforest farmers who mend to produce it all. Those bigger suppliers became even bigger and took over the market so that the farmers out of the rainforest got pushed out of the market in South-America. The result was that the farmers had to sell of their land exactly what was mend to be achieved.

Another thing about Ben & Jerry’s is that they are only using ingredients of high quality in their products but fact is that farmers in Vermont from where Ben & Jerry’s receives their milk products are using toxic pesticides. Ben & Jerry’s claims that the farmers would not be able to succeed in business if they would not do so.

In 14 the company Ben & Jerry’s was searching for somebody to replace Ben Cohen’s position while he became a chairperson. Specially for that Ben & Jerry’s launched a competition where anybody was allowed to participate. They just had to write a short poem of a hundred words and up to 0000 people participated. But reality looked differently and Ben & Jerry’s a firm to search for a appropriate leader for them. They came up with Robert Holland who worked before for McKinskey & Company. He did write a poem but only after accepting the new position at Ben & Jerry’s.

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Ben & Jerry’s is a company which should be respected for their great attempts to do socially good. It is a company that is making profits and on the other side they are doing good things to society but not all of their actions are as it is expected from a company with a mission statement like Ben & Jerry’s has it. It shows how hard it is for a company to fulfil its social duty and making profits at the same time.

From my point of view is Ben and Jerry’s a company which has done a lot of good things in its past and in their case I would say that Ben and Jerry’s is ethical. Ben and Jerry’s is a company which stands for many norms of ethical behaviour and I think even today many other companies should look at Ben and Jerry’s as an good example for an ethical company.

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