Beauty Inspired by Nature: Can The Body Shop Continue to Deliver?
The Body Shop’s key ingredient producers are increasingly impacted by climate change. Can The Body Shop adapt its global supply chain to this “new environment” and continue to deliver natural, ethically-sourced products to its customers?
The Body Shop, a skin care and cosmetics company founded in 1976, sells more than 1,000 products across 3,000 stores in 66 countries [1]. Since inception The Body Shop has incorporated social and environmental responsibility into its mission, with a focus on promoting natural, ethically-sourced ingredients.
The Body Shop purchases a large portion of its key ingredients from small-scale farmers under its Community Fair Trade (CFT) program which ensures sustainable producer benefits such as minimum demand, fair price, and community development. The CFT program covers 25 supplier groups, mostly located in developing countries in tropical regions, that are responsible for producing 18 key ingredients included in 93% of the company’s products [2].
For example, The Body Shop has been sourcing sesame oil from a cooperative in Achuapa, Nicaragua since 1993 to use as a base ingredient in over 100 products [2]. In recent years Nicaragua has been experiencing more erratic and extreme weather events, leading to production challenges of various crops including sesame. Achuapa region’s sesame production was especially impacted during 2010 and 2011 when heavy winter rain caused plants to be more vulnerable to diseases, ultimately leading to significant crop losses [3]. Since many of The Body Shop’s producers are based in geographies that are likely to experience the strongest impacts of rising temperatures and fluctuating rainfall, climate change could present a material risk to the company’s overall supply chain and viability of product lines.
The Body Shop has made concerted efforts to prevent the potential disruption in production from climate change. In an effort to mitigate near-term supply shocks the company requires intermediate distributors to hold greater amounts of CFT inventory as a buffer. Moreover, the company has adopted a strategy in which it communicates demand forecasts with producers 12 months in advance and performs a mid-year review so that production problems, if present, can be addressed well ahead of time. It has also developed new environmental criteria for its CFT producers [3].
In addition, The Body Shop is committed to “protecting the planet” in the longer-term and has implemented changes across its supply chain to reduce the environmental impact. By 2020 the company “aims to reduce CO2 emissions, electricity consumption, and waste by 50% and domestic water consumption by 25%” from its operations through better energy management and elimination of unnecessary packaging [4]. Within its network The Body Shop is shifting towards a “hub-based distribution system” to reduce its carbon footprint including air freight, and is using recycled plastic and paper for packaging whenever it can, in addition to having eliminated 6% of its transport packaging [5]. Most interestingly, the company is planning to integrate sustainability into its product innovation process through its “Bio-Bridges” initiative which aims to regenerate 75 million square meters of forest land and endangered species. “Bio-Bridges” refer to biodiversity hotspots that are created by planting local species of trees in corridors of deforested land between healthy rainforests. The Body Shop’s goal is to not only restore forests but to also identify and utilize ingredients from these areas, such as the Andiroba nut, so that it could create a living for the locals and encourage them to sustain the locations [6].
While I generally agree with The Body Shop’s holistic approach towards combatting climate change there are additional measures that the company can take to better manage its supply chain. In the near-term, the company can work more closely with its CFT producers to leverage “climate-smart” agricultural techniques that increase productivity and resilience against weather events. For example, given the importance of freshwater access to farming operations The Body Shop can educate CFT producers on water conservation methods such as planting trees along streams and rivers and treating wastewater before it gets released back into channels. The company can also share ways to maintain healthy soil which is essential to keeping crops hydrated during dry periods [7].
In the longer-term, the company should expand their efforts outside of its own network to measure and reduce the carbon footprint of its supply chain partners such as its chemicals suppliers. One common chemical used in The Body Shop’s products is paraben, a widely used preservative in the cosmetics and pharmaceutical industry. The Body Shop should develop clear environmental criteria that it can use to evaluate and partner with paraben producers that share the company’s values on sustainability, thereby influencing industry participants to collaborate on creating a greener supply chain.
As The Body Shop continues to develop its green supply chain one open question I have is: how can The Body Shop work with other companies in the cosmetics industry, including upstream and downstream supply chain partners, to continue to promote sustainability?
[1] “The Body Shop”, Wikipedia, [https://en.wikipedia.org/wiki/The_Body_Shop], accessed November 2017.
[2] The Body Shop, “Community Fair Trade – The Human Dimension of Biodiversity”, UEBT Conference, April 2014, [http://ethicalbiotrade.org/dl/bsr_2014/04_11_Christina_Archer_Body_Shop_web.pdf], accessed November 2017.
[3] Thorpe J, Fennell S, “Climate Change Risks and Supply Chain Responsibility”, Oxfam Discussion Papers, June 2012, [https://www.oxfam.org/sites/www.oxfam.org/files/dp-climate-change-risks-supply-chain-responsibility-27062012-en.pdf], accessed November 2017.
[4] Crognoletti, Chiara, “Beauty with Heart: the Values Chain by The Body Shop”, Green Light for Business, July 5, 2014, [http://www.gl4b.org/2014/05/beauty-with-heart-values-chain-by-body.html], accessed November 2017.
[5] Brucher, Melissa, “The Sustainable Supply Chain of The Body Shop and the Company’s Approach to the Complexity of Fair Trade”, Cologne Business School, Summer 2015, [https://www.academia.edu/26253545/The_Sustainable_Supply_Chain_of_The_Body_Shop_and_the_Companys_Approach_to_the_Complexity_of_Fair_Trade], accessed November 2017.
[6] The Body Shop, “Announcing The Body Shop’s Bio-Bridges Initiative To Regenerate, Reconnect And Protect 75 Million Square Meters Of Forest And Endangered Species”, Cision PR Newswire, May 24, 2016, [https://www.prnewswire.com/news-releases/announcing-the-body-shops-bio-bridges-initiative-to-regenerate-reconnect-and-protect-75-million-square-meters-of-forest-and-endangered-species-300273845.html], accessed November 2017.
[7] The Rainforest Alliance, “5 Ways Farmers Can Combat Climate Change”, Global Citizen, September 30, 2016, [https://www.globalcitizen.org/en/content/5-ways-farmers-can-work-around-climate-change/], accessed November 2017.
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Thanks for your perspectives Syndie. Things that came to my mind:
1. Shift from brick and mortar to e-commerce and key sponsorships (to maintain brand recognition). Body Shop has established its brand over the years and this shift might make sense as it reduces the need for inventory and waste due to expiry of products further. It also reduces the carbon footprint in transportation throughout the supply chain.
2. Local sourcing: Using only products available locally to create its products which also reduces the carbon footprint. For example – use the sesame oil only in products available in Nicaragua and countries nearby and use other oils elsewhere.
3. Diversify products: Much like seasonal products, create a range of products and based on the output that year, switch to either an alternative ingredient or replace with a product which is utilizes the available supply. For example – If sesame oil is not available this year, could they use locally sourced olive oil instead?
4. Use upcoming technology: From better managing existing land to reducing water usage, there are upcoming technologies that Body Shop could consider investing in.
Source: https://www.forbes.com/sites/maggiemcgrath/2017/06/28/the-25-most-innovative-ag-tech-startups/#144be79e4883
Great piece. It seems that Body Shop is taking a pretty thoughtful and comprehensive approach to managing the climate change problem.
There are two main additional questions your essay made me think of:
1. Is there an opportunity here to partner with governments to help grow CFT program? The program’s focus on minimum demand/fair price/community development seem like things that would be the hallmarks of public policy. Perhaps there is a way to bring governments in on this, and provide thought leadership that helps them enact similar policies for other companies operating in their countries to have a greater net impact.
2. I wonder how the focus on modifying supply chain to reduce emissions will impact the customer experience, for better or worse. Will the shift to renewable power for its stores lead to changes in store layout? I think the aesthetic of its packaging is important for the body shop, so also curious as to whether there’s a risk that the company can go to far in removing packaging that it deems unnecessary and hurt the attractiveness of its products with customers.
Syndie – I thought this piece was well researched and thoughtful; I especially liked your recommendations for how Body Shop should expand its efforts in the long term. The concern that I have is around product quality. You give the example of Nicaragua as a source of sesame oil and explain that they’re experiencing weather issues but I’m not fully convinced that the Body Shop will be able to find other sources of necessary products that align with their mission at an appropriate price. Will the CFT buffer be sufficient or will they be forced to have to find potentially lower quality sources of raw materials that might even have inflated prices due to scarcity from climate change? In response to your closing thought around Body Shop working with other companies in the beauty industry, I do believe that companies can come together to mutually agree to using and selling sustainable products. Companies such as Glossier have already started this movement and I think that Body Shop, as a well established company, should help take the lead in this space given the brand equity they already have in beauty.
Really interesting article! I appreciate the point you raise about the Body Shop partnering with other cosmetics companies to have a greater impact. And, even further than just partnering to develop environmental criteria for sustainable sourcing, I wonder if there is a state of the world where this type of industry-wide collaborative could go a step further and actually provide suppliers with a portion or all of the funds needed to address the sustainability concerns? Or, perhaps the companies could partner with NGOs and/or governments to serve the same purpose by providing grants and/or subsidies? Regardless, I think the general combination of companies not only holding themselves to environmentally-based supply chain criteria but also actually helping their suppliers achieve these standards is a powerful one that has the potential to truly catalyze widespread change.
Very interesting read, Syndie. I am curious as to your thoughts on the financial impacts these moves will have on both Body Shop’s suppliers as well as the company itself. Given their supply chain is likely comprised of primarily smaller businesses – are these changes financially sustainable for these producers and at what cost will Body Shop have to bear to keep them afloat? It has certainly been shown that a majority consumers are willing to pay a premium for sustainable goods (https://www.nielsen.com/content/dam/nielsenglobal/dk/docs/global-sustainability-report-oct-2015.pdf), so Body Shop should market these intiatives and be able to pass some costs onto the consumers. This then raises the debate of who should pay for creating a more sustainable supply chain: corporations? consumers? or both?
Really enjoyed reading your essay. It seems like the Body Shop has made environmentalist a core component of its strategy and supply chain which is commendable. I think your question around working with other companies to promote sustainability is an interesting question. It could potentially partner with other players on initiatives similar to Bio-Bridges to further increase the impact. It could also evaluate and choose its supply chain partners based on their environmental-friendliness. There is also a question about how far the company should go in its mission. I think efforts like reducing the amount of transport packaging, which can also improve profitability, should definitely be pursued but the economic costs and benefits of some of these initiatives must also be considered.
Great article! The body shop’s approach is very interesting in terms of shifting its distribution into the hub-based distribution system. This can significantly reduce packaging wastes and bring efficiencies over distribution channels. Building Bio-Bridges is also an amazing strategy in terms of our generations’ long-term accountability.
In addition to Mark Twain’s comments, I also have a curiosity about long-term sustainability. Regarding the competitive landscape, competitors value either affordable price or functionality. As more players participate in the market, competitions become more fierce. I completely agree with a rationale behind the Body Shop’s vision, but it costs a lot. Can the Body Shop guarantee long-term sustainability within a high-cost structure? They are not social responsibility organizations. Do shareholders also support the decision?
I am struck by the extensive programs The Body Shop already has in place to reduce the environmental impact of its operations, and think The Body Shop needs to ensure it is communicating these initiatives to its customers, who will pay a premium for sustainable products. The tactic of holding additional inventory buffers at intermediary distributors seems like a viable short-term solution, although I am curious what costs, shelf-life, and other resource constraints could pose limits on its effectiveness. In the long-term, I am skeptical of educational programs, and believe that The Body Shop will need to invest in identifying, educating, and directly implementing measures (such as planting trees) to improve its CFT partners’ resilience against weather pattern changes.
Such an interesting read! I think Body Shop should first explore how much they can reduce the ingredients in their products to be at as minimal levels as possible whilst still giving the same benefit / scent. They can also explore cheaper substitutes to their ingredients. This will lead to new FDA registration and a slight change in the supply chain process but in the long term will help to reduce the amount of resource inputs and overall costs. In addition to educating local producers as mentioned by previous comments – I think they should also consider acquiring their own plantations to ensure constant supply of products and correct implementation of environmentally friendly approaches. They can also explore other global landscapes in which to invest and partner with local plantations.
In terms of their packaging, it is great that they are using recyclable materials. They can also explore reducing the thickness of their plastics and the variability in color on their packaging design as to reduce inputs and waste.
Syndie, lovely writing and thoughtful article! Your article thoroughly discusses the implications of climate chain on the Body Shop’s supply chain and some of the actions the company is taking to mitigate climate change risks. Something came to mind when reading your article, perhaps it makes sense for the Body Shop to use a comprehensive system which forecasts and records historical climate trends in its core sourcing areas and actively shares this data set with the CTF in order to help with future planting cycles and mitigate climate risk when possible. This could lead to a more targeted investment in more robust planting and farming technologies in geographies that look the most at risk for harvest problems due to climate change. A second-order consequence of this system might be a better management of CTF inventory and potentially a reduction in cost for the Body Shop if cost savings are realized by its supplying partner. Although this is far from the Body Shop’s core competencies it is extremely important to ensure continued availability of raw materials used in its goods.
Very thoughtful piece! While the Bio-Bridges initiative is radical and clearly necessary, its immediate benefit is fabulous PR for The Body Shop. The real intended benefits will take decades to be realized (a la IKEA’s deforestation-reversal initiatives). I am more interested in what The Body Shop (or any other company) is doing today to ensure sustainable practices that have fewer repercussions to the environment. I am heartened to see that it is developing a more holistic approach to combatting climate change such as “educating” farmers and suppliers. Though my hope is that the firm goes past mere education and gets its hands dirty in implementation.
“As The Body Shop continues to develop its green supply chain one open question I have is: how can The Body Shop work with other companies in the cosmetics industry, including upstream and downstream supply chain partners, to continue to promote sustainability?”
I agree with the assertion that The Body Shop, while cognizant of and responsive to the risks associated with climate change, should endeavor do more to ensure the beauty products industry as a whole adopts sustainable practices. The question of how to make upstream and downstream supply chain partners promote sustainability ultimately comes back to financial incentives. This shift towards sustainability will of course come with added cost, at least in the near-term, and hence the Body Shop will need to consider whether to increase retail prices or restructure margin distribution across the value chain, and if so, how. In addition, the Body Shop should consider lobbying industry associations as well as governmental agencies/regulatory bodies to push for more stringent sustainability standards, with penalties and/or credits given to companies that comply. Furthermore, consumers are increasingly interested in company’s supply chain practices when determining which products to purchase; as such, The Body Shop should set the standard for complete transparency in sourcing, leading the way for other companies to do the same (and perhaps reconfigure supply chain practices that could damage their brand if made public).