The Body Shop: Social Responsibility or Sustained Greenwashing?

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Case Details:

Case Code : BECG067
Case Length : 25 Pages
Period : 2002-2006
Organization : The Body Shop International Plc.
Pub Date : 2006
Teaching Note : Available
Countries : UK, Europe, USA
Industry : Beauty care / Cosmetics

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"In terms of power and influence, you can forget the church, forget politics. There is no more powerful institution in society than business - I believe it is now more important than ever before for business to assume a moral leadership. The business of business should not be about money, it should be about responsibility. It should be about public good, not private greed."¹

- Dame Anita Roddick, founder of The Body Shop, in her book Business as Unusual, in 2000.

"It's ironic that a company (The Body Shop) well-known for its anti-animal testing stance should sell-out to one (L' Oreal) that tests on animals and which has yet to show its commitment to any ethical issues at all."²

- Ruth Rosselson, Ethical Consumer magazine,³ in March 2006.

"I do not believe that L' Oreal will compromise the ethics of the Body Shop. That is after all what they are paying for and they are too intelligent to mess with our DNA ...I want to make things happen, to spread human values wider in business if I possibly can. And this sale gives us the chance to do so."⁴

- Dame Anita Roddick, in May 2006.

A Controversial Makeover

On March 17, 2006, The Body Shop International Plc. (Body Shop), a retailer of natural-based and ethically-sourced beauty products, announced that it had agreed to be acquired by the beauty care giant L'Oréal SA⁵ (L'Oréal) in a cash deal worth £652 million (US$ 1.14 billion). The deal valued the shares of Body Shop at a premium of 34.2 percent to their price before the acquisition. It was also a major windfall for its founder Dame Anita Roddick (Roddick).

Following this announcement, Body Shop and Roddick came under severe criticism. Body Shop was regarded by many as one of the pioneers of modern corporate social responsibility (CSR).

The company was also strongly associated with the social activism of Roddick.

Since its inception, the company had endorsed and championed various social issues that complemented its core values - opposition to animal testing, developing community trade, building self-esteem, campaigning for human rights, and protection of the planet.

Body Shop was one of the first companies to publish a 'Values Report' in 1996 (Refer to Exhibit I for Body Shop's mission statement and Exhibit II for its values).

Through these initiatives, the company had cultivated a loyal customer base who shared these values of the company.

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1] "Anita Roddick Talk to Benefit Project Censored,"www.sonoma.edu, December 31, 2000.

2] "Body Shop's Shares Rise as its Ethical Rating Plummets,"www.ethicalconsumer.org, March 17, 2006.

3] Ethical Consumer is a magazine in the UK that is produced by the Ethical Consumer Research Association (ECRA). ECRA is a not-for-profit consumer organisation that seeks to promote human rights, environmental sustainability, animal welfare, and provide information on the social and environmental track record of well-known organizations. (Source: http://www.ethicalconsumer.org/aboutec/aboutus.htm).

4] Mark Goyder, "The Body Shop and L'Oreal: Why Can't Big be Beautiful?"www.ethicalcorp.com, May 25, 2006.

5] L'Oréal SA, headquartered in Clichy, France, is the world's leading cosmetics and beauty company. Its portfolio includes various cosmetic brands in segments such as hair color, skin care, sun protection, make-up, perfumes, and hair care. In 2005, L'Oréal's revenue was €14.53 billion and it earned a net income of €1.639 billion. As of December 2005, it employed 52,080 people.