Ben & Jerry’s unjust desserts
Monday, Ben & Jerry’s announced that it would terminate its business relationship with its Israeli distributor because the distributor has refused to go along with Ben and Jerry’s decision to end the sale of its ice cream in the “occupied Palestinian territory.”
The decision came after months of online campaigning by those who were indignant that Israel dared defend itself against attacks from the terrorist group Hamas in ways that regrettably cost some innocent Palestinian lives.
For an American company like Ben & Jerry’s, the decision to align with the anti-Semitic Boycott, Divestment and Sanctions (BDS) movement, a movement that has been denounced by both major U.S. political parties as well as the majority of states as just another in the long history of boycotts against Jews, is not only shameful; it is possibly illegal.
Since Israel is the world’s only Jewish state, singling it out for boycotts and other punitive economic actions involves blatant discrimination on the basis of nationality and ethnicity. If you are curious as to what this looks like, consider Ben & Jerry’s announcement that it will work to “find a different arrangement” to “stay in Israel” that cuts their long-term Israeli licensee out of sales to the West Bank, East Jerusalem and Gaza. The company refused to comment when asked if their products would still be sold in Palestinian-owned stores in those areas (and it is unclear how they intend to continue sales in Israel while boycotting Judea and Samaria, which is illegal under Israeli law), but the strong implication is that if a Palestinian licensee wanted to sell in those regions, Ben and Jerry’s would allow it.
Such discriminatory business practices are contrary to public policy. That is why there has been consistent bipartisan condemnation of the BDS movement by U.S. lawmakers. American anti-boycott regulations under the 1977 Export Administration Act, the Ribicoff Amendment to the 1976 Tax Reform Act and The Trade Facilitation and Trade Enforcement Act all express opposition to such boycotts. Acquiescence to a BDS pressure campaign could therefore expose a company like Ben & Jerry’s to expensive legal challenges.
Second, boycotting Israelis in a discriminatory fashion violates the fiduciary duties of both loyalty and care that officers and directors owe a corporation and its shareholders. The duty of loyalty requires decision-makers to put the welfare and best interests of the company before their own personal interests (including the desire to virtue signal), while the duty of care requires them to reasonably consider the impact of their decisions on the company’s economic prospects. BDS is bad for business: Thirty-five states already have anti-BDS legislation in place which might block those states from doing business with companies that proudly announce they will henceforth engage in BDS. That means that in many of these states, cafeterias at government offices, universities and so forth will not be allowed to stock their ice cream — and perhaps the much larger number of products made by its parent company, consumer products giant Unilever.
Losing that much market share by politicizing ice cream, all in the service of a controversial and arguably bigoted ideological stance, cannot be justified as good corporate governance.
Finally, Unilever is a publicly owned company. As such, they are required to file documents with the Securities and Exchange Commission and send disclosures to investors about risks that may affect the company. Presumably, after having agreed to divest based on a years-long anti-Semitic blacklist campaign, their next disclosure report will need to include a paragraph like this:
“Investment may involve serious risks, because we are currently engaging in a discriminatory boycott, in violation of applicable laws, and for no discernable corporate or business objectives. We may also incur significant liability and cost in defending the company against litigation and enforcement actions responding to our violations, and will likely incur loss of business from jurisdictions that have anti-boycott provisions in place.” In fact, with reports that Ben & Jerry’s has been sitting on this decision for months, they may already be liable for their failure to disclose.
Unilever has tried to distance themselves from the decision, noting in a separate statement that Ben & Jerry’s Board made this decision entirely on their own. That does not absolve them of legal responsibility for the company they own. If Unilever has made agreements with Ben & Jerry’s that prevent them from controlling such actions, they may find themselves in a position of having to choose between selling off the damaged brand or facing regulatory and legal responsibility for its actions.