Article Accuses Retailer of Ethical Lapses
In an article that caused a furor long before its publication, a magazine has accused the Body Shop of trying to sell moldy eye gel, fabricating the exotic origins of some toiletries and other ethical lapses.
An early draft of the article published Thursday in Business Ethics magazine recently led a U.S. ethical investment fund to unload 50,000 shares of the British-based company. Speculation about the accusations has led company stock to plunge in Britain.
The article by free-lancer Jon Entine says that company founder Anita Roddick’s first business partner, cosmetologist Mark Constantine, and Janis Raven, a public relations expert, say the company made up stories about its products: cocoa butter inspired by Hawaiian natives, peppermint foot lotion mixed on request of the London Marathon, among others.
The article also claimed that franchisees around the world had problems getting the Body Shop to take back spoiled products, such as moldy Elderflower Eye Gel reported by former Asian head franchisee Anne Downer.
A company official wrote Downer that the product, though moldy, was unaffected and still safe for use, according to the magazine.
The Body Shop issued a statement Thursday calling the piece “recycled rubbish,” a “mishmash of defamatory and actionable falsehoods” and said it will defend its reputation and is reviewing its legal position.
The Body Shop has had its defenders, including Ralph Nader and Ben Cohen of ice cream company Ben & Jerry’s Homemade Inc. Nader said Entine has “inclinations toward fiction.”
Cohen resigned from Business Ethics’ editorial advisory board after threatening to do so if the article was published.
The furor erupted two weeks ago when the Financial Times newspaper reported that the U.S. ethical investment fund Franklin Research & Development Corp. unloaded 50,000 shares of Body Shop stock amid concerns that upcoming criticism of the company would hammer the share price.
The story said Franklin Research’s decision was based on information it saw in a draft of the magazine article.
A senior vice president of Franklin Research, Patrick McVeigh, later said in a letter to the Financial Times that although his group was researching a report on the company’s ethical performance, it may buy back stock later.
Shares in London rose 12 cents on Thursday to close at $3.36, but they remained below the price of $3.63 they commanded about the time the British news coverage began.
