Company Profile
From Activism to Active Global Risk Management
How The Body Shop Went Beyond CSR to Achieve the Triple Bottom Line
Less is often more when it comes to health and beauty and looking and feeling our best. In these days of heightened awareness and anxiety about our world, our place within it, and a global realisation that we can’t continue to punish our planet if we hope to pass on any kind of positive legacy to the next generation, many consumers are now wanting to “do their bit” by using fewer, longer-lasting resources with a lighter touch and lesser impact on the environment in terms of managing people, products, and packaging.
Ethical Trade
The twin challenges of climate change and COVID-19 have accelerated this existential paring-back approach and the desire to be more aware of our health—what we put into and onto our bodies and the provenance of those products in terms of their ethical sourcing.
Manufacturers, packaging companies, and retailers have responded by cataloguing the numerous international accreditations and environmentally friendly credentials from air miles travelled—the carbon footprint created from source to store—to its extracted ingredients and their relationship to the world around them. This includes the soils and water courses where a product is harvested as well as its farming and manufacturing impact on indigenous communities and anti-cruelty credentials such as whether it has been tested on or contains any animal extracts.
This in turn has forced more businesses to try to lead by example by re-engineering their supply chains to be less harmful. This includes a focus on more circular economy approaches, although only 9 per cent of global businesses are actively engaged in this “return, repair, re-cycle, and re-use” model where sustainable logistics are key to delivering on the “less is more” challenge.
This greening of the entire value chain, argue proponents of the “ECOnomics” model, is now a commercial imperative that not only drives environmental and ethical best practice, but also makes greater economic sense in terms of reducing “empty running”—where every vehicle journey between the point of manufacture and the point of sale is fully optimised. This results in lower operating costs, less congestion on our roads and air, reduced wear and tear on commercial vehicles, and, ultimately, less CO2 and NOx in the atmosphere.
Compassionate Consumerism with a Conscience
Today, we take this level of cerebral intervention for granted, but it was not always like this. Indeed, many businesses had to be shamed to the table through a form of consumer campaigning that was originally harnessed by one stand-out brand that has put activism front and centre of its ethical “change-making beauty” approach for more than forty years.
It would be fair to say that The Body Shop invented the notion of “compassionate consumerism with a conscience” and the kind of high street activism that other businesses have only recently begun to adopt to avoid the accusation of “green washing.” Indeed, it has long campaigned on the slogan that “Green is not a colour, but a state of mind” as it sought to go beyond the narrow definition of corporate social responsibility (CSR) towards what it calls its “triple bottom line,” where the focus goes way beyond profit and into the realms of environmental protection and social justice as well as the loftier ambition of service to the community and society as a whole.
The late Dame Anita Roddick, who founded The Body Shop in Brighton in 1976 and set the co-ordinates of what is now a global business focussed on authentic “rule breaking and never faking” change, said, “Business shapes the world. It is capable of changing society in almost any way you can imagine.
“Social and environmental discussions are woven into the fabric of the company itself. They are neither first nor last amongst our objectives, but an ongoing part of everything we do.
“The business of business should not be about just money—it should be about responsibility. It should be about public good, not private greed.”
She recognised that activism was part of the DNA of the business, an ethos that continues long after the baton was passed on to new owners.
After a brief coupling with beauty giant L’Oreal, The Body Shop is today part of the Brazilian-owned ethical enterprise Natura &Co. Listed on the New York Stock Exchange, it is a more natural market fit for The Body Shop’s socially driven corporate agenda.
Around 15,000 people in eighty-one countries work for The Body Shop, with around half in franchise stores. It has a “grass roots” social selling channel—The Body Shop at Home in the UK and Australia—where budding entrepreneurs provide consultative beauty advice to people in their own homes.
Operating a hybrid model of 2,500 company-owned stores in addition to franchise operations, the brand has invested in rolling out bright new store concepts that use more sustainable materials, including less virgin plastic and FSC-certified wood as part of its mission to deliver profit with purpose.
This also includes what it terms “changing the lives of more people and preserving the beauty of the planet through investment, innovation, and improvement,” whether it’s through revival of the high street, rejuvenation of products that use the lightest touch possible as far as the planet is concerned, or the continued campaigning for social justice.
Online, this ever-evolving approach was further reinforced with the launch of sixty-five new websites in 2021.
Sustainability, Diversity, and Inclusion
As part of Natura &Co, The Body Shop has also set new and ambitious goals for 2030, including 100 per cent of its packaging material being reusable, recyclable, or compostable. Already 50 per cent of the plastic the brand uses is recycled, mostly from plastic waste collected in India, so far preventing 100 million plastic bottles from entering the ocean. In addition, waste offset through “collection and re-use” programmes will reach 100 per cent responsible disposal where the recycling infrastructure is not available.
To meet these targets, The Body Shop is making big changes across a whole range of products and stores, including a growing number of fully recyclable product packs and the re-introduction of its popular refill stations to hundreds of stores around the world, which could reduce plastic waste by more than 25 tonnes per year from 2023 onwards.
From its uncompromising position on animal testing—its “bunnies don’t wear lipstick” strapline—to the empowerment of young people, the beauty brand’s constant activism has deliberately gotten under the skin of despotic regimes and made headlines around the world through outing poor governance and corporate practice that harms rather than heals, an approach that continues to inform and guide its ethical ethos.
For example, its “Be Seen Be Heard” campaign is a three-year global initiative with the United Nations to support greater youth participation in political life in more than seventy-five countries while it is also engaged in initiatives as diverse as supporting Black Lives Matter, fighting sex trafficking of children and young people through changing laws or policies in twenty-three countries and pushing for the expansion of refugee intake for those fleeing the Taliban.
On a day-to-day basis, The Body Shop has engaged with campaigns that address the recruitment challenges facing the entire retail sector, looking at neurodiversity in its workforce to support LGBTQIA+ candidates, and, through its open hiring programme, pledges to potential recruits that “If you’ve got the skills, you’ve got the job,” regardless of their background, which includes those candidates who have a less auspicious start to their working careers and found themselves on the wrong side of the law.
Profit Protection and Risk
Less is certainly more when it comes to the equally ambitious role of managing profit protection and risk across The Body Shop’s global estate.
Steve Middleton does not need or lead a big team of LP professionals circumnavigating the globe to firefight multiple crises in different territories. Instead, The Body Shop’s global head of profit protection and risk has the world come to him and his analyst Tamara Ford to help drive a compliance risk model across its international estate. This small team sets the tempo and tone of risk management by writing the rules of governance that start and end with an aspiration of stock file accuracy and ensuring that the right in-date products are in the right territories at the right time and priced to realise and optimise profitability.
Steve, who began his retail career as a window dresser with Debenhams before undertaking the department store’s management training programme to become a store operations manager, joined The Body Shop as regional manager in 1998. His early background in forecasting, ordering, allocating, and distribution prepared him well for his progression up the risk ladder, first as an LP manager in 2007 and then into a protection role in an international capacity in 2017.
His early years with the brand under the iconic stewardship of Anita Roddick helped shape his career and focus.
“I worked alongside Anita for many years, and I learned so much from her openness. I remember going to her house and having a tour of every room in her Georgian house with added Sussex barn. She was massively charismatic,” he said.
“I learned that in everything that we do, we have to think about what could happen if it suddenly went wrong. We are a very public-facing brand, and there are plenty of critics trying to knock you off the pedestal.”
Managing Risk and Compliance Across Multiple Markets
Not “getting it wrong” is Steve’s international day job, which involves providing the different markets with the essential risk toolkit to ensure the correct levels of international compliance. Although different markets may have different cultural approaches to risk, The Body Shop’s corporate governance requires a “one size fits all” global alignment of exception-based reporting, and Steve’s role involves providing a repository of information or “how to” guides to manage risk in exactly the same way across multiple markets.
Steve and Tamara are the centralised “go to” risk team who provide the profit protection guidance on everything from stock file accuracy to reporting and electronic point of sale (EPOS) processes and procedures. It is a support function that runs the world of risk for The Body Shop—a triangle of layers that rely on constant communication to support the business and define the role of the profit protection manager.
“At the bottom of the layered triangle is support and educate, above which is monitoring, and finally investigation at the pinnacle,” said Steve. “It has to be scalable and influential and has to be communicated in a simple way at store manager level and easy to implement. It could be guides on how to process a refund or new updates on EPOS or stock rotation.
“It’s constant communication to all markets to ensure engagement. We are business enablers rather than enforcers, and our job is to win hearts and minds.
“I don’t fly round the world investigating fraud and theft—it’s all done on Teams, often on ‘red eye’ calls at ‘stupid o’clock,’ but it means that I have visibility across the globe without having to go anywhere anymore.”
Steve also has enterprise risk management in his remit and the infamous Sarbanes-Oxley (SOX) protocol, the gruelling rules-based audit and public disclosure mandate that all American-owned enterprises must submit annually. SOX compliance requires that all financial reports include an internal controls report showing that the company’s financial data is accurate and that appropriate and adequate controls are in place to ensure that the data is secure. Failure to complete the expansive audit can lead to senior executives facing fines of up to $1 million and ten years’ imprisonment for knowingly certifying financial reports that don’t comply with the SOX exacting requirements.
In The Body Shop’s case this involves disclosure around 128 different IT controls and more than 100 different business processes, all of which Steve supports to meticulously catalogue and file.
“I’m not just here to prevent fraud, but to provide a multi-layered risk approach that includes everything from inventory to treasury and IT configuration. We have to understand systems and processes and it’s all about being on top of the detail. This is why, thankfully, loss is not a big issue for The Body Shop because we are steering a steady ship where the focus is on understanding inventory and audit—having total visibility of the stock file,” he said.
One of the major decisions for Steve was how to implement regular stock takes across the globe without costing the earth in terms of flying external counters around the world and the associated air miles and expenses.
Zebra SmartCount
The Body Shop’s approach was simple and consistent. They engaged the services of inventory management specialists Zebra Technologies and its SmartCount™ solution, which offers real-time stock visibility to better manage shrink, increase sales, and ensure The Body Shop has the right products in the right stores at the right time.
As a stand-alone plug-and-play technology, SmartCount is a self-scan physical inventory tool that enables The Body Shop colleagues to perform faster and easier cycle counts of the most accurate data for inventory allocation decisions and order quantities.
“Previously, for certain markets we had to fly external counters and meet all of their expenses for hotels and meals,” said Steve. “Now, SmartCount is delivered to stores in a box and colleagues carry out the count and then the equipment is returned to Zebra. It is intuitive and easy to use for store colleagues, which means we capture more accurate counts. It ticks all the boxes in terms of reducing costs and the carbon footprint of the business through one global contract with one invoice for the entire world, which fits in with The Body Shop’s corporate ethos,” he added.
Zebra, which has held the global account for more than four years, can demonstrate real benefits to this approach. Patricia Lacey, Zebra’s senior software specialist said, “The global account goes beyond simply counting. SmartCount has given The Body Shop flexibility of when to count, ease of use, cost savings, and insights to help drive better decisions.
“Importantly for Steve, it has provided compliance across the estate and visibility of the stock file in real time, which is driving stock accuracy and trust in the data.
“The fact that third-party counters do not have to fly around the world to carry out the count can be quantified in a dramatically reduced carbon footprint, which is important to businesses like The Body Shop who place environmental stewardship front and centre of what they do as an organisation.
“On top of that, it is estimated that the cost savings of using this solution reduce the count bill by more than one-third in the first year, and there are also dramatic time savings in terms of the business getting the data back,” she explained.
Satisfaction levels were also high because the SmartCount solution was rolled out during lockdown and all the restrictions that it imposed across different operating territories.
The application was also measured using NPS (net promoter score), an objective and widely used market research metric that is based on a single survey question asking respondents to rate the likelihood that they would recommend a company, product, or a service to a friend or colleague. The creators of the NPS metric, Bain & Company, say that any score above eighty is in the top percentile.
Pat added, “We operate on a NPS score of ninety-three, which is fantastic. It is one contact to support a global account and post-count reviews to see where we can help drive best practice and keep the platform fresh for today’s retail challenges.
“We had to deliver SmartCount in 2021 under lockdown conditions and in one testimonial we received from The Body Shop in the US, we knew what we set out to achieve had been successful. It said, ‘The platform was very intuitive, we felt in full control of the count, and we would never go back to a third party,’ which is a tremendous endorsement.”
Consequently, on a day-to-day basis, Steve has total transparency of his stock profile worldwide and territory by territory. “SmartCount takes the heavy lifting out of the reporting in terms of saving time and creating efficiency,” said Pat.
“At the click of a button, Steve can view the full estate data, highlighting known and unknown loss across each country, region, and store. The SmartCount platform has rigorous rules in place to help ensure accuracy, and the technology drives integrity throughout.”
The delivery logistics of the handheld scanners is also a key selling point that helps deliver the high NPS metric. “This has been our business for over fifty years because self-directed stock inventory is in our DNA. We deliver the solution to The Body Shop via the USA and via Heerenveen, Netherlands, and we have a good process in place to deliver and return our kit in a timely and controlled manner. It is a seamless operation,” Pat added.
Less is certainly more when it comes to The Body Shop and its wider risk profile in its attempts to be a better corporate citizen. It has a light touch on physical interventions but a steadying hand on overall business control, allowing the enterprising entrepreneurial environmentalists who run the stores—both at their own brand stores and franchisee stores—to be their own bosses and strive to be the best that they can be with a little guidance from the centre.
Beauty may be in the eye of the beholder, but unsightly business blemishes can only be removed by a triple bottom line approach that addresses the wider societal challenges such as equality and inclusion.
