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Monday, February 27, 2017

Strategic CSR - Lush

The article in the url below discusses the activism-based business model of the British cosmetics company, Lush:
“Lush likes to cause a stink. As well as its smelly shops and package-free produce, a large chunk of the handmade cosmetics company’s time and money is spent on political activism.”
Lush, today, is positioned in the market in a way that reminds me of The Body Shop in the 1990s. Similar to The Body Shop, Lush campaigns broadly and passionately:
“Far from carefully choosing a few business-friendly good causes, Lush has backed a plethora of controversial causes from Guantanamo prisoners, to hunt saboteurs and the anti-fracking campaign. It does this through financial donations – totalling £5m a year in 2015 - and in-store products such as the May Day bath bombs, which supported activists opposed to the badger cull. It also supports groups in favour of peaceful resistance to the Israeli occupation of Palestine.”
The key question, of course, is how many of its stakeholders (customers, employees, etc.) engage with the firm as a result of its activism and how many just like its products, or its working conditions, or whatever? If most stakeholders engage with the firm in spite of its activism, then the firm is probably wasting its money and is less efficient as a result. If most stakeholders engage with the firm because of its activism, however, then the firm is creating value for those stakeholders in a way that other firms are not. The difference speaks to the extent to which, for Lush, activism is the foundation of a successful business model, as opposed to the founder/CEO’s personal interests/values that are selfishly being imposed as a constraint on what would otherwise be a more successful cosmetics company:
“Such blatant politicisation is a tactic few other businesses in the UK seem willing to replicate. The renewable energy firm Ecotricity has produced anti-fracking films, but this makes sense for a company that benefits from consumers switching away from fossil fuels. Lush admits a lot of the campaigning it does has nothing to do with its own business.”
That is perfectly OK (and something I wish more companies would do) but, in order to be consistent with strategic CSR, it is essential that the firm is acting in accordance with its stakeholders’ collective set of values:
“None of this appears to be harming sales, which reached a record £574m in 2015, with profits of £31.3m. … ‘People don’t just want to buy something, they want to belong to something. We’re not a cult but we certainly have strong ethos and personality that’s difficult to describe. It doesn’t come directly from the founders, it comes from the organisation and it is something that you belong to. It is a company in the true sense of the word, as in a group of individuals,’ says [says Simon Constantine, head of buying at Lush and son of co-founder and boss Mark Constantine].”
Take care
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How badger bombs and politics brought Lush sales of £500m
By Tom Levitt
May 10, 2016
The Guardian