Icy vibes for Ben and Jerry’s🍦

Unilever is not using Nike’s playbook

This is edition 338 of Beyond The First Order, a premium daily newsletter that demystifies the hidden models, incentives and consequences of the most significant events across India and Southeast Asia

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Good morning,

Eating ice cream in Israel is now a political act, thanks to Ben & Jerry’s corporate activism. Except, parent company Unilever isn’t 100% on board with the ice cream major’s stand. Speaking of big brands, Adidas, Gap, and Nike need Vietnam back on the vaccine map. Internet companies in India, if they’re serious about roping in the ‘next billion users’ as customers, need to start with an address. 

And yesterday, the human race officially used up more resources than the earth can generate this year.

That’s scary. Happy Friday. 

What does an ice cream company have to do with woke investing?

Businesses don’t like to get involved in prickly social issues. 

But that hasn’t stopped Nike. In 2018, the company debuted an ad campaign centered on Colin Kaepernick, the former NFL (National Football League) player who took a knee instead of standing for the national anthem before games. It was his mark of protest against racism in America.

Following the powerful ad, conservatives called for a boycott of the company. Images of people burning their sneakers were all over social media. It served as a reminder of a time when legendary basketball star Michael Jordan, who had his own line of merchandise in Nike, didn’t endorse a black candidate from the Democratic Party in 1990, saying, “Even Republicans buy sneakers”.

But Nike didn’t care about the other side. And despite Nike’s stances, in the past five years alone, its share price has risen by 200%. Double that of what the diversified stock index, the S&P 500, has delivered.

Another company that doesn’t mind a social battle is ice cream brand Ben & Jerry’s.

Around 10 days ago, the brand, which is now owned by FMCG major Unilever, decided that it wouldn’t sell its ice cream in the “occupied Palestinian territory”. This came after fighting in the region intensified recently. 

Of course, Israel wasn’t too pleased. In fact, on 27 July, Axios reported that Israel had formed a special task force to get Ben & Jerry’s and Unilever to change their mind. And while Unilever has maintained that the company had the right to take such steps as part of its corporate responsibility and social justice policy, the parent company is facing some backlash from conservatives in the US. From certain states like Texas and Florida, and their pension money.

“Ben and Jerry’s decision to boycott parts of Israel is disgraceful and an insult to America’s closest ally in the Middle East,” Texas Republican Gov. Greg Abbott said in a statement Tuesday night relayed from a spokesman to CNBC. “Unilever, Ben and Jerry’s parent company, must reverse this ill-conceived decision.”

Abbott signed a bill into law four years ago that would force Texas pension funds to divest from any company boycotting Israel.

But Ben & Jerry’s has only asked its Israeli franchise to stop marketing their ice cream in the settlements. It will still be sold within Israel’s pre-1967 borders. Unilever also released its own statement on Monday, saying, “We remain fully committed to our presence in Israel, where we have invested in our people, brands and business for several decades.” 

Unilever, which is listed in London, does have a certain class of its shares trading in the US. And in the past five years, its US shares have risen only by 20%. 

But hold on. 

Remember how Unilever said that Ben & Jerry’s had the right to take such a decision as part of its social justice policy? Well, the chair of Ben & Jerry’s board, Anuradha Mittal, actually called even the initial statement that was put out by the ice cream company ‘deceitful’. Because it was released by Unilever and not really by Ben & Jerry’s.

Unilever released the statement against the wishes of the board and in violation of a legal agreement made when it bought Ben & Jerry's in 2000, Mittal said.

[...]

When Unilever acquired Ben & Jerry's in 2000, the companies crafted an unusual acquisition agreement that legally vested an independent board with control over the ice cream company's social mission, brand integrity and policies. That means the board has to approve any changes to the product, licensing deals, new markets and social mission statements.

Maybe instead of worrying about a few “unwoke” pension funds, Unilever should worry a little bit more about what these statements about ‘deceit’ from its almost independent entity means for its share price. And what value conscious investors can do. 

Take that lesson from Nike?


PS: Surveys indicate that India tops the list of respondents that expect CEOs to weigh in and fix societal issues. But would that hold true if the CEOs started publicly stating their opinion on politically and religiously charged matters like the CAA/NRC Bill or Article 370 in Jammu and Kashmir?

Well, a study by Stanford University showed that public opinion on CEO activism around religion had a net-unfavourable reaction in the US. 

So, don’t expect CEO activism to catch on in India. 

Destroying the earth one year at a time

29 July 2021. 

That’s the day this year when humankind used more ecological resources than what our planet can naturally regenerate during the entire year. And we currently use 74% more than what Earth’s ecosystems can regenerate. Or “1.7 Earths”.  These ecosystems took millenia to establish, and we’re wrecking it in the blink of an eye.

Every year, we’ve been taking more from the Earth than what we give back. And that’s just not sustainable. Any respite from emissions reductions caused by global lockdowns have reversed. 

Source: Quartz

So, all the noise last year about how the pandemic will accelerate efforts to go greener and change how we impact the environment was just temporary. 

“Rather than recognize this [the pandemic] as a reset moment, governments have been eager to get back to business-as-usual...," said Stephanie Feldstein, population and sustainability director at the Center for Biological Diversity (CBD), a US-based environmental group.

[...]

"We missed opportunities when bailout funds were given to major climate polluters, like the aviation and meat industries, without any requirements for a green recovery," said Feldstein. "And we continue to miss opportunities every day that officials refuse to recognize the climate and extinction crises as emergencies — just like the pandemic."

You can see that attitude is worrisome. Climate treaties are not being honoured and there’s constant bickering among nations as to who should bear responsibility. Not to forget the billionaire space race that’ll heat up more in the future.

Meanwhile, wildfires and heat waves are raging across America, there’s flooding in some parts of Europe, and scorching heat in other parts of the continent, and landslides in India. Everything points to how we use our resources and the impact on the ecology and climate. 

Maybe the world would be better off if everyone lived like Indonesia which individually reaches the ‘overshoot’ threshold only on 18 December this year.

Friends in unexpected places

Some Southeast Asian countries, especially Vietnam and Thailand, were able to fend off larger Covid-19 outbreaks in the early stages of the pandemic. Now they are finding themselves in a trap.

There wasn’t enough urgency for governments to jump onto the frantic global vaccine procurement bandwagon. Vietnam, for one, thought it would have time to develop its own vaccines.

This has left Vietnam with the lowest vaccination rate in the region: less than 4% (of 96 million people) have received one dose, and only 0.5% have received both shots. This makes the country fertile ground for the Delta variant of the virus, and, as expected, cases are at an all-time high.

But what happens when Vietnamese factories stay shut due to Covid? Brands like Adidas, Gap, and other global fashion labels get antsy. Especially now that big markets, like the US and Europe, seem to have put the worst behind them for now. Vietnam is the biggest supplier of shoes and clothing to the US, after China. 

Well, now Adidas, Gap, and the rest are stepping up on behalf of Vietnamese workers. 

American Apparel & Footwear, a US trade group, took matters into its own hands by lobbying the US government to prioritise sending vaccines to Vietnam’s garment sector. After all, it would be a shame to face supply shortages just as US citizens are rediscovering their appetite for shopping. 

Are the next billion users mapped?

Our house help needed to install a washing machine in her house in a crowded urban settlement. I booked a technician from home services aggregator Urban Company for her. But I could not find the location of her residence on Google Maps. She is tech savvy. She uses digital payments to receive her salary, her husband drives an auto rickshaw under the banner of one of the major cab aggregators. But most digital services will be out of reach for them because urban slums, their streets and residences, simply don’t exist on the map for digital companies. 

So, as companies chart their plan to reach the next billion users—a term used to capture users who are newly adopting the internet—a navigable address is a must. And right now, the effort to get a digital address to those spatially excluded is led by non-governmental organisations.

"In a world that is increasingly more dependent on the internet to provide goods and services, “not appearing in these platforms means not having access to many of the benefits of urban life and development,” says Nikolai Elneser, an urban planner and data analyst.

In an effort to fill information gaps, the Humanitarian OpenStreetMap Team (HOT), an international NGO dedicated to open mapping for developmental and humanitarian purposes, has launched and helped dozens of similar projects around the world through map data uploaded to OpenStreetMap.

In India, too, Google along with Pune-based NGO Shelter Associates and UNICEF partnered earlier this year to bring `Plus Codes’. Plus Codes are like street addresses for people or places that don’t have one, according to an Indian Express report from January. 

Though useful, efforts like this are likely to be piecemeal when left to NGOs. The incentive to include greater swathes of the hidden urban populace lies with the internet companies. As companies look to expand beyond the top 100 million internet users, are low-income households—who still need to buy essentials and use cashbacks and discounts available online—on their radar? 

That’s it from us for today. We’ll see you on Monday.

Have a safe weekend.

Best,
Olina
olina@the-ken.com

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