The recently agreed takeover of The Body Shop by French cosmetics
company L’Oreal has sparked fresh discussion about whether a
multinational can absorb a smaller company with an established
‘ethical’ name, and maintain that reputation.
The £652million ($1.1bn) takeover has provoked calls to boycott The
Body Shop from campaigners concerned about L’Oreal’s animal testing
record and a 26 per cent stake in it held by Nestlé, which has long
been criticized over its marketing of breast milk substitutes.
Such deals have become increasingly common in the past five years, with
Ben & Jerry’s taken over by Unilever, Stonyfield Farm by Groupe
Danone, and Green & Black’s by Cadbury Schweppes. The Body Shop,
which has more than 2000 shops in 53 countries, will continue as a
stand-alone business with its own head office, and Dame Anita Roddick,
its founder, will be retained as a consultant.
However, such assurances have failed to placate some campaigners, who
now see The Body Shop as a target. The Ethical Consumer Research Group,
which rates companies and publishes the results in Ethical Consumer
magazine, said its score for The Body Shop will fall from 11 out of 20
to 2.5, mainly because of L’Oreal’s animal testing and the Nestlé
shareholding, but also because it believes L’Oreal does not have strong
ethical policies in general. Baby Milk Action, which co-ordinates
international consumer action against Nestlé, has added The Body Shop
to its boycott list, as have other groups.
However, some feel the boycott calls are counterproductive. ‘Punishing
a social enterprise’s effort to mainstream ethical consumerism would be
to cut off our nose to spite our face,’ said Samantha Huddle, general
manager of Great Place to Work Institute UK. Giuliano Perseu, of the
Human Rights Institute at the Central American University in Nicaragua,
said: ‘We should be happy mainstream companies buy other companies
well-known for their ethical practices. It’s a sign that something is
changing for the better. This fundamentalist approach does not lead to
anything good.’
ECRG director Rob Harrison conceded that ‘campaigners are divided’ on
how to respond when companies that have built up an ethical reputation
are taken over, but said boycotts were a useful tool. L’Oreal is not
regarded as being in the vanguard of socially and environmentally
responsible businesses, but in 2004 German rating agency oekom ranked
it third in its sector, behind Henkel and Procter & Gamble. SRI
research firm Siri Company said L’Oreal ‘performs quite well’ on
sustainability.
L’Oreal is in the middle rank of large French companies in terms of
disclosing details of its social and environmental performance,
according to the Alpha Etudes consultancy (see page six).
In a related development, Colgate Palmolive is buying the US maker of
‘natural’ toothpastes Tom’s of Maine for $100m (£57m). Co-founders Tom
and Kate Chappell say they have an undertaking from Colgate to preserve
the company’s ‘character, spirit, and values’ and to continue an
existing policy of returning 10 per cent of pre-tax profits to the
community.
