Earlier this year The Body Shop, the campaigning heath and beauty company, announced it was to be acquired by French luxury goods manufacturer, L’Oreal. To many, this represented a sell-out of tragic proportions. The Body Shop had been a trailblazer among UK ethical brands, and Anita Roddick, its co-founder (with husband Gordon), was one of few visible and well-known advocates of the notion that business could and should be socially responsible. It was of this version of the capitalist model, often referred to as “social enterprise” that Anita was “poster child”.
Tragedy turned to disaster, as it emerged that L’Oreal was itself 26% owned by Nestle. In the food industry, Nestle has been a lightning rod for criticism by “socially responsible” investors due to a range of practices, particularly in the less developed countries. Anita’s protests that she would change L’Oreal from within sounded optimistic at best—if not naïve or even cynical. The Guardian newspaper reported that since the announcement of the acquisition The Body Shop’s ethical rating has fallen from X to Y since the announcement.
Knocking the rich is good sport, the question is whether those of us with a strong interest in the growth of social enterprise should mourn or rejoice at the cashing in of the Roddick chips. There seems a strong for celebration for supporters of social and ethical enterprises willing to take a dispassionate view of events, based on several factors.
First, there is a very strong and unmet demand for capital amongst UK social enterprises. One reason for this is the simple absence of big success stories. Apart from the Body Shop, where is there another example of a UK social enterprise that has been a big win for investors? There have been innovative models, which result in much social good (e. g. The Big Issue)—but few have made people rich. One possible exception has been Green & Black’s, which, like the Body Shop, has suffered much criticism since its sale in 2XXX to Cadbury’s. And the Body Shop has been immensely successful…just ask the garage owner/family friend who lent Gordon and Anita £8,000 (after many banks had turned them down) and is now sitting with 21% of the proceeds of this £xxx million sale.
Such stories fire the imagination (and fuel the greed) of potential angel investors into social enterprises in the same way the astonishing returns to early backers of Ebay, Amazon, Google and others encouraged the massive growth in US venture capital investing. There may yet come a day when investors are willing to part with meaningful sums of cash for social purposes alone, and this pool of capital is growing. But it is still meagre in comparison with the need.
The second cause to be jubilant at the enrichment of Gordon, Anita and their early “angel” is that most of their cash is likely to be recycled into social enterprise and the charitable sector. They are on record as saying they will give most of their money away. If we consider what they have done to date with their salary and dividend income there are further grounds for encouragement.
Over the course of the past two decades the Roddicks have backed social enterprises, charities or campaigns in such diverse fields as organic food, third world development, conflict resolution, environmental protection, ethical sourcing, human rights, etc. They have also been backers of many of the best-known UK social enterprises including Freeplay, the manufacturer of windup and solar radios, sold predominantly in the third world, and the aforementioned Big Issue, a pioneer in helping the homeless. While Anita has been the public face of the duo, Gordon has provided not only cash, but also valuable time and expertise to many budding British social entrepreneurs. The idea of this wealthy couple, slipping off to a quiet and comfortable retirement on the back of their millions is laughable. More importantly, the sale of their stake in the Body Shop represents a windfall to the social sector.
Taking shots at the successful is a great pastime. Finding inconsistencies in those we perceive to be a bit sanctimonious can be a source of great delight. By identifying the flaws in “the great and the good” we can feel better about our own shortcomings (hey, these guys are really no better than me!). But while engaging in this sport those of us who care genuinely about the growth of ethical business need to put forward the positive arguments as well when our most successful social entrepreneurs cash out.
First Published in The Guardian in June 2006.