CSR Assignment Caa 090213

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B8009

Corporate Social Responsibility

Case Studies and Individual Project

Submitted By:

Heok Kay Liong, Benjamin

G1202284D



Assignment Submission Declaration

Nanyang Business School

Name: Heok Kay Liong, Benjamin

Matriculation No: G1202284D

Title: Case Studies and Individual Assignment

Course and Code: B8099 Corporate Social Responsibility

Lecturer/Tutor: Professor Richard Welford

Submission Date: 13th February 2013

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I declare that this assignment is my own work, unless otherwise referenced, as defined by

the NTU policy on plagiarism. I have read the NTU Honour Code and Pledge.

http://www.ntu.edu.sg/home/yclai/

Signed………………………………………. Date ……………………………. 13th

Feb 2013

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CASE STUDY 1: KELANI VALLEY PLANTATIONS (KVPL) AND HUMAN RIGHTS

1. What do you see as the ‘business case’ for protecting human rights and

putting in place programmes to assist the well-being of workers and their families?

A possible rationale for the protection of human rights and assisting the well-being of

workers and their families would be the internal benefits that it brings to the company.

A healthy and well-adjusted workforce will be more productive as less man hours are

lost to illness and child-care issues.

With better work conditions, worker will also be more motivated to stay in their jobs;

hence KVPL’s corporate social responsibility (CSR) practices will also have retention

benefits as well as less dissatisfaction among workers which may lead to work

stoppages or strikes.

By addressing social responsibility issues all the way down the value chain, KVPL is

also delivering a strong business case in terms of the monetary and non-monetary

values that it brings to the company. In differentiating itself from the competition

through its ‘A Home for Every Worker’ programme, KVPL is carving out a niche

market for itself. By marketing and promoting its goods as ethically produced, it can

then able to command a premium for its products. The monetary returns can then be

used to sustain the programme and further its human rights initiatives in the future,

completing this virtuous cycle of CSR practice.

Additionally, by protecting and sustaining their workers’ culture and way of life, KVPL

is also ensuring its own continuity as its labour force is mainly made up of the

minority migrants from India. If their identity is lost, the recruitment pool from which

the company draws its staff from may also disappear.



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2. What are the risks to the company of not engaging in programmes to assist in

workers’ protection and development?

The first risk will be lowered productivity that will in turn diminish the returns on

investment of the company. Lost productivity due to family and health issues will hit

the bottom line of the company and disengaged workers also tend not to perform at

their optimum level. Furthermore, employee dissatisfaction due to inadequate

working conditions may also bring about industrial action, which will also lead to lost

productivity.

In contrast, a better working and living environment will guarantee KVPL a continued

supply from its recruitment pool and this will mitigate any potential issues arising

from shortages in the labour market, which is especially risky for labour-intensive

industry such as rubber and tea growing.

By establishing its name in the specialty market of ethically produced goods, KVPL is

also buffering itself against fluctuations in prices common to primary commodities

such as tea and rubber. With less competition due to its differentiation, sales will be

less volatile and not subjected to swings in market prices, ensuring more stable

profits for the company.

In the agricultural industry where forced and child labour may be an issue, especially

in developing countries like Sri Lanka, KVPL can also minimising any potential

litigation for mistreatment of its employees by adhering to international human rights

conventions and labour laws. By providing for its employees, the risk of law suits

arising from ill-treatment can be reduced.



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3. How might you measure the benefits of an initiative such as this one?

As with other community development projects, KVPL’s CSR initiatives are long-term

and results, unlike financial reports on business profitability, are not immediate.

Broadly, the company’s annual gross profit margins can be used as an indicator of

whether the company is successful in the financial sense but usually the results of its

CSR actions will only be realised five to ten years after implementation. Furthermore,

although the measurements of the inputs to the initiatives are fairly easy to quantify

in terms of time and cash value, the impact of the initiatives are more difficult to

measure and attribute to specific actions taken. Therefore, in order to accurately

measure the benefits of KVPL’s CSR programme, both quantitative and qualitative

analysis are required.

Measurable and Verifiable Performance Indicators

Due to the long lag time from the initial investment to the final res ults of KVPL’s CSR

programme, one method is to carefully identify measurable and verifiable shorter-

term proxies correlating action to impact as a quantitative measure of the

performance of such initiatives. For example, yearly data such as educational results,

school attendance records and unemployment rates of the employees’ children can

be used to measure the “Empowerment of Youth” component of the programme.

Similarly, in order to measure the general improvement to workers’ living and

working conditions as a result of the company’s specific “Health and Nutrition”

component of its core programme, historical figures of the company’s annual staff

turnover, recruitment and retention rates as well as sick leave and medical



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reimbursement records during both the pre-and post-implementation periods can be

contrasted in order to verify the effectiveness of the measures.

Furthermore, these figures can also be measured against controls if available; in this

case business performance from KVPL’s competitors not engaging in such CSR

practices, specifically other plantations with a similar background and context in

terms of plantation size, labour force and output production. A better performance

will indirectly indicate the advantage of having CSR initiatives in the company.

However, such correlations may not be entirely conclusive as other intangible factors,

such as branding and advertising, also play a part in the company’s overall

performance. Therefore, these comparisons need to be viewed in conjunction with

qualitative analysis derived from extensive stakeholder engagements.

Qualitative Data

In terms of obtaining qualitative data on the efficacy of CSR initiatives, one of the

methods is through active engagement of KVPL’s staff to garner feedback by

conducting employee satisfaction surveys, in-depth interviews as well as community

and house visits.

In order to maintain neutrality, such activities should be conducted by external

auditors that can give an impartial and objective view of the company. Also, by

interacting with non-KVPL personnel and keeping such interactions anonymous,

employees will more likely express their genuine thoughts and concerns without

worrying about the possible repercussions of giving negative feedback.



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Likewise, customers can be engaged through the conduct of customer satisfaction

surveys and establishment of other feedback channels such as the provision of a

customer service hotline and email address. Questions relating to the effect of the

company’s CSR initiatives on branding can then be addressed such as the

effectiveness of using the CSR narrative to brand KVPL’s tea leaves as an ethical

product.

(1066 words)



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CASE STUDY 2: THE COCA-COLA COMPANY (TCCC), ENVIRONMENTAL

RESPONSIBILITY AND COMMUNITY DEVELOPMENT

1. Using examples from the case, outline the links between environmental

conservation and community development.

Through its “Plant Performance” core area, TCCC’s management of water usage in

its manufacturing process (specifically wastewater treatment systems) is able to

return used industrial water back to nature such that it is clean enough to support

marine life. Therefore, besides protecting the environment, it also ensures that

fishing and aquaculture communities located near the plants are also not affected by

its effluent; thereby sustaining such industries in the long-term.

TCCC’s “Watershed Protection” initiatives help to protect the biodiversity within the

water catchment as well as preserve its water sources. In doing so, it also helps to

ensure a sustainable water supply for communities within the catchment areas as

well as an outside population that depends on the water source from the catchment.

Other than maintaining a healthy ecosystem, planting of grass and bamboo saplings

help to prevent soil erosions that may cause landslides, blocking rural roads and

damaging public infrastructure such as telephone cables and electrical power supply;

hence ensuring that lines of communications to remote communities are not cut off.

The “Community Water Initiatives” programme helps villagers grow seasonal fruits

and vegetables by providing a long-term supply of water through the construction of

water storage facilities. This has additional environmental benefits in that farmers will

not have to illegally divert water resources from river systems to water their crops



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which may inadvertently affect the riverine ecosystem as well as cause potential soil

stability issues.

The company’s “Awareness and Action” programme helps promote awareness of

environmental conservation at the same time as educating adults and young people

on water challenges and helping them develop local water management solutions.

By starting a community-based network for water information and launching a

website dedicated to water resource issues, TCCC has also empowered

communities to manage water resources while keeping them engaged in climate

change and other environmental conservation issues.



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2. What are the business benefits in assisting local communities in the

conservation of natural resources?

As a branding exercise, TCCC’s internal and external reputation as a socially

responsible company is greatly enhanced. This brings with it monetary benefits due

to potential increased sales of its products as both local and international consumers

are be more likely to buy from the company than a competitor because of the

emotional benefits of associating with an ethically conscious brand. Similarly, socially

responsible staff will also feel more satisfaction being employed by TCCC and this

can lead to increased labour productivity.

Another advantage in assisting communities on water conservation is the potential

benefits that are brought about by fostering relationships and linkages with

community leaders as well as regional and local authorities. Their influence can help

to promote the company in a region where arguably the most effective form of brand

promotion is by word-of-mouth. By having this long-term multi-sectoral partnership

between government, civil society and business, TCC can also benefit when it

comes to mediating potential local disputes arising from plant operations and

mitigating labour issues at the local level.

From the viewpoint of the company’s operations, water is a major resource in the

manufacturing process. Through better water resource management at the local

level, TCCC is also guaranteeing an uninterrupted supply of water to the plants,

minimising potentially expensive production halts due to water shortages.

Improvement of the plant’s performance by using less of the local communities’

water supply can also lead to overall cost reduction.



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Lastly, new distribution networks in rural areas can be created through its water

resource infrastructure developments where previously less accessible markets can

be reached.



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3. Outline how would you measure the impacts of Coca-Cola projects?

Value for Business Indicators of Value for Community

Quantitative Indicators

Reduction of water in the production

process can be measured through meter

readings and this can be directly

translated into dollar value on

expenditure saved on water resources.

Profitability of the company can also be

compared against other competitors not

engaging in similar CSR activities, such

as PepsiCo in Thailand, as well as

against historical records of the

company’s profits before the initiation of

such activities to gauge the effectiveness

of the initiatives in terms of the overall

increase in profits.

Qualitative Indicators

Reputation enhancement of TCCC as a

socially responsible company amongst

Quantitative Indicators

Value to the community from the

“Watershed Protection” and “Community

Water Initiatives” can be quantitatively

measured by tallying the number of

households and people directly

benefitting from the provision of

sustainable water sources, the total area

of water catchment conserved etc.

“Awareness and Action” initiatives can be

counted through the total numbers of

programmes conducted and participants

involved.

In-depth ecological studies can also be

commissioned to quantitatively measure

the effect of the CSR measures on the

natural environment and its impact

compared using internationally

recognized standards.



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Value for Business Indicators of Value for Community

both local and international stakeholders

can be determined through surveys in

the form of market surveys, interviews

and questionnaires with both external

customers and internal staff.

Another indicator of business benefits is

through the amount of coverage from

traditional and new media reports of

TCCC’s CSR initiatives. An increase in

reporting not only serves as a free form

of advertising of the company but is also

an indicator of the extent of impact of the

CSR programme for the brand.

Qualitative Indicators

Anecdotal evidence and emerging stories

can be solicited from within the

communities benefitting from the

programmes through house visits,

surveys and questionnaires. These

accounts can then be used to

qualitatively corroborate the

effectiveness of CSR initiatives on the

community itself.

(925 words)



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INDIVIDUAL ASSIGNMENT: THE BODY SHOP INTERNATIONAL

4. An overview of the community investment activities of one company related to

pro- poor development, poverty alleviation and/or ‘bottom of the pyramid’ initiatives.

INTRODUCTION

According to the World Bank, the common international poverty line given is $1.25

per day at 2005 purchasing-power parity (Ravallion, Chen, & Sangraula, 2009).

However, there are least 80% of the world’s population living on less than $10 a day

with about half of them, almost three billion people, on less than $2.50 per day (Shah,

2013). This section of the population, being the largest but poorest and most

deprived demographic group in the world, has been described as the ‘bottom of the

pyramid’ in terms of their economic status.

Aside from their poverty, people classified in this segment are also usually afflicted

with other associated social issues brought on by their financial predicament such as

falling prey to human trafficking, being plagued by the HIV / AIDS epidemic as well

as suffer gender biases amongst others.

This paper will attempt to present an examination of the community investment

activities by The Body Shop International plc (The Body Shop) in its poverty

alleviation and other associated activities. It will provide a brief overview of the

company, outlining its founding concepts and principles as well as the approach to

its various operational activities before addressing its community action programmes,

support of fair trade initiatives, defence of human rights as well as charity work. The

paper will then conclude by recapitulating the main points in this study.



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COMPANY BACKGROUND

The Body Shop was founded in March 1976 by Anita Roddick (Our History, 2012)

with the first store opening in Brighton, United Kingdom (UK). Listed in 1985, parent

company L’Oréal Group acquired the company in 2006 and it now has 2600 retail

outlets in over 60 countries worldwide (Our Company, 2012).

It was one of the first cosmetics retail brands in the world to practice corporate social

responsibility (CSR) and adopt an ethical business model through its eco-friendly

practices such as providing re-fill services at a discount in order to cut back on

plastic product packaging waste. At a time when others in the beauty care industry

were still pursuing what will now be considered politically incorrect business

strategies such as actively performing unnecessary animal testing for its products,

The Body Shop was able to carve out a niche market appealing to a new generation

of environmentally friendly, pro-animal rights consumers and also charge a premium

in price over the competition for it (Bartlett, Elderkin, & McQuade, 1995).

By establishing its five core values of “Support Community Fair Trade”, “Defend

Human Rights”, “ Against Animal Testing”, “ Activate Self-Esteem”, and “Protect Our

Planet” (Our Values, 2012), the company has continued to demonstrate CSR

through campaigns championing positive social and environmental causes.

These values were preserved via the approach used in its various operational

activities. For example, in terms of franchising a stringent process was taken where

potential candidates were selected only if they passed a barrage of interviews and

tests after which they had to undergo intensive training on product knowledge,

merchandising and store operations so that the company’s brand image and

principles were not diluted with its expansion (Bartlett, Elderkin, & McQuade, 1995).



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Also, with respect to product development, the company will tend to avoid

exploitation of nature and animals when creating new product ranges such as using

synthetics instead of real musk for its White Musk range as well as jojoba oil as an

alternative to whale blubber by-products (Values Report 2011, 2011).

As for its supply chain operations, potential suppliers have to fulfil its ethical, social

and quality requirements as well as undergo periodic legal and financial audits

before it can qualify to be registered on the company’s approved list of partner

businesses. Its “Supporting Fair Trade” programmes also act as a form of community

development which will be elaborated on in the later section of the paper.

INITIATIVES

Remaining true to the conviction and philosophy first espoused by its founder, the

company has continued the social and environmental activism in numerous

campaigns and initiatives since its founding. This next segment will focus on The

Body Shop’s poverty alleviation, development of economically disadvantaged

communities and ‘bottom of the pyramid’ programmes all aimed at fulfi lling the core

values mentioned above.

SUPPLY CHAIN VERIFICATION

In support of its “Defend Human Rights” and “Support Community Fair Trade” ideals,

the company has implemented a system to assess its direct suppliers as mentioned

earlier. By basing this Code of Conduct in accordance to a framework set out by a

recognized body, the Ethical Trading Initiative, the company can then gain



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international creditability for its efforts. The Code attempts to prevent exploitation of

vulnerable groups such as women, child and forced labour, most of which are in the

‘bottom of the pyramid’ bracket, by stipulating guidelines on workers’ rights and

treatment of employees as well as working conditions, equitable wages and number

of work hours (ETI Base Code, 2013).

To ensure that its direct suppliers conform to the ethical standards set out in the

code, the company is not only using audits to check on these partners but also

taking a pro-active and collaborative approach by conducting Ethical Trade training

and workshops for them. Furthermore, this programme is also extended to ‘tier two’

suppliers further down the supply chain such as checking on whether the cotton

supplied to manufacturers making The Body Shop’s employee uniforms are from an

ethical agricultural source not using child labour (Values Report 2011, 2011).

SUPPORT FAIR TRADE

The company’s Community Fair Trade programme, previously known as ‘Trade Not

Aid’, actively seeks to source from small, local and community groups from

developing countries, pledges to pay reasonable compensation for work done in fair

conditions, commit to community development as well as guarantee a sustained

demand in order to ensure that these communities are able to plan for their long term

futures (Support Community Fair Trade, 2012). With most of the suppliers coming

from poor, underprivileged backgrounds, the poverty alleviation effects within these

communities are especially felt and amplified. The programme currently runs in 21

countries with 21 producers.



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One of the early examples of this programme is the Get Paper Industries, a supplier

set up in Kathmandu, Nepal in 1989. It provides the paper fibre used to make the

company’s gift boxes, wrapping, packing paper bags, notebooks, scented drawer

liners and printed cards.

By employing more women than men and at the same time paying the same rate to

them for the same work done even though it is not common in a country where men

are traditionally paid more, these women are assisted and can then better provide for

their families, leading to their status in the community is being raised (Paper

Products from Nepal, 2012).

Another example hailed from the company’s country of origin, the UK, a developed

nation not commonly associated with poverty alleviation initiatives. The Soapworks

Project was initiated in 1989 at Easterhouse, a Glaswegian suburb where

unemployment rates were hovering around 37%. A decision was made to shift its

soap manufacturing facilities from Littlehampton to Glasgow at a cost of £1 million.

The new facility hired sixteen previously chronically unemployed staff (increased to

100 by 1991) and provided them with salaries equivalent to that in Littlehampton,

which was one-third higher than local rates. The plan was to contribute 25% of

profits after taxes to a charitable trust in order to benefit the entire community once

the factory broke even (Bartlett, Elderkin, & McQuade, 1995).

VOLUTEERISM

Among its “ Activate Self-Esteem” initiatives, every October a special ‘Anita Week’ is

held in memory of its founder, who passed away in 2006, to encourage volunteerism

among its staff to spend one day that week on volunteerism. Furthermore, company



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policies allow employees up to 6 paid days per year to do volunteer work among the

local neighbourhood.

Examples of such activities benefitting ‘bottom of the pyramid’ communities include

the setting up of collection bins for donation of gifts to homeless women in the US,

participating in Oxfam’s Trailwalker fundraising events in Japan and supporting

Oxfam projects in Cambodia and Laos. Besides serving the community, these

activities also allow the employees to feel better about themselves; indirectly

boosting self-confidence and productivity as well as their affinity to the company.

Additionally, The Body Shop also benefits from the positive publicity generated in the

local community from their goodwill.

CAMPAIGNING

The company also conducts active campaigning to raise social awareness and

induce positive changes to society as part of its ‘Defend Human Rights’ core value.

An example of this world-wide campaign fighting for basic human rights of the

disadvantaged (Elliott, 2010) is the ‘Stop Violence in the Home’ movement in 2006.

In this instance, the company is campaigning for raising awareness and educating

the public on issues related to domestic violence, especially on children and women.

Children who have suffered from physical or verbal abuse will be affected in their

physical, emotional and social development and the negative impacts can continue

from childhood to the future when they become adults in later life. By preventing

such mistreatment so common among the poor and underprivileged families, the



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company also hopes that future generations will not have to suffer the same fate and

thus break this vicious cycle.

Another case in point is a peaceful demonstration was organized in Denmark in 2010

(Values Report 2011, 2011) to promote awareness of the sex trafficking of children

and young people. In spite of adverse weather conditions, over 1500 people turned

out and attracted much media attention while at the same time generated much

publicity for the cause online as well.

Resulting from the company’s actions, the Danish national government proposed a

national action plan to address the human trafficking issue, recommending that

victims of such sex trafficking not treated as criminals like they previously were.

Police and other government agencies were also similarly educated in the ethical

treatment of these people (Values Report 2011, 2011).

As with most of their campaigns, The Body Shop usually forms partnerships with

experienced and knowledgeable non-governmental organizations (NGOs); in the

above case, with ECPAT International (Altamura & Sakulpitakphon, 2012). Through

such collaborations, the company can then add creditability and legitimacy to its

social causes, as NGOs can provide independent assessment and verification of its

activities. Association with such NGOs also shortens the learning curve for the

company as they provide valuable expertise on the issue concerned.

Besides cooperating with NGOs, The Body Shop also works with CSR advocates in

other businesses to spread the influence of its messages and magnify the impact of

its actions. A good example of this is its ‘Defend Human Rights’ initiative, fighting

against the spread of the HIV / AIDS epidemic with the latest campaign launched in



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March 2009. This world-wide scourge is especially lethal to the poor as they have no

means to procure expensive retro-viral drugs that keep the disease at bay.

Together with MTV International and the Staying Alive Foundation, the company

aims to raise awareness and educate youth on the practice of safe sex in order to

prevent spread of the disease, thus reducing the instances of young people being

infected every day, currently numbering over 6000 for the age group of 16 to 24

(Values Report 2011, 2011).

As MTV is also a forerunner in its field for social activism in the broadcast industry,

The Body Shop can reach further out to the campaign’s target demographic than on

its own by leveraging on MTV’s strengths and know-how in the media industry. With

broad appeal among teenagers and youth who readily identify with the music video

broadcaster’s trendy and popular image as well as its creative brand of promoting

social issues, MTV’s Staying Alive Foundation has collaborated with The Body Shop

to raise more than $3.6 million through campaigns like “Spray to Change”, “Move

Your Lips” and “Yes Yes Yes!" (How We're Funded, 2012).

The company also devised innovative methods of raising money for these

campaigns by associating some of its products with certain causes and creating

limited edition of products especially commemorating such initiatives. For example,

in the above case of the HIV / AIDS campaign, The Body Shop donated all profits

generated from the sale of its Tantalizing Lip Butter to the cause.

CHARITY WORK



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In terms of philanthropic work, the company established The Body Shop Foundation

as a registered charity that tackles human rights, environment and animal protection

as well as other social issues through its funding activities by focusing on grass-roots

organizations whose activities directly benefit the local community.

Ordinarily, these groups would usually be overlooked by other conventional charities

due to the limited returns on investment as their impact are most likely restricted only

to the local level and thus not receive as much publicity and media attention.

Working with such home-grown groups also ensures that issues are addressed by

local expertise that understands the community’s needs the best and that any

solution proposed is also well supported by the community (Values Report 2011,

2011).

As with its approach to business operations, every of the foundation’s projects have

to undergo strict selection procedure. A project has to be able to demonstrate

tangible benefits that can be measured, monitored and evaluated at the end of the

scheme before it is chosen to be implemented.

One such example that The Body Shop Foundation supports is SolarAid: a charity

focused on tackling global poverty and climate change by delivering clean, affordable

and renewable energy in the form of solar panel power to local communities in the

developing world.

SolarAid’s ‘sunnymoney’ programme in Malawi will receive £40,000 over the next

two years from the foundation to recruit, train and supply local entrepreneurs in

installing and maintaining SolarAid’s solar panel products in order for electrical

power to reach over 20,000 people that may not previously have electricity in their



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communities due to the limited reach of the national power grid (Values Report 2011,

2011).

Besides empowering the selected entrepreneurs to bring them out of poverty through

this micro-franchising scheme, the rural countryside will also gain with this project by

having a steady supply of electricity. With electrical power, follow-on benefits may be

brought about that can dramatically change these communities for the better, such

as providing lighting at night so that households involved cottage-industry can

continue to produce goods and exchange them for additional income or for children

to revise and study when they cannot do so in the day as they may have to help out

their families in household or work chores. Investing in children’s education is one of

the most effective ways of alleviating poverty as it allows for the next generation to

break the cycle of poverty by opening them to more opportunities afforded through

the knowledge acquired from education.

CONCLUSION

In summary, this paper has given an overview of the community investment activities

of The Body Shop related to pro-poor development, poverty alleviation and ‘bottom

of the pyramid’ initiatives by first providing an outline of the company’s background,

its core values and how it operationalizes them in its business activities, especially in

its franchising, product development and supply chain operations.

The paper then described how the company’s supply chain verification, community

fair trade, volunteerism, campaigning and charity work contributed to various pro-

poor, poverty alleviation or ‘bottom of the pyramid’ causes and further elaborated on



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The Body Shop’s approach to campaigning by partnering established NGOs and

like-minded businesses to create a deeper impact for its causes as well as in

philanthropy through the selection of local groups for funding in order to maximize

benefits at the grass-roots level.

In conclusion, The Body Shop has not just been a pioneer in the corporate world for

its human rights activism but also for other causes in animal welfare and

environmental protection. It has shown that ethical businesses can be profitable as

well and blazed the trail for many others to follow. Although the company has been

taken over by L’Oréal, a large corporation in many ways the antithesis of Anita

Roddick’s founding ideals and business concept, the company’s principles and

philosophy have survived the take-over and The Body Shop is still thriving and

remains as committed to its core values as ever.

(2708 words)



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