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The Body Shop Values

Report – Towards Integrated


Stakeholder Auditing Maria Sillanpää

ABSTRACT. All the available evidence suggests that be managed in a spirit of continuous improve-
companies which are run with a view to the long ment, where all participants may challenge rules
term interests of their key stakeholders are more likely and norms, learn from failure and invent new
to prosper than those which take a short term, “share- ways of working. The Japanese refer to this as
holder first” approach (Wheeler and Sillanpää, 1997). Kaizen. In the most successful companies, a
Indeed it is the central premise of this article that
culture of creative, continuous improvement does
forces of economic globalisation and developments
in the technology of mass communication will make
not abolish the need for control systems, corpo-
stakeholder inclusion an increasingly essential com- rate policies and manuals; but absolute reliance is
ponent of corporate strategy in the 21st century. Put no longer placed on them.
simply, companies, like governments and other estab- The first approach draws on Taylor’s Principles
lished institutions, need to listen, to process and to of Scientific Management which were based on
respond positively to the values and beliefs of their a belief that, in the newly mechanised industries
stakeholders – most especially their customers, of the early 20th century, efficiency flowed from
employees and investors. Failure to do this will reduce precision in job design, clear division of respon-
competitiveness and increase the risk of corporate sibilities and tight policing of implementation
demise. (Taylor, 1911). Taylorism (and its industrial
apotheosis Fordism) was wholly consistent with
notions of the organisation as a “military
The business case for stakeholder inclusion machine” first developed by Frederick the Great
of Prussia, and later refined by Henri Fayol
The effective management of business issues such (1949). Taylorism also embraced theories of
as product quality, learning (knowledge transfer) division of labour first expounded by Adam
and human resource management, may be Smith in the context of his mythical pin factory.
achieved in one of two ways. They may be done In each case the customer is simply a consumer
top down, based on the development of detailed and the employee a cog in an industrial machine.
process prescriptions and individual job specifi- During the early twentieth century, the results
cations and accomplished within a “command of implementing the Taylor model were
and control” framework. Alternatively they may profound. Mechanisation and top down control
of output and quality led to massive increases in
Maria Sillanpää (M.Sc.) is Ethical Audit Team Manager productivity in certain industries, but the human
at The Body Shop International plc and Industrial cost was significant. At one point Henry Ford’s
Research Fellow at Kingston University, Centre of
assembly lines had an annual employee turnover
Stakeholding and Sustainable Enterprise. Her current
doctoral research explores the concepts of learning organ-
of 380 per cent.
isations, complexity and dialogue-driven approaches to The second approach draws on the more
corporate social responsibility. She is a council member sensitive management theories first pioneered by
of the Institute of Social and Ethical Accountability and Elton Mayo. His now famous Hawthorne Studies
sits on the board of the U.K. government-sponsored demonstrated the importance of informal work
Ethical Trading Initiative. relationships and manager-employee communi-

Journal of Business Ethics 17: 1443–1456, 1998.


© 1998 Kluwer Academic Publishers. Printed in the Netherlands.
1444 Maria Sillanpää

cations (Mayo, 1933). Mayo’s work was rein- competitive and dangerous, that firms’ contin-
forced after the second world war by researchers uing existence depends on their day to day
such as Abraham Maslow, Frederick Herzberg mobilisation of every ounce of intelligence”
and Douglas McGregor, all of whom explored (Canon, 1996).
human relations at work: how to cater for basic Today, eleven out of the world’s top 20 indus-
human needs whilst providing for motivation trial firms are Japanese and they have an enviable
through personal development and recognition reputation for product quality, customer satisfac-
(Crainer, 1996). tion and employee loyalty. But caring about
Later, the concept of continuous improvement customers and workers as well as investors is not
in product quality demonstrated the need for only a far-eastern phenomenon. The modern co-
employee empowerment and involvement in operative movement was, after all, a British
problem solving – a development based on the invention (Rochdale, Lancashire circa 1844). And
work of American academic W. Edwards Deming stakeholder-friendly British firms like Rowntree,
but turned to most powerful effect by com- Cadbury, Whitbread and Pilkington thrived in
panies in the Far East (Oakland, 1996). the middle years of the industrial era (Canon,
Finally, through a coincidence of human 1992).
resource development thinking and quality Established U.S. firms like IBM may have had
management thinking, we arrived at the 1990s their ups and downs, but they pioneered novel
concept of the learning or “knowledge creating” and effective systems of employee and manage-
organisation (Senge, 1990; Nonaka and Takeuchi, ment development. Drucker described Thomas
1995). In this model, everyone in the firm is a Watson’s IBM of the 1930s as creating “the social
problem solver and an enhancer of systems. organisation and the work community of the post
Everyone is a potential creative force to be industrial society”. In their best selling book Built
developed and nurtured, and the firm is a more to Last (Collins and Porras, 1995), Collins and
fluid entity allowing for personal growth to be Porras tracked the commercial performance and
combined with organisational effectiveness and organisational resilience of 18 “visionary” com-
competitive success. Most importantly, the firm panies nearly all of whom were U.S.-based. They
itself should be focused on a wide range of found that not only did these companies invest
stakeholder interests and needs. heavily in employee training, knowledge transfer
It is common to quote far eastern high and alignment of organisational values, they also
technology companies as leading exponents of outperformed the stock market by an average of
quality management and organisational learning. 15 times.
Indeed it was electronics magnate Konosuke In a study conducted by Kotter and Heskett,
Matsushita who famously challenged the Western it was found that over an eleven year period,
industrial model of organisation thus: “We are large established U.S. companies which gave
going to win and the industrial West is going to equal priority to employees, customers and share-
lose out; there’s not much you can do about it holders delivered sales growth four times and
because the reasons for your failure are within employment growth eight times that of “share-
yourselves. Your firms are built on the Taylor holder first” companies (Wheeler and Sillanpää,
model, and even worse, so are your heads. With 1997).
your bosses doing the thinking while the workers Yet stakeholder-exclusive behaviour, although
wield screwdrivers, you’re convinced deep down terribly damaging for the individuals, companies
that this is the right way to run a business. For and communities decimated by the corporate
you the essence of management is getting ideas restructuring of the 1980s, persists. It represents
out of the heads of the managers and into the a flirtation with short termist “shareholder first”
hands of labour. We have gone beyond the Taylor fundamentalism which totally ignored the
model. We realise that business has become so experience of successful stakeholder inclusive
complex, the survival of firms so precarious, and enterprise over the last two hundred years.
our environment increasingly unpredictable,
The Body Shop International 1445

Two basic principles of stakeholder Co-operative Bank and Levi Strauss social
inclusion responsibility forms part of the equation for
stakeholders. For The Body Shop and Ben &
If stakeholder inclusion is to become the norm Jerry’s Homemade, public political campaigns on
in business, how may successful stakeholder- environmental, animal welfare and human rights
inclusive experience be captured and systema- provide a unifying force.
tised? Wheeler and Sillanpää suggest that two In summary, aligning values requires two active
basic principles of stakeholder inclusion are commitments: i) a commitment to share per-
common to many successful mainstream corpo- spectives and beliefs via dialogue and effective
rations in North America, Europe and Japan (e.g. communication; and ii) a willingness to allow
IBM, Hewlett-Packard Motorola, S. C. Johnson, collective values to develop and evolve – again
BT, Daimler-Benz, Matsushita and Sony). These via active dialogue. Values which are articulated
principles have been successfully applied over top-down or which are cast in tablets of stone
many years but not necessarily in an overt way. are by definition non-inclusive and will inevitably
At their heart is a commitment to listen and become ossified.
respond to stakeholder needs and beliefs.

Dialogue-based empowered relationships


Alignment of values
In recent years there has been a deluge of man-
The literature on quality management is littered agement literature and handbooks explaining
with examples of companies which have rescued how to deal with the accelerating pace of change
themselves from mediocrity by establishing a of business (Cannon, 1996; White, Hodgson and
reputation for product quality (e.g. Oakland, Crainer, 1996; Peters, 1992). The forced flat-
1996). Japanese electronics, automobile and tening of organisational structures in the 1980s
motorcycle companies adopted a single minded has required a new type of leader and senior
approach to quality in the 1950s and 1960s which manager to emerge – people who can deal with
turned a post-war international reputation for chaos. The rapidly globalising economy only adds
cheap, poor quality goods to one of unparalleled to the complexity and uncertainty (Bryan and
reliability and performance by the 1970s. Farrell, 1996).
Japanese companies with a quality focus have One way to make sense of chaos is to base
engineered a seamless alignment of product decisions on the maximum amount of available
quality from the suppliers of components, information. The only sure way to secure infor-
through the firm and its employees, through mation is to actively request it. In the case of
distributors to the customers. Today, no one is in key relationships with stakeholders this means
any doubt what a product from Honda or Sony regular conversations, focus groups and opinion
represents. surveys. It also means that the firm must organise
Similar value chain alignment has been itself to be receptive to inputs of opinion. In this
achieved in the retail sector where exceptional context there are few more important sources of
service is twinned with guarantees on product knowledge and advice than the company’s own
quality. Wal-Mart (U.S.) and Tesco (U.K.) are employees.
exemplars of this approach, out-performing com- Table I sets out some trends in organisational
panies which have concentrated more tradition- behaviour which may be observed in modern
ally on product value for money. businesses. The trends are being driven largely by
The point here is that perceived “value” may macro-economic and technological factors. The
go well beyond physical and technical notions best companies are responding and embracing
of product or service quality. Other, less tangible both the forces and the organisational behaviours
values can be offered for customers, employees, needed to harness them. Nearly all are predicated
suppliers and investors to unite around. For the on inclusive, dialogue-based interactions between

1446 Maria Sillanpää

TABLE I
Trends in organisational behaviour

Employer directed companies Usual Employee inclusive companies



Trend

Organisational goals emerge from leadership  Organisational goals are articulated through
language of shared values and vision
Authority derives from position  Authority derives from behaviour and intellect
Influence increases with seniority  Influence increases with knowledge
Organisational structure dictates work  Organisational structure liberates and encourages
relationships team working
Work systems linear and technical  Work systems cyclical and organic
Style formal or uniform  Style informal or diverse
Responsibility devolved vertically  Responsibility shared laterally
Corporate objectives agreed by leadership  Corporate, team and individual objectives aligned
and cascaded through dialogue

Reproduced from The Stakeholder Corporation, Pitman.


Source: Wheeler and Sillanpää, 1997.

the firm, its managers and its (empowered) Shop’s experience in developing and imple-
employees. menting a social audit methodology, aimed at
As a result of a study of 580 U.K. companies, ensuring continuous improvement in the
the Industrial Society concluded: “It is becoming company’s stakeholder relations as well as
a competitive disadvantage not to be moving ensuring greater external accountability and
significantly towards empowerment, although transparency for its social performance and wider
there will always be organisations that manage societal impacts.
to survive with the ‘command and control’
approach. But you can only empower people
when everyone shares a very strong vision of The Body Shop approach to social auditing
what the organisation needs to be like. That
usually means you have to be explicit about the The methodology development work for The
organisation’s values” (Industrial Society, 1995). Body Shop social audit first commenced in 1993
A dialogue-driven approach is needed to and was formalised for the first audit cycle of
nurture empowered stakeholder relationships. 1994/95. The aim was to synthesise some aspects
The good news is that stakeholder dialogue can of environmental management and auditing,
be systematised using relatively simple techniques quality management and the long tradition of
of information capture and communication. academic and practical work in social auditing.
Moreover, it is possible to link processes of stake- The commitment to social auditing followed
holder dialogue and inclusion with management successful experience in implementing audit
systems designed to secure continuous improve- programmes for environmental protection and
ment in product quality, human resource and health and safety at work, as well as ingredient
safety management as well as individual learning monitoring programmes for animal protection.
and development. In the case of environmental audits, The Body
The rest of the article focuses on The Body Shop elected in 1991 to follow the European
The Body Shop International 1447

Union Eco-management and Audit Regulation indicators, stakeholder consultation, internal


(EMAS) as the most rigorous framework avail- management systems audit, preparation of
able (Wheeler, 1992). Since 1992, the company accounts, agreement of strategic and local targets,
has published five independently verified envi- verification, publication of statement and internal
ronmental statements (The Body Shop Inter- reports, and follow-up dialogue with stake-
national, 1992, 1993, 1994, 1996, 1998). holders.
In January 1996, The Body Shop published its The following describes each step briefly in
first integrated document of its ethical perfor- general terms and provides examples on how
mance called The Values Report 1995. The these steps relate to the company’s first two audit
report comprised of three statements on the cycles of 1994/95 and 1995/97.
company’s performance on environmental,
animal protection and social issues. Each state-
ment had an element of independent verification Commitment and leadership
in line with established best practice. The pub-
lication also included a paper “The Body Shop The Body Shop committed itself to a formal
Approach to Ethical Auditing” describing the social audit process in 1993. This followed pub-
methods underpinning the three reports. In lication of Anita Roddick’s autobiography in
January 1998, the company published its second 1991 in which she wrote: “I would love it if
integrated Values Report. every shareholder of every company wrote a
However, since the focus of this paper is on letter every time they received a company’s
the Social Statement, the framework presented annual report and accounts. I would like them to
below outlines the different components of the say something like, ‘OK, that’s fine, very good.
social audit methodology as implemented by The But where are the details of our environmental
Body Shop. The audit cycle consists of ten key audit? Where are the details of your accounting
components, namely: policy review, determina- to the community? Where is your social audit?’ ”
tion of audit scope, agreement of performance (Roddick, 1991)
Leadership and commitment

Review or adoption of policy

Publication of statement and Determination of


follow-up dialogue with scope of audit
stakeholders

External verification Agreement of


and certification indicators

Stakeholder
Agreement of objectives consultation

Preparation of accounts
and internal reports Stakeholder surveys

Internal audit

Figure 1. Framework for social auditing and disclosure at The Body Shop.
1448 Maria Sillanpää

There is no doubt that had it not been for the safety and health at work for employees (usually
commitment of the founders of the company and very well documented) to customer service
the development of an “accountability ethos” (frequently expressed more through a company’s
within The Body Shop in the early 1990s, the culture than through any formalised system).
company would not have been in a position to There may be dividend policies for shareholders,
publish a statement of its social performance in payment terms for suppliers, codes of ethics for
1996. As with environmental management and company representatives working overseas, and
auditing, clear leadership is probably the most so on. Clear policies help provide a framework
important single factor in driving a process of for assessing the quality of a company’s relation-
social auditing and disclosure to a successful ships with its stakeholders. Before any assessment
conclusion. or audit of social relationships, a company should
be aware of its explicit and implicit intentions
with respect to each stakeholder group.
Policy review For The Body Shop’s first social audit, the
main policies against which performance was
In every company there will be a variety of judged were the company’s Mission Statement
formal and non-formal policies which prescribe and Trading Charter (Insets 1 and 2). More
the organisation’s intentions with respect to its specific policies and guidelines existed for health
stakeholders. These may range from occupational and safety at work, human resources (managers’

Inset 1. The Body Shop Mission Statement.


The Body Shop International 1449

Inset 2. The Body Shop Trading Charter.

and employees handbooks) and Fair Trade Figure 2 outlines The Body Shop’s ethical
(Community Trade programme). These were also policies which underpin the ideals expressed in
used as the basis for assessing the ability of man- its Mission Statement.
agement systems to deliver on policy commit-
ments.
1450 Maria Sillanpää

Memorandum of Association

Mission Statement

Trading Charter

Human and Environment


Animal Protection
Civil Rights Sustainability

Statement of Bill of Rights Health and Against Animal


Environmental Endangered
Principles on for Staff Safety Animal Derived
Policy Species
Human Rights Policy Testing (AAT) Ingredients
Policy
Policy Policy

Managers Health and Environmental AAT


Fair Trade Handbook Safety Procedures
Guidelines Guidelines
Guidelines Manual

Employee Site Specific Site Specific


Handbook Health and Environmental
Safety Procedures
Procedures

Figure 2. Guide to The Body Shop International ethical policies.

Determination of audit scope choosing to concentrate mostly on U.K.-based


groups in the first cycle. So although some
Because parallel systems exist at The Body Shop information was gathered with respect to U.S.
for auditing and reporting on ethical perfor- franchisees and customers it did not constitute
mance with respect to animal protection and the the systematic effort that was devoted to the U.K.
environment, the subject area of the social audit social audit process.
was restricted to people: human stakeholders The last factor to be taken into account in
who may affect or be affected by The Body scoping a social audit is the level to which
Shop. The number of individual stakeholder indirect stakeholders may be embraced. For The
groups could theoretically be quite large and a Body Shop this required a decision about
decision had to be taken as to which groups whether, for example, staff of franchisees or non-
should be included in the first and subsequent governmental organisations in franchised markets
audit cycles. The Body Shop took the view that should be consulted. It was decided that such
in the first cycle, the net should be cast as wide stakeholders were better consulted directly at
and as deep as possible. But inevitably some such a time when franchisees were able to
groups and sub-groups could not be reached for conduct their own audit processes.
practical reasons. The stakeholder groups for The Body Shop’s
Another important factor in the scoping of a first social audit included:
social audit is geography. Where a company has
wholly or majority-owned operations in different • Directly employed staff by The Body Shop
countries, a decision has to be taken as to International
whether one or all countries are to be covered • International head franchisees
in each cycle. For The Body Shop this meant • U.K. and U.S. local franchisees
The Body Shop International 1451

• U.K. and U.S. customers 2. Stakeholder perception of performance


• Suppliers against core values (i.e. The Body Shop
• Community trade suppliers Mission Statement and Trading Charter).
• Shareholders These core values are essentially defined by
• Local community (Littlehampton) the organisation itself. Each stakeholder
• U.K. non-governmental organisations group is consulted to establish their per-
• Foundation applicants. ception of how closely the organisation’s
performance matches its stated aspirations.
3. Stakeholder perception of performance
Agreement of performance indicators against specific needs of stakeholders. These
needs are particular to individual stake-
There are three types of performance measure- holder groups. They are identified as salient
ment in The Body Shop’s approach to social through consultation with stakeholders in
auditing. They are: focus groups and measured in anonymous
and confidential surveys of opinion.
1. Performance against standards (performance
indicators). These should reflect nationally
and internationally available information on Stakeholder consultation
best practices for activities and policies that
describe the organisation’s social perfor- Qualitative measures are arguably the most
mance. Measures may be both quantitative important barometer of human relationships. An
and qualitative. Standards are agreed with employee who feels he or she is treated fairly may
relevant departments which then have the tolerate quite severe challenges in the workplace
responsibility for collecting relevant infor- but retain his or her loyalty and commitment. A
mation. Data are submitted by the depart- customer whose complaint is fixed without
ments and validated by the audit and quibble or debate may feel even better about a
verification processes. company than if the product never disappointed
Where appropriate, departments are in the first place. For effective stakeholder inclu-
encouraged to set internal benchmarks/ sion, perceptions are reality. A misunderstanding
targets relating to individual standards, and is no less damaging to a relationship regardless
to collate information on external bench- of whether the company or the stakeholder is to
marks. Therefore, the ideal set of reported blame.
information relating to individual standards Few major companies eschew market research
should evolve towards the following format with customers. Indeed for many organisations
(see Table II). this is their most significant investment in stake-
Where data are available, historical data holder inclusion. In order to systematically
on performance indicators should be measure the perceived quality of relationships
reported at least for the preceding audit between other stakeholders and the firm, tech-
cycle. niques similar to market research need to be

TABLE II
Ideal format for reporting performance indicators

Standard Performance Indicator Internal Benchmark/target External Benchmark

e.g. Employee Based on on-going internal Based on target-setting by Based on publicly available
turnover monitoring; data and monitoring relevant department or data on e.g. industry
process subject to internal company performance
audit and verification
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deployed. In our experience, focus groups and The internal management systems audit
large scale confidential surveys of opinion where
the questions themselves are co-designed in focus There were three main sources of information
groups with stakeholder representatives can be for The Body Shop’s first audit process: i) the
applied to almost any relationship. results of the focus groups and surveys described
Engaging stakeholders in direct dialogue is one above; ii) the documentary information provided
of the most important and sensitive processes in by departments which had agreed quantitative
social auditing. It is especially important to and qualitative standards; and iii) the output from
identify salient issues for each group in face-to- confidential internal audit interviews with staff
face conversation before conducting wide-scale and managers. This latter source of information
surveys of opinion. The Body Shop’s first social was based on the kind of “management systems”
audit engaged stakeholder groups in focus groups structured interviews used in environmental and
to explore specific stakeholder needs and to allow quality management auditing. Checklists were
stakeholder views and concerns to be expressed. developed specifically for the purpose of the
To ensure open dialogue in the discussion, it was interviews and results used to build up a dynamic
considered important, especially for the initial picture of departmental handling and knowledge
stages of the process, that the verifiers had access of issues and company policies relevant to social
to the process as observers. performance.
Following the focus groups, when specific During 1996/97 the internal management
issues had been identified as salient or of partic- systems audit was further developed toward an
ular interest to stakeholders, questionnaires were integrated methodology whereby individual
designed to measure more wide-scale opinion. departments were audited on management
These questionnaires were intended to capture systems relating to the company’s policies on
perceptions of the company’s performance against environment, animal protection, human
both stakeholder-specific needs and core values resources, communications, occupational health
articulated by the company. and safety, information management and other
Questionnaires were designed with profes- relevant ethical issues.
sional assistance to avoid inadvertent introduc- The audits result in time framed action plans
tion of bias. Space was also allowed on the prioritising recommendations for proposed
questionnaires themselves for open-ended com- improvements. The audit reports as well as
mentary on the company’s performance. documentation relating to the auditing proce-
Surveys were done using the largest manage- dures are made available to external verifiers. The
able sample size; respondents completed the management systems audits are conducted by a
questionnaires anonymously and returned them semi-independent audit team which reports
to an independent organisation for confidential direct to the company’s Executive Committee.
analysis. Only summary information and lists of Management audits are sometimes based on
comments were submitted to The Body Shop for professional codes and standards; this is especially
inclusion in the audit process. true of financial audits. With stakeholder rela-
Following publication of the results of the tionships and social performance there are as yet
social audit, it was considered vital to obtain no professional or accredited international stan-
feedback from stakeholders and engage them in dards, although groups such as the Institute for
follow-up dialogue about how they reacted to Social and Ethical Accountability are working
the findings presented in the Social Statement. towards them.
This process of dialogue helps shape future audit
cycles, enables indicators and data presentation
to be fine tuned for future cycles and helps set Preparation of accounts – the Social Statement
priorities for future action by the company.
The format chosen for The Body Shop’s first
Social Statement was based on a stakeholder
The Body Shop International 1453

model, with each group given its own section should be in future cycles. The external verifi-
within the report. An introductory section gave cation process should have an influence on the
a general explanation about the scope of the tone, format and style of the Social Statement.
social audit and how the information had been The extent of this influence is guided by the
compiled and what assumptions were used. The verifier.
company founders also gave their overview in a The Values Report 1995 consisted of three
Foreword thereby setting a tone to the separate statements on the company’s social,
document. environmental and animal protection-related
Each stakeholder section then followed a performance respectively. In an attempt to
common format: develop the companies reporting towards greater
integration, the 1997 report comprises of a single
1. The basis for the company’s approach and
document, structured throughout in a stake-
aims for each stakeholder group (with
holder-driven way, each stakeholder section
reference to relevant policies etc.) as well
reporting on those aspects of environmental,
as basic information about the stakeholder
animal protection and social performance most
group (e.g. size, structural/contractual rela-
salient to a particular stakeholder group. Each
tionship to the company).
stakeholder section took the following format:
2. The methodology used for each consulta-
tion process (i.e. what combination of focus 1. The basis for the company’s approach and
groups, surveys and discussions were used aims for each stakeholder group (with
to capture stakeholder perceptions). reference to relevant policies with special
3. The results of stakeholder consultation with reference to policy developments within
perception surveys described in as even- the audit cycle).
handed and neutral a way as possible so as 2. A report on progress toward social audit
to avoid premature interpretation, together strategic targets and “Next Steps” com-
with direct quotations from stakeholders mitments made in the Social Statement
selected in an independent fashion. 1995 and progress toward environmental
4. Quantitative and qualitative standards of and animal protection strategic targets set
performance where these existed. in respective statements.
5. A company response in the form of a quote 3. The methodology used for each social audit
from a board member or senior manager consultation process (i.e. what combination
setting out their reaction to the audit results of follow-up dialogue, focus groups,
and noting where progress is already being surveys and discussions were used to
made and/or where improvements were capture stakeholder perceptions).
clearly required (“Next Steps”). 4. The results of stakeholder consultation,
including: information on follow-up
The above format was based on the assumption
dialogue; results of consultation exercises;
that by setting out the accounts in this way
and, results of perception surveys where
promotes the dialogue process and allows stake-
applicable.
holders to take a view on the adequacy or oth-
5. Quantitative and qualitative standards of
erwise of the company response. In order to
performance relating to environmental,
make the follow-on dialogue process efficient,
animal protection and social performance.
stakeholders receiving the Social Statement were
6. A company response in the form of new
encouraged to complete a response card and
targets in response to audit results.
attend a discussion with representatives of the
company.
The final components of The Body Shop’s first Agreement of strategic and local objectives
Social Statement were a verification statement
and a summary chapter on those stakeholders As with environmental auditing and reporting, a
who could not be included in the cycle, but very important part of the process is to set
1454 Maria Sillanpää

strategic objectives for the business which can ronmental management and quality. Based on
help clarify the future priorities of the company The Body Shop’s experience it is also of
and unite all stakeholders behind a common enormous value in assessing and improving the
purpose. Setting strategic objectives and placing quality of relationships with stakeholders.
these in the public domain requires a significant Organisations such as the U.K.-based think tank
amount of internal discussion, management com- New Economics Foundation have pioneered
mitment and senior “sign-off ”. techniques of “social audit” verification with
Target setting provides perhaps the key some success. It involves, for instance, docu-
leverage for continuous improvement in any mentation review, testing the veracity of numer-
auditing and public reporting context. The Body ical accounts, examining the integrity of internal
Shop has had a formal target setting programme management and audit systems and ultimately
within its environmental management system signing off on the accuracy of published reports
since 1992. Both local and strategic targets have as “true and fair” accounts. It has also proven
been set based on audit findings and progress useful for the verifiers of a social/stakeholder
reported on in public statements. Similar target audit to convene advisory panels of experts in
setting programmes were established for animal particular stakeholder perspectives to comment
protection and stakeholder-related performance on the scope and adequacy of draft public
respectively when audit methodologies were accounts.
established for these during 1994/95.
Strategic objectives must also be underpinned
by subsidiary or localised objectives which apply Publication of statement
more specifically to individual stakeholder
groups. The latter are in some ways simpler to The Social Statement needs to be a true and fair
negotiate because they involve fewer decision- picture of the social impacts of the organisation,
makers at the corporate level. However, the in so far as the defined scope of the audit allows.
endorsement and support of the company board It needs to be comprehensive and systematic, but
and central management committee are essential above all be understood. Because of the complex
if more localised objectives are to be executed nature of a social audit and because of the variety
speedily and efficiently and kept in line with of stakeholder needs for information, a multi-tier
wider business goals. approach was adopted for the publication of The
As mentioned earlier, the Social Statement Body Shop’s first Social Statement. The full
1995 included a response from the relevant board statement was published based on the approved,
member or senior manager to each stakeholder verified accounts and made available to all stake-
section. All in all, 89 specific “Next Step” com- holder groups.
mitments were made together with seven In addition, more detailed information was
company-wide strategic targets. The Values provided to employees on specific results relevant
Report 1997 reports on progress towards these to them and their part of the company. A
targets. The external verifiers assessed the summary document of all the ethical statements
company’s claims towards these targets. The 1997 was produced for wider scale distribution
statement includes 97 new targets relating to the alongside even briefer material appropriate for
company’s stakeholder/social performance as well customers and other large audiences. In each case
as 10 integrated targets where stakeholder/social readers were made aware of how they could
performance forms a component part. obtain more detailed information. The full Values
Report was also launched on the Internet.
Similarly, in 1997 a summary report – The
Verification Road Ahead – was published aimed mostly at
general audiences. A special broadsheet have also
As noted earlier, independent verification is now been produced for employees on the social audit
accepted practice in financial accounting, envi- results relating to them.
The Body Shop International 1455

Follow-up dialogue and internal reports improved communication and business decision-
making by those departments responsible for
Following publication of the results of the looking after individual stakeholder groups. The
company’s first social audit, stakeholders were Body Shop also believes that, in the future, fewer
invited to engage in follow-up dialogue in order mistakes will be made and less effort and
to obtain feedback on how they reacted to the resources expended on inappropriate business and
findings presented in the Social Statement. The stakeholder specific initiatives. In short, social
aim of this process is to help shape future audit auditing and reporting, is not just an ethically
cycles, enables indicators and data presentation desirable activity, it is also a driver for improved
to be fine-tuned for future cycles and help set effectiveness for the organisation and enhanced
priorities for future action by the company. inclusion and thus support from stakeholders.
The departments responsible for specific stake-
holder relations were encouraged to enter into
direct dialogue with stakeholder representatives. References
In some cases this dialogue has been facilitated
and/or attended by the audit team. The Values
Bryan, L. and D. Farrell: 1996, Market Unbound:
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1456 Maria Sillanpää

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E-mail: maria_sillanpaa@bodyshop.co.uk.