The Body Shop, one-time paragon of the ethical trading movement, has been under the glare of the media spotlight in recent months. In March, the ethical skincare and cosmetics group agreed to a £650m takeover by French cosmetics giant L’Oréal, provoking anger among some in the campaigning community. Founders Dame Anita Roddick and her husband, Gordon, were accused of abandoning their principles after they announced plans to sell their 18% stake in the Body Shop, despite assurances from L’Oréal that the Body Shop would retain its ethical values and be run as a standalone entity.
“L’Oréal has said very publicly it wants the Body Shop as a standalone company and that the values will be respected and maintained… there is no intention of dismantling them, ” Jan Buckingham, director of global values, tells Briefing in an interview. Buckingham was appointed as director of global values in November 2005, joining from Allied Domecq, where she was director of group social & environmental policy.
“L’Oréal’s significant strengths in the management and development of global brands, combined with our skills as a global retailer with strong values and commitments, will be a powerful combination in the cosmetics and personal care market place and we are looking forward to working together to share our strengths,” Buckingham adds.
Reconciling the two companies’ sets of values may not be top of their agenda, but it is something they arguably will need to do to gain widespread acceptance among a broader set of stakeholders. The success of the takeover will undoubtedly be judged by the Body Shop’s financial performance under its new owner – so far the company has seen little impact on sales since the news of the takeover broke. But ultimately the litmus test will be whether or not L’Oréal succeeds in taking ethical trading into the mainstream with the help of the Body Shop and Anita Roddick.
Values management
The Body’s Shop’s values are the fabric of the business and as such Buckingham as the director of values sits on the company’s executive management board, reporting directly to Body Shop chief executive Peter Saunders. Alongside Buckingham on the management board sit the directors of the global functions of finance, product development, supply chain, marketing and HR and four regional managing directors, responsible for running the stores, the at-home business, the direct-selling business and the e-commerce business across the four regions – the UK, Americas, Europe the Middle East and Africa and Asia-Pacific.
Every member of the management board has responsibility for corporate social responsibility, or “Values” in Body Shop speak. For example the director responsible for supply chain management leads on dealing with the Body Shop’s 31 community trade suppliers and executing its ethical trade commitments. “In terms of strategy and what values mean, then that’s the job of the values director and the values team. But responsibility for delivering the strategy at the store level is down to the regional managing directors, and every director considers how they can support the company Values in their business function. “This ranges from devising new products to including community trade ingredients, adopting a hybrid company car policy or creating marketing language that does not stereotype women into images of beauty found only in super models.” Buckingham says.
Community affairs
The Body Shop’s global policies support community affairs, setting the parameters, but essentially there is no separate budget for supporting community projects. Since a number of shops are run as franchises, the level of community involvement, how much money they donate to charity and what they do in the community is decided at the local level.
Throughout its history the Body Shop’s head franchisees have often lead the way in supporting community projects. The company’s flagship Stop Violence in the Home programme was started by the head franchisee in Canada and the retail business in Switzerland became carbon neutral long before the target was adopted by the Body Shop board.
Volunteering is another example of the devolved approach to community affairs. In Australia, employees have the opportunity to volunteer for a good cause for 16 hours a year. In the global office, staff received 6 days of volunteer time in the 2004/05 and 38% staff supported local projects and good causes both as individuals and as part of their business teams. The stores also play an important role in the local community. For example, the Body Shop in Harlem, New York City, contributes 5% if its annual sales to the local community.
In the financial year 2004-2005, the Body Shop donated nearly 3.6% (£1.3m) of its pre-tax profits to charity mostly through its charitable foundation. The money is distributed by a UK board of trustees and four regional boards who determine the grants to be made to their own local projects and charities. In addition to its corporate donations, customers helped raise over £500,000 through the Stop Violence in the Home campaign during the last year. The Americas region also supported work on HIV/AIDS, carried out by the Until There’s A Cure campaign, with stores in the US and Canada raising $300,000 through the sale of bracelets.
Suppliers
Everything that is supplied to the Body Shop is either sourced via the community trade suppliers or from regular suppliers that are audited against the company values. The ethical trade audit is carried out using the guidelines developed in partnership with the Ethical Trading Initiative (ETI). The Suppliers Ethical Data Exchange (Sedex) is increasingly being used as it allows suppliers to give data to one source that several customers can access.
Over 15 years ago the Body Shop created its own fair trade programme called Community Trade by satisfying its demand for ingredients, gifts and accessories in a fair way to help create sustainable trading relationships with marginalised communities around the world. Working with 30 suppliers across 23 countries Community Trade benefits the lives of more than 15,000 families.
From Australia to Zambia, The Body Shop sources ingredients such as tea tree oil, sesame oil, babassu oil, honey, beeswax and cocoa butter from small scale farmers who secure a fair price for their goods, and in many cases a social premium to benefit their whole community. Most suppliers have a social premium that they decide how to use through a stakeholder group whilst others such as the Zambian beekeepers have chosen to be paid individually due to their geographic spread. Community Trade has supported the building of wells, schools, community centres and the supply of educational materials across the world.
Elsewhere, the company audits all of its first-tier suppliers, either through an in-house team or third-party agents in the field, while these suppliers carry out a self-audit down the supply chain, Buckingham explains. A lot of the suppliers are using Sedex: “By pooling resources you can get a better standard of audit… I also think it’s important to remember why you are doing auditing. It’s not to make you sleep better at night because you’ve put a tick in the box. It’s actually to say you are concerned about people working in the supply chain,” Buckingham explains.
Communicating values
Assuming responsibility for values at a company with such strong ethical credentials is not so easy as one might first assume, Buckingham admits. The director of global values sees many challenges ahead. “Responsibility and values really are in the DNA of the company. But because it’s in the DNA a lot of the basic systems – global data collections programmes, even something as simple as an employee handbook – just aren’t there.
“Because many people joined The Body Shop and stayed because of the strong values commitment, everyone was doing the right thing anyway so systems and handbooks were not necessary,” Buckingham says. One of the changes she is bringing about is to introduce more consistent data in global reporting so that the Body Shop has information to prove it is upholding its values and enables targets to be set to improve performance.
The Body Shop has a very complicated structure, with its retail outlets, including the franchises, at-home shopping network and the e-commerce business, all spread across four regions. “From a global perspective you have to be simple and clear-cut in communicating your values. Often it’s in influencing people and motivating them that’s the real test of good communications and management skills.” Buckingham says.
Communicating with consumers is one of the major challenges, but is a priority to “re-energise”, Buckingham says. “When the company was more active in political campaigning – such as the campaign to free political prisoners, the Nigerian campaigns – the customers were intimately involved and communicating wasn’t an issue. Two things have happened as time wore on: the company is not a political campaigner any more; and the marketplace is more crowded.”
The L’Oréal takeover reinforces the importance of good communication, Buckingham says. “To keep its position as an ethical retailer, Body Shop does have to tell the customer what it is doing. The community trade side is a good opportunity to communicate, because it’s all about story telling. It’s about lavender oil coming form Norfolk farmers and keeping alive a traditional way of life; Shea butter coming from the Co-op in Ghana.”
Business as usual
L’Oréal’s offer for the company on March 17 was greeted with widespread consternation among some in the campaigning community. Accusations that the founders had ‘sold out’ to a big corporation led to boycotts of the Body Shop’s products. Anti-Nestlé campaign groups such as Baby Milk Action were particularly fervent, since the Swiss multinational currently owns a 26% stake in the French cosmetics giant.
Buckingham stresses the Body Shop’s ethical trading policy will continue after the takeover is completed. “L’Oréal has said it is terrifically interested in the values of the company and has taken Anita [Roddick] on as an independent consultant to help understand the whole range of activities that the company undertakes, from community trade to campaigns,” she says
Animal test case
Opposition to animal testing is fundamental to the Body Shop’s very existence and as such it is “inconceivable” that this should cease, Buckingham says. The policies of the new parent company and itself are not incompatible, she stresses. L’Oréal has not carried out or commissioned tests of products or ingredients on animals since 1989.
L’Oréal has been committed to the elimination of laboratory animal testing and the development of alternative approaches for more than twenty years, spending millions of pounds on this work. It has already contributed to successful scientific validations together with the European Centre for Validation of Alternative Methods and as part of this approach acquired SkinEthic, which specialises in the production of human epidermal and epithelial tissues.
Counter productive campaigns
Since the takeover of Body Shop was officially announced, campaign groups and rival ethical cosmetic brands have lined up to condemn the proposal. Baby Milk Action, the group that campaigns against Nestle’s infant milk formula, has added the Body Shop to the list of brands to boycott and in April organised a day of action.Buckingham believes the boycott does more harm than good. “It would be shame if consumers don’t support us and therefore we can’t support people through the Community Trade scheme or other issues that are so integral to the Body Shop,” she says.
Protests have not been confined to civil groups, with rival ethical cosmetics-maker Lush putting up posters in its shop windows saying “Fed up with BS?”‘ Lush chief executive Mark Constantine predicted that opposition to the L’Oréal bid was just the beginning of the anti-Body Shop campaign.
But the boycott appears to have had little impact. According to figures released May 5, sales in the eight weeks to the end of April rose 5% on a like-for-like basis, compared with a 4% rise in the previous 52-week period.
The rise of ethical consumerism
L’Oréal joins a long list of multinational companies wanting to buy into niche, ethical brands. Last year Cadbury Schweppes acquired organic chocolate maker Green & Blacks and recently UK newspapers reported that Nestlé was eyeing the Linda McCartney vegetarian food business. Ethical brands undoubtedly have a bright future, as ethical consumerism begins to dominate the retail sector, Buckingham says. She believes that the much more active consumer could potentially lead to higher expectations for companies to deliver ethical goods. “If you want a big impact it will be down to the individual. So companies that serve customers are going to have to do their part in making it happen,” she says.
The Body Shop hopes to benefit from this wave of ethical consumerism sweeping the market. Brand loyalty may never be as strong as when the retailer was the darling of the activist community, but under the ownership of L’Oréal, the Body Shop must be hoping that its products will eventually become more than just niche.
BODY SHOP’S VALUES
Against Animal Testing: we consider testing products or ingredients to be morally and scientifically indefedsible.
Support Community Trade: we support small producer communities around the world who supply us with accessories and natural ingredients.
Activate Self Esteem: we know that you’re unique, and we’ll always treat you like an individual. We like you just the way you are.
Defend Human Rights: we believe that it is the responsibility of every individual to actively support those who have human rights denied to them.
Protect Our Planet: we believe that a business has the responsibility to protect the environment in which it operates, locally and globally.
BIOGRAPHY
Jan Buckingham is Director of Global Values at the Body Shop. Before joining the Body Shop, she spent seven years as group director of social and environment policy for Allied Domecq, where she was responsible for developing the company’s global CSR policy. Prior to that, she was public affairs manager for Allied-Lyons, developing the company’s environment policy and a community affairs programme with Business in the Community. Jan is also fellow of the Institute of Chartered Secretaries and a member of the Institute of Directors. She has a BSc in Biological Science (ecology), from the University of East Anglia.
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