The Messy Reality of Socially Responsible Business

Good Intentions: Ben & Jerry's

What do you do with too much ice cream? That was the dilemma faced a few years ago by Ben & Jerry's. After every run of Rainforest Crunch, Chunky Monkey, or Cherry Garcia, technicians at its Waterbury, Vermont, headquarters washed down their machines with hot water, leaving gallons of diluted ice cream. At most companies, the waste would have presented no dilemma at all--just wash it down the drain. Ben & Jerry's, with its socially conscious operating philosophy, had another idea. The ice cream water was collected and given away to local pig farmers.

It seemed like a classic win-win situation: Ben & Jerry's solves a minor environmental problem while farmers get an unexpected windfall. At least, that's what everyone thought. Meanwhile, the story was fed to the press along with Ben & Jerry's Peace Pops. It got great play in Vermont and even made the international news wires: yet another example of benevolent eccentricity at one of today's most progressive companies.

But benevolence soon led to unexpected complications. Piglets that happily slurped Ben & Jerry's Homemade sugar water never made it to 600-pound adulthood, suddenly expiring at 200 pounds, victims of oddly human-like arteriosclerosis. And the slaughtered pigs yielded a fattier pork, according to local pig farmer Earl Mayo. Neither Ben & Jerry's nor the farmer had explored the implications of feeding pigs premium ice cream. It was a minor catastrophe, the kind of reckless idealism that everyone would forgive, but Ben & Jerry's chose to hide the mess. A reference to the project was suddenly deleted from the company's annual report; no one was allowed to talk about the story, even to its social auditor.

This would be merely an amusing story if not for the disturbing insights it offers into Ben & Jerry's quixotic managerial style and the contradictions of many businesses that boast the moral high ground. The sloppiness, and eventually the arrogance, that marked "swinegate" is as much a trademark of Ben & Jerry's--and the socially responsible business movement in general--as its well-publicized social campaigns. "That's how many good companies--and Ben & Jerry's does so much right--get into so much trouble," says Paul Hawken, the environmentalist and author who was hired by the company to perform a social audit. ¹ At its worst, reckless idealism can lead to far more significant disasters, such as Ben Cohen's ill-conceived "rainforest harvest" which has caused so much unintended disruption in Brazil.

Harvest Moonshine

"The success of the rainforest harvest and our Rainforest Crunch ice cream made from Brazil nuts," said Ben Cohen in a June speech in Los Angeles, "has shown that harvesting nuts is a profitable alternative for indigenous Amazon natives who have seen their lands ravaged to create grazing areas or for mining." The crowd of 350 idealistic business leaders at a local meeting of Business for Social Responsibility (BSR) burst into applause. It was an inspiring moment. The only problem is that Cohen wasn't telling the truth.

In fact, Ben & Jerry's 1995 annual report, released just days before, and a spate of recently published critiques, tell the behind-the-gloss details of what anthropologists have come to call the "rainforest fiasco."

Over the past decade, "saving the rainforest" has been one of the defining goals of social activists. Its premise seemed simple, compelling, and beyond challenge. "We want to show that a living rainforest makes more money than a dead rainforest," said anthropologist Jason Clay, who was the intellectual force behind the project back in the late 1980s. The harvest brought together two popular movements: the environmentalist struggle to protect the forest against clear-cutting and the cultural preservation of indigenous peoples.

It has had a serendipitous history. In 1988, Ben Cohen attended a New York Grateful Dead concert, a benefit for the nascent "save the rainforest" movement. Also at the concert was Clay, a research director at Cultural Survival in Cambridge, an internationally known indigenous rights organization founded by Harvard anthropologist David Maybury-Lewis.

At a post-concert party, Cohen casually mentioned that he was developing a new brittle for an ice cream using something more exotic than peanuts. Clay, according to those present, lit up like a video game. He regaled Cohen with his pet project to make the Amazon self-sufficient by marketing renewable non timber rainforest products such as fruits, nuts, and flowers. A few days after the concert, Clay headed for Vermont carrying a 50-pound bag of rainforest nuts. "We mixed up the first batch of Rainforest Crunch in Ben Cohen's kitchen and served it to the board of directors that night," recalled Clay, "and we were off." ²

The rainforest movement got a big boost in early 1989 when journalists, environmentalists, and celebrities from Jane Fonda to Sting to Anita Roddick, the founder of The Body Shop, traveled to the annual Amazon peoples conference, held that year at Altamira in Brazil. It became an international event, making stars of obscure anthropologists and native leaders such as Paiakan, a striking Kayapo spokesman in full native dress who soon turned his ability to speak English into a personal gold mine. "He's the next Ghandi," gushed Roddick. ³

With popular interest in the Amazon exploding, Clay set up a business organization to source the nuts and fruits under the umbrella of Cultural Survival, calling it CS Enterprises (CSE). ⁴ Cohen founded Community Products Inc. (CPI) to source Brazil nuts through CSE and supply them to other entrepreneurs who wanted to make rainforest-friendly products. Thus was born "Rainforest Crunch" ice cream, candy, and a host of cosmetic products made by a variety of companies. ⁵

To Cohen, capitalism-on-the-Amazon offered indigenous cultures an alternative to mining and clear-cutting. CPI was chartered to give 60 percent of its profits to charity, a third of that to Cultural Survival. The harvest soon became the centerpiece of Ben & Jerry's progressive marketing image.

"Money from these nuts...helps to show that rainforests are more profitable when...cultivated for traditional harvest than when their trees are cut and burned for short-term gain," read the label for Rainforest Crunch when it was launched in 1989. The ice cream sparked hundreds of glowing articles on how profits and principles go hand in hand. It was an overwhelming overnight success--for Ben & Jerry's, which reaped millions of dollars from its new, best-selling ice cream.

The view from Amazonia was not nearly so sanguine. From the start, most anthropologists and indigenous rights groups were skeptical. Amazon experts feared opening up this fragile area to the free market. There was also no evidence to support the central premise of the harvest--that nuts or herbs could ever generate the income the natives collect by selling offland rights to miners and foresters.

Andrew Gray, director of the International World Group for Indigenous Affairs, based in Denmark, tells a parable about "green capitalists." Green businesses are like elephants, he says, and indigenous people are like ducks and their eggs. "The duck was killed by an encroaching colonist, leaving her eggs unattended. The kind-hearted elephant [rainforest capitalists] decided to do his friend the duck a favor. He sat on the eggs." ⁶

Within a year, it was clear even to Cultural Survival that the eggs were cracking. The anticipated source for the nuts--the Xapuri cooperative in the Western Amazon--never produced the necessary quality or quantity to meet exploding demand. And the co-op had no native workers but was composed of white rubber tappers, mostly of Portuguese ancestry.

The first year Rainforest Crunch was on the market, Ben & Jerry's sourced 100 percent of the nuts from commercial suppliers. ⁷ The harvest never met expectations. To meet exploding demand, Ben & Jerry's turned to the commercial markets supplied by some of the most notorious, anti-labor agribusinesses in Latin America, including the Mutran family, convicted of killing labor organizers. Over the years, Ben & Jerry's has purchased more than 95 percent of the nuts for Rainforest Crunch from these suppliers.

The story gets worse. The larger commercial interests elbowed out native suppliers in Brazil and Bolivia and flooded the market. Nut prices, already soft, plummeted, cutting the income of native tribes who did harvest the nuts. To make up for the shortfall, Indians have been selling off more land rights. Meanwhile, not one pint of Rainforest Crunch has included nuts harvested by indigenous natives for Ben & Jerry's.

In 1993 the harvest began to publicly unravel. Clay was forced out of Cultural Survival in a power struggle with Maybury-Lewis. In the spring of 1994, the Xapuri cut off all supplies to CSE, Ben & Jerry's supplier. Critics who had been cowed by the media frenzy that greeted the harvest came out of the closet. Stephen Corry, the director of Survival International. a U.K.-based indigenous rights group which publicized the contradictions, dubbed the Brazil nut projects "harvest moonshine." ⁸

University of Chicago anthropologist Terrence Turner calls the harvest "Aid Not Trade," a play on Ben & Jerry's and The Body Shop's "Trade Not Aid" slogan. "Indigenous cultures give these companies free aid in the form of their green image with almost no trade in return," says Turner.

His conclusion: "The essentially symbolic function of the so-called 'trade' projects holds out little hope for... development." ⁹

According to Cultural Survival director Michelle McKinley, the harvest has officially collapsed. CPI has distributed no charity for four years, is deeply in the red, and, according to McKinley, owes her organization more than $30,000. "CPI has been our worst customer," she says.

Even Ben & Jerry's own annual report takes the company to task. "It is a legitimate question," writes Paul Hawken in a social audit included in the 1995 report, "whether representations made on Ben & Jerry's Rainforest Crunch package give an accurate impression to the customer." Hawken quotes sharp criticism from Amazon rights groups, then concludes: "There have been...undesirable consequences which some say were predictable and unaviodable." ¹⁰

Aware that the messy reality of the rainforest endeavor was beginning to leak to the mainstream press, Ben & Jerry's quietly ditched its deceptive label this spring. Yet, no one at the company, which declined to comment on "swinegate" or the harvest controversy, has been able to reign in Chairman Cohen. "We have made a difference in the rainforest," he said during the recent Los Angeles gathering. At the reception after his speech, a new member of BSR munched contentedly on Rainforest Crunch. "It's so inspiring," she said, "to know that business can make money and still do so much good."

Greenwashing

According to Joan Bavaria, president of the Franklin Research and Development social investment firm, the business world can no longer be conveniently divided into "bad" multinationals and "good guys," mostly retail entrepreneurs. Bavaria is one of the founders of CERES, the Coalition for Environmentally Responsible Economies. In the wake of the Exxon Valdez disaster, an evolving group of environmental and social activists and public pension trustees developed a set of environmental standards and accounting guidelines with the goal of beginning a constructive dialogue with business, small and multinational. "We are entering a new era in the world of socially responsible managing and investing," says Bavaria. "It is not a black world or a white world with neat and crisp lines of demarcation. It is the real world of complex systems and internal contradictions."

The search for socially responsible business (SRB) principles is fragile and still evolving. The philosophical roots stretch back to the Industrial Revolution. Robert Owens, the early 19th century Welsh philanthropist and socialist, founded "Owenite" communities in the United States and United Kingdom. Over the decades, social business experiments such as George Pullman's model factory town near Chicago flourished and failed. Few were taken seriously by the mainstream business community.

SRB has only become fashionable in the last 15 years, spurred by environmental concerns and the cultural impact of aging baby boomers. Today, green marketing is sizzling. More than one third of consumer dollars are so-called "green" dollars--$100-plus billion a year. Investors are also putting their money where their hearts are: $5 billion has poured into some 30 mutual funds that screen out companies that develop weapons, sell alcohol, or violate environmental regulations; another $10 billion is "ethically" invested by pension funds. ¹¹

Yet, for many companies, even those run by well-meaning executives, "responsible business" is little more than a synonym for "cause-related marketing," or trading on the idealism of consumers. Affluent baby boomers no longer try to change the world so much as "shop for a better world," the title of a popular "green" consumer buying guide.

Big business has jumped on the green bandwagon. Today, everyone from Mobil to Waste Management makes noise about reengineering the corporation, improving worker relations, or protecting the environment. "We are all environmentalists today," says George Keller, Chairman of Chevron, which has systematically tried to gut toxic waste regulations. ¹²

This is not to suggest that all green claims are frivolous or fraudulent. Many companies walk their talk because it makes dollars and sense. Responsible business fosters pride, spurs employees, and creates loyal customers. Selling quality products; treating employees, franchisees, and vendors with integrity; and reexamining environmental practices go straight to the bottom line.

For instance, Monsanto recently began recycling its sludge after it found it cost more to just dispose of it; Johnson & Johnson rebounded from its Tylenol poisoning crisis so quickly in part because of its quick, sensitive response to loyal consumers and its well-deserved reputation as a progressive corporation. The press is far more sympathetic to companies it perceives as open and trying to do things with a double bottom line in mind.

Unfortunately, many companies spend far more time bragging about green practices than actually practicing them. On close scrutiny, progressive business is often a land of alchemy where promises are easy to make, workers are frequently treated with indifference, and environmental reforms are superficially attempted. "So many socially responsible companies have noble corporate philosophies," observes Jon Lickerman, a social researcher with the Calvert Group of mutual funds, "but mistreat their own employees, vendors, and customers."

An Icon Stumbles: The Body Shop

In 1976, Anita Roddick opened a tiny shop in the faded English southcoast resort town of Brighton. The Body Shop offered "one-stop ear piercing" along with an exotic-sounding array of beauty products in small, plastic bottles. Today she and her husband Gordon oversee a chain of 1,200, mostly franchised Body Shops in 45 countries with annual sales of $750 million. With a net worth of more than $250 million and an annual income of $1.1 million, Roddick is arguably the most financially successful self-made business woman in the world. No competitor could match her two-for-one sale: buy a bottle of not-tested-on-animals Brazil nut hair rinse and get social justice for free. While other companies sell beauty-in-a-bottle, Roddick peddles idealism.

Roddick and The Body Shop are an intriguing combination of entrepreneurial single-mindedness, off-beat charisma, and moral arrogance. "Anita instinctively understands the facile nature of the press," says Janis Raven, who crafted and supervised the company's eco-friendly public relations image from 1979 to 1986, "and she plays to it."

At first celebrated mostly for her quirky marketing, Roddick gradually became a favorite of affluent baby boomers, a harbinger of the New Age, weaned on can-do chutzpah and do-right values. The SRB-a loose-knit collection of environmental and social activists and New Age entrepreneurs that calls itself the "social responsibility movement"-raised her to feminist icon status. "This Woman Has Changed Business Forever" ran a cover story in Inc. magazine in 1991. "Anita," Ralph Nader once said, "is the most progressive business person I know." ¹³

But Roddick's rags-to-riches-to Robin Hood myth masked The Body Shop's frequently less than ethical history. The mask came off last September in my expose "Shattered Image" published in Business Ethics. This was soon followed by revelations in In These Times (David Moberg, "The Beauty Myth," September 19, 1994) and scathing analyses by corporate research groups in the United Kingdom, Canada, and the United States.

The reports paint a portrait of a company with a wide gap between high-minded rhetoric and reality. Among the revelations: The Body Shop sells expensive, mediocre products filled with petrochemicals (according to Consumer Reports and other independent journals); has a history of penurious charitable contributions (nothing in the company's first nine years; half the average of U.S. corporations for percentage of pre-tax profits donated overall); misrepresents its ethical trading practices (less than 0.16 percent of turnover) ¹⁴ ; and struggles with troubled employee and franchisee relationships across the world, spawning numerous lawsuits and a Federal Trade Commission fraud investigation.

Most startling, Roddick's myth was based on a fundamental deception. According to interviews with her early executive team and friends, supplemented by company documents, The Body Shop's name, store and package design, product line and even its recycling philosophy were copied from another cosmetics company- the Body Shop of Berkeley, California. The Roddicks had visited Berkeley in 1971, five years before Anita opened her first shop in the United Kingdom. These sources also say that Roddick fabricated stories of discovering beauty elixirs in far-off lands. Overly inquisitive journalists or fair trade activists who questioned the company myth have been threatened by Body Shop solicitors, an effective deterrence on the press in the libel-shy UK.

Over the years, the company fended off exposes of these inconsistencies by threatening inquisitive journalists and fair-trade activists, an effective deterrence in the libel-shy United Kingdom. But "Shattered Image" shattered the company myth and woke up social activists who had promoted eco-entrepreneurs as the New Age answer to avaricious big business. The self-proclaimed "world's most honest" company suddenly found its corporate character under scrutiny.

"A firestorm of controversy"

The revelations consumed the British media and spilled over into the international press. "[Shattered Image]," wrote Eric Utne in the Utne Reader (January-February 1995), "set off a firestorm of press coverage and looked for a time like it might bring down the socially responsible business community's most visible and vocal leader, consuming the rest of the movement in the conflagration." ¹⁵ The Body Shop's stock plunged, recovered, and then fell to an all-time low this June, stripping more than $500 million in equity from investors.

"Anita brought a lot of people into the tent," confesses Steve Scheuth, an executive at Calvert Financial, which oversees the country's largest group of ethical mutual funds. "She was the star. She generated more attention than all other progressive leaders put together. But we were snookered. We swallowed Anita's hype, hook, line, and sinker." Depending on one's perspective, Roddick is either a visionary who is being unfairly crucified for excessive enthusiasm, or a cynical exploiter of idealistic customers, employees, and trading partners. Perhaps she's both.

Shades of Gray

Debating The Body Shop's fall from grace has become an Internet parlor game among academics and an obsession within the activist community. "Socially Responsible Business Brawl," headlined a March article in The Progressive, one of many on the controversy. This affair continues to smolder because it cuts to the paradox of the socially responsible business movement: Can we "shop for a better world?"

Does buying $2.99-a-pint of artery-clogging ice cream made with rainforest nuts herald a new age of business or just inure the public to the consequences of our profligate lifestyle? Are retail firms led by outspoken, charismatic visionaries such as Ben Cohen or Anita Roddick more responsible than grayer companies such as Cummins Engine or Gillette, which quietly but conscientiously involve themselves in their communities, open their corporate practices to outside scrutiny, and develop intensely loyal workforces? Most importantly, is socially responsible business about quality products or services, and treating stakeholders-workers, vendors, investors, and customers-honestly and fairly, or railing about injustice in the world?

New Age entrepreneurs, like big businesses, run the ethical gamut. There are no icons in the business world, only companies with some innovative programs and many bottom-line compromises. Even well-publicized models that appear to have the best intentions are riddled with contradictions--or worse. A few examples:

• Esprit, Levi Strauss, The Gap, and other retailers have collected numerous honors for showering their core workforce, mostly white and prosperous, with progressive benefits. At the same time, some of their clothes are manufactured in contract sweat shops. ¹⁶
• Co-Op Bank became the bank-of-choice of the U.K. progressive community after it began promoting its "new" policy of refusing to loan money to repressive regimes. Only later did it surface that Co-Op has never offered loans to any foreign borrowers. ¹⁷
• Starbucks Coffee, found on many lists of progressive businesses, has developed a shark-like reputation for putting competing mom-and-pop coffee shops out of business. Further, Starbucks pays Guatemalan coffee bean pickers two cents a pound for beans that it sells for $9. Until a grassroots protest kicked in over the winter, the company wouldn't even meet with a coalition of Guatemalan solidarity committees. ¹⁸
• Stride Rite Shoes, which pioneered corporate and community day care in 1970 and pledged its commitment to its Boston inner-city headquarters, suddenly shuttered its Roxbury headquarters and skipped out to the suburbs. ¹⁹
• Reebok, another SRB favorite, has made corporate hopscotch its operating credo, moving its manufacturing operations from South Korea and Taiwan to China, Indonesia, and Thailand in search of the lowest wages. ²⁰ While it recently paid $9.5 million to settle federal price-fixing charges, ²¹ its CEO has regularly been one of the highest paid executives in the world.

Who Are the "Good Guys"?

There are no icons in the business world, only companies with some innovative programs and many bottom-line compromises. The consumer-unfriendly reality is that it's almost impossible to identity the "good guys," even with a scorecard; indeed, you never could. Despite the proliferation of green buying guides and widely-touted "social screens" offered by mutual funds such as Working Assets, Parnassus, Calvert, and others, ethical measuring sticks are wildly subjective.

Is defense spending in a post cold-war era good or bad if it generates high-paying, secure jobs and helps secure the peace? Is unionism progressive or not? Many liberal litmus test issues such as an opposition to animal testing or support of so-called "natural," environmentally friendly products demonstrate the facile nature of most screens. In the following two examples, which of the companies is the more progressive?

• Animal testing

  Gillette, which has spent tens of millions of dollars to develop alternatives to animal tests and publishes the details and scientific rationale of every test that it performs; or

  The Body Shop, which has helped spark an international debate on the necessity of animal testing yet has spent nothing to finance alternative research, been condemned (and even sued) by animals rights activists for demagoguing the issue, and uses tested-on-animals ingredients in many of its beauty products.
  

• Environment

  DuPont, which has pioneered numerous environmental reforms and monitoring programs, yet has been guilty of many serious environmental violations; or

  Ben & Jerry's, which sets impressive environmental standards in many areas yet ships its Vermont milk in gas-guzzling trucks to all parts of the United States and makes an expensive, frivolous, potentially health-threatening product.

For many companies, progressive business practices are part of day-to-day operations, not an excuse to call in the press and trumpet the latest visionary accomplishment. The urge to demonize big business and iconize eco-entrepreneurs such as Anita Roddick and Ben Cohen belies the complexity of business. The Body Shop, Celestial Seasonings, and Tom's of Maine--or Johnson & Johnson, Nordstrom's, and AT&T, for that matter--are not socially responsible businesses because of clever, green-sounding promotions.

Companies resemble dysfunctional families; the best of them have a handful of interesting programs and many contradictions. Progressive business practices are sometimes found in unlikely places. "Some of the most innovative environmental programs are the creation of some of the worst polluters," says Paul Hawken, an author and expert on progressive business. "It may not be politically correct to say this, but innovative solutions are not the exclusive province of the so-called progressive companies. We have to keep an open mind and look for solutions wherever they may be."

The most farsighted members of the SRB community are broadening their vision to include sometimes messy corporations. For instance, Green Seal, an environmental audit firm, is developing benchmarks for environmental sustainability for manufacturers as a way to avoid the "good guy/bad guy" trap. The CERES audit guidelines are another potentially significant development. Timberland and Stonyfield Farm Yoghurt are among the endorsers of the CERES principles--along with General Motors, the Arizona Public Utilities Commission, Polaroid, HB Fuller, and Sun Oil. Even a tiny change in the way multinational manufacturing firms do business will have far more sweeping economic and environmental impact than a handful of new low-paying jobs at next year's fad "green" retailer.

Ethical performance is intrinsically subjective, arbitrary, and arguably impossible to measure. "Company character" is a much more compelling model of business ethics. The currently fashionable "visionary" model, which looks outward to vague and contradictory social goals, is far less informative than a focus on corporate "integrity" based on transparency and a responsiveness to criticism. Ben and Jerry's, for all its contradictions, was an early proponent of CERES and deserves high marks for publishing within its annual report a candid, state-of-the-art social audit.

Business ethics is not "performance art" but old-fashioned stakeholder concerns such as job security; employee pay, benefits, and work conditions; franchisee and vendor relations; and product quality and customer service. Greenback capitalism--that is, business on the back of the green movement--only perpetuates a myth of "socially responsible" business and breeds cynicism. "It's a lot worse," says Steve Goldstein, a former systems manager with The Body Shop, "when you find out that the robber who's been stealing from you is the local cop."

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We are grateful to Jon Entine for giving us the rights to reprint this article, which has been previously published in At Work and the Utne Reader.