>I vaguely remember some discussion (I think negative) of The Body Shop
>on this or some other list. The company has or aspires to have a
>progressive reputation. Does anyone have any information.
>
>Carrol
The New York Times September 2, 1994, Friday, Late Edition - Final
Body Shop's Green Image Is Attacked
By RICHARD W. STEVENSON, Special to The New York Times
DATELINE: LONDON, Sept. 1
The Body Shop International P.L.C., the retail cosmetics chain that has
expanded rapidly from Britain into American malls, has carefully crafted
its image by pledging sensitivity to the environment, promising not to test
its products on animals and seeking to be a progressive force in the
communities where it operates.
The success of the Body Shop, its 1993 annual report intoned, "proves that
profits and principles can go hand in hand and that business can be a force
for social change."
Now the company is under attack by an American journalist, who in an
article published today by the Minneapolis-based journal Business Ethics,
takes issue with the Body Shop's contention that the company's walk matches
its talk. Formaldehyde Is Cited
The journalist, Jon Entine, a former ABC News producer who spent much of
the last year working on the article, said the company's charitable
contributions, environmental standards, efforts to buy materials from
developing nations and use of "natural" ingredients in the company's
products all failed to live up to the Body Shop's stated goals.
Some of the company's products use "outdated, off-the-shelf product
formulas filled with unrenewable petrochemicals," Mr. Entine wrote. The
Body Shop, he said, has had quality- control problems that on one occasion
led to its selling products containing formaldehyde. And despite generating
considerable publicity about its efforts to develop suppliers among native
people in developing countries, only a tiny fraction of the company's
purchases actually come through its "Trade Not Aid" program, Mr. Entine
reported.
Mr. Entine also wrote about the disillusionment among some of the company's
franchisees, some of whom are cooperating with a Federal Trade Commission
investigation into the company's franchise practices in the United States.
The company, in a 32-page rebuttal that was distributed before Mr. Entine's
article was published, acknowledged that there was an F.T.C. investigation.
But the company dismissed it as a routine and groudless response to a
complaint by a single franchisee.
And the company also said that Mr. Entine's criticisms of its purchasing
policies were unjustified. "His numbers are wrong, but more importantly his
percentages are beside the point," the company said, adding that it had a
deep and growing commitment to developing third world suppliers. Today the
company dismissed the article as "recycled rubbish."
Nevertheless, the publicity over the article has already proven costly to
the Body Shop, both in public relations terms and in its standing with
investors.
The dispute, analysts and investors said, may also prove to be a cautionary
tale for companies that project a righteous image. Increasingly, they said,
journalists, regulatory authorities and so-called socially responsible
investment funds are peeling back corporate facades to see whether their
operations justify their claims to "green" or socially englightened
business practices.
Although it has bounced back somewhat in the last two days, the Body Shop's
stock price has taken a beating over the last several weeks, dropping as
much as 15 percent as rumors about the article spread. Investors had to
ponder both whether something is fundamentally amiss and whether the
company was at risk of losing business. The stock closed today in London at
224 pence, or about $3.45, up 8 pence, or a little over 12 cents. The stock
had been as high as 264 pence earlier this year.
One investment fund that sold the stock last month was Franklin Research
and Development of Boston. Franklin sold its 50,000-share holding and
recommended to its clients that they do the same.
Joan Bavaria, Franklin's president, said the decision was motivated partly
by concerns that sales growth was slowing at the Body Shop. "We felt it was
a fully valued stock with some questions about its incremental growth
rate," Ms. Bavaria said.
But she said Franklin, which invests on behalf of clients who are concerned
about companies' social responsibility, was also aware of the gist of Mr.
Entine's article, and felt that its publication would probably send the
stock down.
Ms. Bavaria said Franklin had made no judgment about the article's
accuracy. But she said that because of Mr. Entine's conclusions, Franklin
had decided to look into the Body Shop's business practices on its own and
would publish its findings next week in its newsletter. Franklin has not
yet reached a conclusion about whether the Body Shop lives up to its
socially responsible billing, she said.
The Body Shop was founded in 1976 by Anita and T. Gordon Roddick, a British
wife and husband team. Over the years their chain of retail stores, selling
cosmetics, soaps and other beauty products, grew into one of Britain's most
successful and best-known enterprises.
Much of its focus in recent years has been on expanding into the United
States and Europe. It now has 1,128 stores worldwide, including 240 in
Britain, 196 in the United States and 111 in Canada. Many of the stores are
franchises.
In its latest fiscal year, ended Feb. 28, the Body Shop reported a net
profit of £19.4 million, or just under $30 million at current exchange
rates, a gain of 40 percent over the previous year.
>From the beginning, the Roddicks sought to position the Body Shop as a
store with a conscience. Mrs. Roddick, the company's managing director and
its public face, spoke out about human rights, environmental protection,
cosmetic tests using animals and fair trade with developing nations. It
donated money to charity and supported various causes.
In Britain, for example, it spent $450,000 to start a newspaper produced
and sold by homeless people. The paper, The Big Issue, is now
self-supporting and is widely considered a model for providing opportunity
and hope for homeless people.
The company's do-good image has been challenged from time to time, and the
company has a reputation for responding aggressively. After a critical
documentary by Britain's Channel Four, the Body Shop filed a libel suit in
London and won a $425,000 judgment.
Last weekend, the Body Shop distributed a six-page dossier on Mr. Entine,
raising questions about his reporting techniques and saying he was
conducting "a single-minded campaign of vilification" against the company.
Earlier this year, the company threatened to sue Vanity Fair magazine,
which was then considering printing a version of Mr. Entine's article.
Vanity Fair later rejected the article, and people there said the decision
was not determined by the Body Shop's threats.
In its statement today, the Body Shop said it was "reviewing" its legal
options in response to the Business Ethics article.
"The Body Shop's goal here is to isolate this as a story between me and
them," Mr. Entine said in an interview.
Louis Proyect
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