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This report focuses on the benefits of Corporate Governance (CG) and Corporate Social

Responsibility (CSR) engagement as well as the company¶s strategies involving CSR by using The

Body Shop as the main focus of the report.

The Body Shop was regarded as one among the first companies in the cosmetic industry to publish a

report on its social responsibility commitment. The Body Shop has been using Corporate Social

Responsibility (CSR) successfully established itself as leader in the arena of social responsibility,

and increasing awareness of its name and product ranges. One of the company strategies is providing

extensive programs aimed at educating its consumers about corporate actions and using Anita¶s

philosophy related to the Environment, Human and Animal rights and Fair Trading program for the

selling point.

The Body Shop went through the tough time later with the criticisms from the activist groups

campaigning for consumer to ban The Body Shop. As these activist group accused the company of

misleading the information and abusing the CSR for the benefits of the company.


 
 


The Body Shop was founded in 1976 by Anita Roddick, selling natural soap and lotion products, in

Brighton, UK (Van, Nijhof and Jeurissen, 2009), She was inspired to set up the shop after seeing a

store called µThe Body Shop¶ in Berkeley, California, USA, that sold cosmetic like shampoos,

lotions and body creams (Purkayastha, 2006). Also, having worked as a United Nations researcher in

the 1960s, Anita was aware that men and women in Africa, Asia and Australia used locally grown

plant extracts to care for their bodies (Van, Nijhof and Jeurissen, 2009).

The First Body shop had to be financed from extremely limited resources (Roddick, 1991, cited in

Van, Nijhof and Jeurissen, 2009). Anita made a virtue out of a necessity by bashing her soaps and

lotions on natural ingredients, such as bees wax, grains of rice, cocoa butter, almonds and bananas

(Van, Nijhof and Jeurissen, 2009). The product packaging was simple with handwritten label, which

people could also reuse. Urine sample bottles, the cheapest packaging available at the time, were

used as containers (Purkayastha, 2006).

At first, The Body Shop was unable to afford any advertising. Anita managed to compensate amply

for this cleverly playing the role of the underdog (Van, Nijhof and Jeurissen, 2009). When two

funeral directors threatened to sue her if she used the name µBody Shop¶ as they considered

inappropriate name (Purkayastha, 2006). She managed to bring the problems to attention of a local

newspaper, µThe Argus¶ (Van, Nijhof and Jeurissen, 2009). The newspaper published the story as a

centrespread, which generated free publicity for her shop.

In the 1980s, Anita acquired the US right to the µBody Shop¶ from the two entrepreneurs of

Berkeley, USA (Purkayastha, 2006).

On March 17, 2006, Body Shop announced that it had agreed to be taken over by L¶Oreal in a ǧ 652

million deal (BBC news, 17 March 2006).

  
 
 
 

  


 


  






 



As Zenisek (1979) cited in Maharaj (2008) stated that in order to be accepted as a good corporate

citizen organizations must be cognizant about societal expectations. The lack of attention to CSR and

social performance by organizations is gaining prominence in the strategy field as there is growing

acknowledgment that skilful stakeholder management contributes to firm¶s value creation process,

by enhancing a firm¶s intangible assets, such as reputation and subsequently its competitive

advantage (Clarkson, 1995; Hillman and Hitt, 1999 cited in Maharaj, 2008). Also, there are a

growing number of investors who are solely investing in companies that are recognizing their role as

corporate citizens and being socially responsible (Maharaj, 2008). Such proven benefits good CG

and CSR can bring the achievement of competitive advantage, better reaching market segment like

ethical consumers and socially responsible investors as mentioned from above. Furthermore, CG

and CSR engagement can enhance opportunities for strategic alliances or other partnerships as major

business opportunities for corporations with external constituencies, and, from an internal point of

view, enhancement of labour relations and employee commitment (Keinert, 2008).

 
 


 


?

CSR has long been discovered as a major source of competitive advantage for many reasons. Firstly,

CSR helps crating intangible assets. Seifert et al. (2003, p196) cited in Keinert, (2008) stated that µdo

good in order to do well.¶ Doing good certainly is the favourable influence exercised on key

stakeholder attitudes and public opinion toward corporations outstanding in their engagement for

society and the environment (Campbell et al, 1996 cited in Keinert, 2008). CSR engagement will

enhance the market position, the indirect and direct impact upon sales through the creation of

positive publicist and enhanced reputation (Keinert, 2008). The Body Shop had adopted this very

well from the start, it was associated with the social responsibility which also strongly associated

with the social activism of Anita. She was very critical of what she called the environmental

insensitivity of industry and called for a change in standard corporate practices (Purkayastha, 2006).

Anita wanted to establish a business with ethics. The Body Shop focused on being to become a good

corporate citizen organisation and socially responsible. For instance, Body Shop was one of the first

companies to publish ³Values Report¶ in 1996 (Purkayastha, 2006). µThe Body Shop¶s mission

statement (Purkayastha, 2006). Anita (BBC news, 17 July 2003) ones said µI don¶t give a damn if we

were made successful by Mrs Rosie Brown who love her vitamin E cream. Behind us there was a

tacit acceptance of what we were doing.¶

The Body Shop distinguished itself clearly from the competition. The Body Shop asked its suppliers

to sign declarations that they had performed no animal testing in the past five years, and had no plan

to perform tests of this kind in the future (Van, Nijhof and Jeurissen, 2009). The company has

differentiated itself by developing a niche product line and unique buying experience (Menon et al,

1999). For example, Body Shop provided product information, a number of leaflets and poster on

recycle paper provided information about social causes that the company believed in and encouraged

its customers to get involved. Therefore, all of these had given The Body Shop the competitive
advantage, like taking opportunities within the market and appeal to consumers and investor as well

as building partnerships and alliances.

 !
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Another advantage potentially implied in CSR engagement is the creation of new business

opportunities through value-added to products and services, and raising consumers¶ and investors¶

interest in the corporation and its respective offers (Keinert, 2008). The Body Shop was creating to

the needs of the ethical consumer and socially responsible investor by creating identity called µ

profits with a principles¶ philosophy and the brand was closely associated with the social justice

agenda (Purkayastha, 2006). Furthermore, The Body Shop staff would receive half a day wage for

services to the community (Van, Nijhof and Jeurissen, 2009). This form of voluntary work is now a

popular expression of one aspect of CSR. Therefore, The Body Shop developed a loyal customer

base. As research suggests that consumers prefer to buy products and services, and investors prefer

shares from socially responsible firms (Keinert, 2008). Moreover, The Body Shop has extensive

programs aimed at educating their customers about corporate actions and philosophies related to the

environment. Establisng credibility, personalising purchases, and adding perceived value to the

product and service are some of the factor creating customer and brand loyalty (Menon et al, 1999)

As a result, the company has been able to expend very substantially its market share in both a

consistent and sustainable manner to the degree that it has even entered the mainstream market after

gaining strength and visibility in a market niche. Also, this group of consumers once they dispose of

sufficient knowledge about The Body Shop engaged with CSR, they tend to be loyal and made a

repeated purchase or willingness to pay a premium (Keinert, 2008). Moreover, the company seemed

to attract the µSocially oriented investors¶ who tend to be loyal, truly engage with the company, and

not interested in portfolio µfashion and fads¶ (McLachlan and Gardner, 2004 p13 cited in Keinert,
2008), CSR has been found to be also part of overall product and service evaluation and thus

exercises at least an indirect influence on consumer and investor loyalty (Keinert, 2008).

 
 




 


CSR engagement and an excellent corporate reputation for high values and ethical standards in the

treatment to their stakeholders can be, increasing the company attractiveness, increasing loyalty and

identification with the corporation, and thereby rendering employees more committed to the interest

of the organisation (Del Mar Garcia de los Salmones et al, 2005, p 370 cited in Keinert, 2008). An

organisation which builds employee commitment through CSR engagement will also be more likely

to attract and consecutively retain employees with equally high standards (Keinert, 2008), which

crucial for continuous growth. For example, employees are selected very much on the basis of

personal values (Sodeman, 2003 cited in Van, Nijhof and Jeurissen, 2009).

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Compliance with equal Opportunity legislation has become a MUST within the developed world

(Keinert, 2008). Companies that mirror the general population on all levels are apt to better

understanding the needs and wants of customers, and to develop products and services that meet their

needs more accurately (Eyring, 1998 p 245 cited in Keinert, 2008). The benefit of equal opportunity

for the firms lies in the benefit arising from diversity and its underlying potential for innovation.

Evidence suggest diversity leads to overall improved decision making, as a diverse group takes

advantage of increased awareness of global opportunities, and might find a more cogent approch to

identification and solution of upcoming problems (Keinert, 2008).

 %




 

CSR engagement and sincerely upheld values and principles clearly build confidence in a company

(Kaptein,2005 P 14 cited in Keinert, 2008 ), therefore a CSR champion is likely to be more

trustworthy partner for strategic alliances that a firm not know for its social orientation (Keinert,

2008). The Body Shop has sticked to their core values from the beginning. The Body Shop has

being socially and ecologically as part of their core values, when engaging with stakeholders and

community to gain considerable competitive advantage through the enhancement of their image. As

Keinert (2008) stated that partnerships with governments or communities may serve to reduce

criticism and distrust towards corporations, grant them access to community knowledge and thus

provide them with valuable new insights.

 
 &


' 

The Body Shop has been engaging the Stakeholder Business Model from the early years as part of

their expansion, using themselves at the centre of an array of mutual relationships with persons,

groups and entities called µStakeholder¶ (Steiner and Steiner, 2009). Furthermore, they have been

including CSR in their marketing strategies to represent their commitment by behaving ethically and

contribute to economic development, while improving the quality of life of the employees and their

families, as well as of the local community and society at large (Watts and Holme, 1999). Last but

not least, the company produces and promotes its product lines with environmental and social

sensitivity as a major theme. Anita once said µI¶d rather promote human rights, environmental

concerns, indigenous rights, than promote a bubble bath¶ (Entine, 1995 cited in Dennis, P. Neck and

Goldsby, 1998).

First of all, The Body Shop was discovering their core values from the very early days, the

company created the mission statement (Exhibition 1) that reflected on Anita¶s

environmental, social, and political values. Furthermore, The Body Shop published its first
 µValue Report¶ in 1996 and its second µValues Report¶ in 1998 (Purkayastha, 2006). These

reports were audit statement of its social, environmental and animal protection practices. The

reports were given a top rating in a worldwide ranking by Sustanaiability for the United

Nations on environmental and social reporting (Purkayastha, 2006).

Secondly, The Body Shop has been engaging their stakeholders, including the animals, for which

steps are taken to prevent their use in cosmetic testing, alongside native population groups seeking an

income, and the environment, which is not burdened with mountains of packaging waste (Van,

Nijhof and Jeurissen, 2009).

 ( 
 

The Body Shop asked its suppliers to sign declarations that they had performed no animal testing in

the past five year, and had no plan to perform tests of this kind in the future (Van, Nijhof and

Jeurissen, 2009). According to Paulette Cleghorn, a spokesperson for the company, ³Our products

offer the consumer an alternative ± a high quality, naturally based, inspired product from a company

that cares about the environment, the developing world and does not test on animals´ (Wheeler,

1994). As a result in 2005, the company was awarded the first place in the cosmetic category for

µAchieving Higher Standards of animal Welfare¶ by the royal Society for the Protection of Animals,

in recognition of its efforts on this issue (Purkayastha, 2006).

 
 


The company developed the Trade not Aid program to support developing countries by trading with

them. The Body Shop guaranteed a living wage for its community trade suppliers and their workers

through a predictable and long term business relationship (Purkayastha, 2006).

In fact, the company pays the Kayapo¶ well above the market price for Brazil Nut Oil´ (Bavaria et

al., 1994 cited in Dennis, P. Neck and Goldsby, 1998). In Anita¶s words µOur trade with the

communities is not just about creating another product or market for The Body Shop. It is about

exchange and value, trade and respect, friendship and trust¶(www.thebodyshop.com/

bodyshop/values/support_community_trade.jsp, accessed on 17 July 2010). To ensure that the

company Trade not Aid program would be successful in fulfilling a community¶s goal, The Body

Shop developed a set of Fair Trade Guidelines and Ethical Trade Standards (Exhibition 2 and 3).

 )





The Body Shop has a history of taking action to address environmental concerns. For example, the

company has been a proponent of ³green´ packaging. The company also supported materials and

technologies that caused minimal harm to the environment and promote the use of renewable

resources and sustainable ingredients (Purkayastha, 2006). For instance, it has dealt with the problem

of waste water affluent. By installing a Living Water waste treatment system, they became the ³first

international skin- and hair-care company to tackle the industry¶s chief environmental challenges:

successfully treating raw factory waste on site with an experimental, ecologically sustainable

system´ (Roderick, 1993 cited in Dennis, P. Neck and Goldsby, 1998). These environmental efforts

have paid off for The Body Shop. For the year 1997, the company had the highest ranking in an

environment report published by the UK (Boulton, 1997). The Body Shop also published its first

social report in 1995, after consulting more than five thousand stakeholders. This makes the
company a front runner in the development of sustainability reporting (Wheeler and Sillanpaa, 1997

cited in Van, Nijhof and Jeurissen, 2009).

 
 

 
 
 

The Body Shop initially claimed that its products contain ingredients that are tested on animals, there

is evidence this claim is not completely true. The Body Shop used ingredients in its products that

have been tested on animals by other companies (Entine, 1995 cited in Van, Nijhof and Jeurissen,

2009). The company¶s purchasing manager, in an internal memo dated May1992 µ noted that 46.5

percent of its ingredients have been tested on animals, up from 34 percent the year before¶ (Entine,

1995 cited in Dennis, P. Neck and Goldsby, 1998). As a result The Body Shop ended up junking its

deceptive label, replacing it with the equally disingenuous µ against animal testing¶ (Entine, 1997

cited in Dennis, P. Neck and Goldsby, 1998).

 




 

The Body Shop was accused of paying exploitative wages and having an anti trade union stance. The

program was also viewed as patronizing and was said to have created tensions and divisions within

indigenous communities and undermined self sufficiency and self dependence (Purkayastha, 2006).

According to Bavaria, Becker and Billenness (1994) stated in their research that;

µIn its promotional materials The Body Shop stated that the harvest of Brazil Nuts is µa viable and

sustainable alter native (Kayapo) to cutting down their forest¶ However, the Kayapo make the bulk

of their income from selling logging and mining concessions on their lands, precisely the activities

that The Body Shop claims it is preventing. The money Kayapo make from Brazil Nut oil and
wristbands is just supplemental income that could never match the level of income achieved by

selling logging and mining rights¶.

Moreover, in fact only a small proportion of the ingredients were purchased through fair trade

programmes, while the majority was brought on the world market (Entine, 1995) To conclude this,

the production volume that could be generated from the trade not Aid program is too small for

worldwide sales, so a proportion of the production is purchased through the mainstream market.

 c



There have been environmental problems associated with The Body Shop. At the company¶s former

New Jersey warehouse, there were three leaks of product into the environment (Dennis, P. Neck and

Goldsby, 1998). According to the records of the company and local Hanover Sewerage Authority, at

least 62 gallons of shampoo and shower gel were released. It also appears that the spills were first

identified by the officials of the Hanover Sewerage Authority and traced back to The Body Shop.

The pattern of spills suggests that management at The Body Shop¶s facility was lax in its safeguards

and tardy in its reporting (Bavaria, Becker and Billenness, 1994).

 


The Body Shop is a special company in many respects. Firstly, the leadership of the company, who is

Anita Roddick, committed to the CSR from the beginning. She created brand identity that closely

associated with the CSR and pass on her philosophy to her employees and her value customers.

According to Kohli and Jaworski, 1990 cited in Bavaria, Becker and Billenness, 1994 stated that, the

leadership of an organisation is believed to play a critical role in shaping its values and orientation.

Secondly, it is clear that the company focused in the stakeholders in the early years and tries to

continue to do so. The company tried to differentiate itself from its mainstream industry by using
CSR with its marketing strategies involving their stakeholders and focusing on environmental

awareness. As a result, the company created the µGreen customers¶ base, the loyalty customers,

attracting the employees with the same value with the company and The Body Shop was imaged as

the social and environmental sustainability company. Also, the Body Shop shows how to set up and

expand a profitable company based on unconventional assumptions. For example, the company

invented µagainst animal testing¶ policy in the cosmetic product development. The Body Shop has

also shown how a company has the option of purchasing goods based on a fair price.

* 

I conclude that The Body Shop is a good example of the company that applying CSR successfully.

The company has still preserved with various CSR projects in the face of criticism. From this report,

I can classify that The Body Shop¶s strategy is involving its stakeholders and using Anita¶s

philosophy as part of the company values and point of selling.

The Body Shop was actually a pioneer in the dialogue with its stakeholders and the development of

Values Reporting. This makes The Body Shop a front runner in the development of sustainability

reporting.

The company has succeeded in appealing to a very specific customer group and investors, being

socially and environmentally aware buyers of its products who identify with the founder, Anita

Roddick¶s philosophy and ideals.



 

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›? Dedicate our business to the pursuit of social and environmental change.

›? Creatively balance the financial and human needs of our stakeholders: employees, customers,

franchisees, suppliers and shareholders.

›? Courageously ensure that our business is ecologically sustainable, meeting the needs of the

present without compromising the future.

›? Meaningfully contribute to local, national and international communities in which we trade

by adopting a code of conduct which ensures care, honesty, fairness and respect.

›? Passionately campaign for the protection of the environment, to defend human rights, and

against animal testing within the cosmetics industry.

›? Tirelessly work to narrow the gap between principle and practice, whilst making fun, passion

and care part of our daily lives.

›? V
www.thebodyshop.com

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We are looking to work with established community organizations which represent the

interests of their people.

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We target those groups who are disadvantaged in some way, those whose opportunities are

limited.

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We want the primary producers and their wider community to benefit from the trade socially

as well as economically.

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!
It has to make good commercial sense meaning that price, quality, capacity and availability

are carefully considered.

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The Trade has to meet The Body Shop standards for environmental and animal protection.

Source: www.thebodyshop.com

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›? Employment is freely chosen

›? Freedom of association and the right to collective bargaining are respected

›? Working conditions are safe and hygienic

›? Child labours is not used

›? Living wages are paid

›? Working hours are not excessive

›? No discrimination is practiced

›? Regular employment is provided

›? No harsh or inhumane treatment is allowed

Source: www.thebodyshop.com







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social performance, Investing for a better world, Franklin Research¶s Insight, Boston,pp 1-8.

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2010,www.news.bbc.co.uk.

Boulton, L. (1997) µBody Shop tops league table of µgreen¶ reports¶, Financial Times,2

February,p.12.

Dennis, B, Neck, P. C and Goldsby, M. (1998) Body Shop international: an exploration of

corporate social responsibility, Management Decision, 36, 10, pp.649-653

Keinert, C. (2008) Corporate Social Responsibility as an International Strategy, Physica-

Verlag,«..?

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µµstrategic¶¶ Stakeholder (SST): implications for the board of directors, Corporate

Governance, 8, 2, pp.115-127.

Mehegan,S. (1996) µGreen on green¶, Brandweek,37,27,p.43.

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environmental sensitivity in marketing programs: A synthesis of theory and practice, Journal

of Marketing Theory and practice,7,2,pp.1-15.

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perspective, text and cases, McGraw-Hill Irwin, New York.

The Body Shop International (2009), Living Our Values: Values Report 2009,viewed 7 July

2010,www.thebodyshop.com.

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Responsibility, viewed 2 July 2010, http://www.wbcsd.org

Wheeler, D.(1994) µAu natural¶, Soap-Cosmetics- Chemical Specialties, 70, 7,pp.36-42