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Cohen warns on conflict between growth and values

March 2004

One of the leading pioneers of socially responsible business has warned other entrepreneurs not to imperil their companies’ values in the search for rapid growth.

Ben Cohen, joint founder of the Ben & Jerry’s ice cream chain, says that in his experience changing an ethical company’s ownership structure to raise money usually dilutes CSR measures in the end.

Cohen told a conference in France that he regretted issuing more shares to raise capital. He said rapid growth led to the arrival of managers with less sympathy for CSR. The company was eventually taken over by Unilever.

‘We ended up growing faster than we could bring up management from within, and that’s when we ran into problems. When you hire in people, the prevailing culture ends up trying to take over the unique culture you have inside.’

Other founders of CSR-orientated businesses told the Better World Forum they had encountered similar problems.

Francois Lemarchand, founder of Nature & Decouvertes, a 14-year-old socially responsible travel firm with €120million ($153m, £81m) annual turnover, said he had avoided rapid growth after seeing what had happened to other social entrepreneurs. ‘You are put under pressure to maximize profits to benefit shareholders who have values different from your managers,’ he said. With his wife, Lemarchand retains a 72 per cent stake in the company, which donates ten per cent of its profits to charity.

Gary Hirschberg, founder of the US-based Stonyfield Farm, the world’s largest organic yoghurt business, also warned against going public, but said there were ways to attract investment that would not necessarily damage a company’s social mission.

In January, French food firm Danone increased its stake in Stonyfield to 80 per cent, but Hirschberg says he has retained decision-making autonomy. ‘There’s no reason the same model can’t work elsewhere’, Hirschberg said. It was for founders and managers to ensure the social mission survived ownership change. However, Cohen said it was easier for a business with an identifiable central mission – organic produce in Stonyfield’s case – to keep its values. ‘B & J’s mission was more about social justice and that’s virtually impossible to encode.’




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