The Higher the Standard, the Harder the Fall (1995)
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The Higher the Standard, the Harder the Fall (1995)

For the socially responsible business movement the tough question raised by this episode is whether The Body Shop turned itself into a target by its outspoken promotion of an alternative business ethic

Paul Holmes

by Paul A. Holmes 
 
“Pioneers," says Carol Cone, "are recognized by the arrows in their backs."
 
Cone is president of Cone/Coughlin Communications, a Boston-based public relations firm with a specialty is social marketing, and a member of Business for Social Responsibility, a 1,000 member organization of companies dedicated to making a difference at the same time as they make a profit. As such, she has followed recent attacks on British cosmetics retailer The Body Shop with consid­erable fascination, and more than a little discomfort.
 
The company took a few arrows in its back as a result of recent allegations that the reality falls far short of the ideals its founders espouse so publicly. For the socially responsible business movement, which has been growing rapidly in recent years, the tough question raised by this episode is whether The Body Shop turned itself into a target by its outspoken promotion of an alternative business ethic, and whether by marketing its principles more aggressively than its products it simply made itself more vulnerable to attack.
 
The question is pertinent to the broader business community also. More and more mainstream companies are boasting about their good works in advertising—from American Express and its Charge Against Hunger campaign to DuPont and its acqui­sition of double-hulled oil tankers—and there may be concern that such statements simply serve as an invitation to the cynics to subject the company's social policies to greater scrutiny.
 
The Body Shop began in Brighton, England, in 1976 with a single store and a sim­ple mission: to become a force for good as well as a source of profit, to trade ethical­ly, to be committed to social responsibility as an integral part of the business, to mar­ket only products that were natural, to eschew animal testing, and to empower employees.
 
"Enlightened capitalism," said founder Anita Roddick, in one of her early pronounce­ments, "is the best way of changing society for the bet­ter."
Today, there are more than 1,000 Body Shops in 45 countries and worldwide sales total $700 million. Roddick and her husband Gordon together own 20% of the publicly traded company and have a net worth estimated at $300 million.
 
The company's commit­ment to a socially responsible agenda has expanded too. The company has pioneered recycling, with minimal pack­aging and a refill service, and used recycled plastic materials in the manufacture of furni­ture for its new Wake Forest headquarters in North Carolina. It requires suppliers to provide written confirmation every six months that materi­als have not been tested on animals within the past five years. It has committed to a trade-not-aid policy that helps to create jobs in economi­cally stressed communities in the developing world.
 
(One specific program involves the Kayapo people of the Brazilian rain forest, who produce a range of beaded wristbands for sale in The Body Shop stores, and nut oil used in a conditioner. Another program, in Mexico, purchases agave fibre body scrub from Nahnu Indians. Both programs help to preserve a traditional way of life, the company says.)
 
In the U.S., the company has a stock option plan for any staff—even youngsters in its shops—who work more than 20 hours a week, a paid family leave policy, a health plan that offers full benefits to gay and les­bian partners, and a half-day each month of paid community service.
 
"Anita was one of the first individuals who recognized that business could have a double bottom line, a profit bottom line and a social bot­tom line," says Cone. "Anita felt that business could be a positive force in society, contributing to all people it touched. Whether purchasing products from a third world artisan or providing a platform for social and political commentary, The Body Shop broke all the rules."
 
But Roddick has not always been diplomatic in her discussions of competitors and fellow business leaders. She has condemned most mainstream cosmetic companies as frauds who "exploit women" for profit, accused them of selling "false hope and fantasy," and once said the cosmetic industry was "the most indifferent... con­spicuous in its absence of social care." She also described investment bankers as "bloodsucking dinosaurs" and told a Forees reporter he was too "money-conscious" to understand her business.
 
Thus it was that when an article appeared in Business Ethics maga­zine, a small independent publication that has considerable influence within the socially responsible business community, last fall, there were those who believed that Roddick was getting her just desserts, paying the price for self-righteousness and occasional overstatement.
 
Says Robert Triefus, who headed Body Shop's U.S. public relations department until earlier this year, when he joined Ketchum Public Relations: "Anita tends to speak her mind. Her language is not always the language of business. She can be abrasive. She does not have a great deal of respect for institutions, whether you're talking about the media, other businesses, or the financial community. She doesn't spend a lot of time worrying about whether people like her."
 
Among the allegations in the Business Ethics article:
•               the company deals unfair­ly with franchisees—one Virginia couple says the com­pany promised profits that never materialized, supplied spoiled products, and almost drove them into bankruptcy; •                The Body Shop name and concept were stolen from a California company;
•               despite marketing itself on the strength of its natural ingredients, the company uses many outdated, off-the-shelf formulas filled with nonrenewable petrochemicals;
•               the Trade not Aid program, also featured in the company's mar­keting activities, provides only a tiny portion of its ingredients; charita­ble contributions and environmental standards fall short of company statements;
•               some stories told by Anita Roddick about the exotic origins of Body Shop products were fabricated;
•               the company is under investigation by the Federal Trade Commission for its franchising practices; and
•               a heavy-handed legal approach was taken in an attempt to pre­vent publication of these charges, including a threatened libel lawsuit against Vanity Fair, which had at one time considered the story.
 
The article was followed by an editorial penned by Business Ethics founder and publisher Marjorie Kelly. ""I have very mixed feelings about the cover story we carry this issue," said Kelly. "The Body Shop... is a company most of us know as a shining star of social responsibility. But as our story shows, it's a company where the reality is very different from the image.
 
"As a journalist, I find the shape of the story all too familiar: the great hero turns out to have feet of clay. It's the quintessential `big story' of our post-heroic age, when most of our heroes are now face-down in the mud."
 
The Body Shop's supporters also see the story as "quintessential," an example of the alarming journalistic and societal tendency to destroy those they have first placed on a pedestal. They also question whether Business Ethics recognized that this "quintessential" story would draw considerable mainstream media attention to a small, struggling maga­zine, and perhaps have some positive impact upon subscription sales.
 
Frank Mankiewicz, the veteran public affairs executive with Hill & Knowlton, was retained the help The Body Shop defuse the crisis. He describes author Jon Entine as a "tabloid TV journalist" whose style of "gotcha cheap-shot journalism" could only find a home in an "obscure" magazine. Mark Steitz, who was acting as head of the public relations operation at The Body Shop following Triefus's departure, concurs. Entine, he says, "stalked" the company.
 
Carol Cone was among those interviewed by Entine. "He was like a relentless pitbull, hammering me with accusation after accusation, striv­ing to extract a `sound bite' to support his mission of destruction." Cone says that she believes Entine's goal was to annihilate the social responsi­bility movement.
Another interviewee was Jay Harris of the progressive Mother Jones magazine, who recalls that Entine began his interview "with a 20-minute rant about `the most evil company I've encountered during 20 years of investigative reporting."' Harris was one of a number of figures prominent in the social responsibility move­ment who rushed to the company's defense.
 
Whatever its motivation, however, the Business Ethics article clearly had an impact. In the U.S., the "ethical investment" fund Franklin Research Development sold its shares in The Body Shop (the fund later confirmed that it had used financial rather than ethical criteria in mak­ing its decision), and in the U.K., National Provident, a fund that invests in environmentally and ethically sound companies, said it had removed The Body Shop from its approved list of companies.
 
At one point, the company's stock price plunged nearly 20%, although it rebounded almost immediately on publication of the article, which one London analyst described as "a storm in a teacup." The rebound was helped along when the company announced that six-month profits had increased from $15.8 million in the same period last year to $19.3 million. Sales in the U.K. were up, but the U.S. market was flat.
 
Coverage in the U.K. media was widespread, with several articles appearing in The Financial Times, including fresh charges regarding the spillage of 30 gallons of Fuzzy Peach Shower Gel into the Hudson River, an incident characterized initially as a "toxic emission."
 
Several writers suggested that The Body Shop had brought all these problems upon itself, not because it was guilty as charged, but because Anita Roddick had spent so much time and energy boasting of the com­pany's record, making herself a target. Most commentators agreed that the charges would hurt The Body Shop, which built its relationships with customers largely on its wholesome reputation, more than they would have hurt a more mainstream company.
 
Franklin Research made much the same point when it published its own report on The Body Shop almost a month after the Business Ethics article appeared. The report praised the company's "impressive" approach to the environment and other ethical issues, and described any shortcomings as "quite correctable," but accused it of employing "bombastic tactics" in responding to criticism.
 
"The question we pose is whether The Body Shop should be held responsible for the public perception of its products if that perception diverges from the truth," said Franklin president Joan Bavaria. "We would answer yes to the question even though this means holding The Body Shop to a higher standard than other firms."
 
Triefus, who had headed the company's PR efforts in the U.S., concedes that there is something to this view. While the company never deliberately set out to mislead or to exaggerate its good deeds, he says, there was occasionally more emphasis on goals and aspirations than on reality.
 
"Anita and others like to talk about all the things the company wanted to do, the difference they felt it could make, and I think the inference was that the company was doing more than it really was," he says. "On the other hand, I don't believe there was ever any deliberate attempt to be dis­honest, or to mislead. This is a company that is tremendously committed to doing the right thing, to making sure that its principles permeate everything it does."
 
The Body Shop's response to the allegations was assertive and passionate. The company sent a Memorandum of Response to all Business Ethics subscribers (the magazine later claimed it acquired the subscriber list nefariously) including rebuttals from some of the individuals quoted in the article, and a lengthy account of the company's social and environmental policies.
 
In a press release, the company said the article was "riddled with error and grossly unfair to The Body Shop and its founders." Of the 22 sources quoted in the article, the company described ten as "dis­gruntled former employees or franchisees, current competitors, or disappointed bid­ders for our business." Four more, The Body Shop says, have either denied their quotes or claim that they were quoted out of context. Five others were cited for their opinion about social investment in general. "The accusation that I find personally most offensive is the suggestion that we lack commitment to our trade not aid program," said Gordon Roddick. "Some of our critics' arguments center around a percentage game that misses the point. They say that because trade-not-aid purchases form only a small percentage of our total, we should not talk about them. We say that trade-not-aid is a very important part of our business, on which we spend a disproportionate amount of time and money. Financial and management efforts on these projects far outweigh their naked value to us."
 
He also pointed out that the company recently institutionalized its values in an amendment to its memorandum of association, passed by shareholders at the 1994 annual meeting., and established a Values and Vision Centre that will focus on animal testing, environmental, fair trade and human rights concerns.
 
Fighting to preserve its reputation, the company took actions that even some supporters found extreme and heavy-handed, including threatening legal action against Business Ethics. The company had previ­ously sued and won in the British courts (which offer plaintiffs greater opportunity for success than those in the U.S.) when the U.K.'s Channel Four ran a program containing similar allegations. However, the threat of a U.S. suit was considered by many public relations people to be a mistake, given the jealousy with which the American media cherishes its First Amendment rights.
 
"Many individuals, including some leaders in the social responsibili­ty movement, were surprised at the vigorous nature of The Body Shop's response," says Carol Cone. "But I believe the company had to act swift­ly, and had to use every avenue including legal remedies, to fight fire with fire. The Body Shop acted like any company defending its reputa­tion, its principles and its very reason for being."
 
More valuable than all the corporate activity, however, was the reaction of others within the social responsibility movement. In the U.S., Ben Cohen, founder of Ben & Jerry's, resigned from the Business Ethics advisory board in protest at what he described as Entine's "diatribe." "The issue is not whether socially responsible companies should be scrutinized," says Cohen. "They should and they are. The issue here is what degree of responsibility we must insist upon in the journalism community."
 
Ralph Nader also chimed in: "The author sounds like the mouth that roared," he said in a press release. "Apart from his inclinations towards fiction, the author seeks to make smaller and better companies perfect. Maybe the next time he should get into the trenches and go after the likes of GE and Monsanto."
 
In the U.K., support came from Charles Secrett, director of Friends of the Earth, and from other leaders of the environmental movement, including former Green Party leaders Jonathan Porritt and Sara Parkin. Amnesty International also wrote that it regarded its relationship with The Body Shop as "a very positive one." Clearly, if The Body Shop's high profile made it vulnerable to criticism, the relationships the Roddicks had forged with consumer and environmental activists better­equipped the company to come through the crisis.
 
In late October, The Body Shop announced that Stanford University professor Kirk Hanson, also a member of the Business Ethics advi­sory board, had been hired to conduct a "social audit" of the com pany's operations. Hanson says he was approached by the company before the current crisis, but that the Business Ethics article had acceler­ated the process. He added that the company had granted him complete independence and access to all company records. The audit will be pro­duced by the summer of 1995.
 
"We want to show that we're a company that is by no means per­fect, but that we have gone a long way on the road to social responsibili­ty and that we have a high degree of principle and integrity," says Gordon Roddick.
 
The company also announced that it had commissioned a Europe­wide review of animal testing products so that it could compare its per­formance with that of other "green" companies.
 
"British companies on the whole and The Body Shop in particular have been reluctant to open their books to social audits," says Amy Domini, a partner in Kinder Lydenberg Domini of Boston, which pro vides institutional investors with social research on U.S. companies. "If you're going to benefit from a strong social profile, you have to be able to allow an independent audit."
 
Ultimately, observers say, the criticism of The Body Shop is likely to make the company stronger. Rather than questioning its commitment to the principles upon which it was founded, the company has reaffirmed those principles and put in place new systems and outside scrutiny to ensure that it is living up to them.
 
"The Body Shop is not perfect," says Mark Steitz, now a consultant to the firm. "But it is committed to being the best company it can be, and to getting better."
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