Socially Responsible Firms: Principles or Market Ploy?

IN June 1990, Inc. magazine's cover featured Anita Roddick, founder of The Body Shop International, a British retailer of natural cosmetic and bath products, exuding the eco-charm and business prowess that rocketed her into a $650 million-a-year business. It proclaimed: ``This Woman has Changed Business Forever.''

Last month, the cover story of Business Ethics magazine entitled, ``Shattered Image,'' alleged that there is ``a wide gap'' between popular mystique and reality at The Body Shop. The article inferred that the gap is created by a passion for profit that overwhelms the company's do-good approach.

Mrs. Roddick is one of the most visible emblems of a growing coterie of companies seeking a middle ground between the pursuit of profit and an active responsibility for the communities in which they operate.

Although the allegations against The Body Shop are sowing controversy, some introspective analysis, and a vigorous campaign by Roddick to refute the claims, they aren't likely to slow the new adherents to corporate social responsibility.

Two major associations of socially responsible businesses have grown considerably since their inceptions: The Washington-based Business for Social Responsibility added 650 members in two years; and the San Francisco-based Social Venture Network has grown eightfold since 1987. Total membership in the two organizations is more than 1,100.

``Every company in the movement is on a tremendous learning curve,'' says Helen Mills, co-chairwoman of Business for Social Responsibility and owner of five Body Shops. ``We're learning to balance profits and principles.''

The movement includes high-profile corporations such as software-maker Lotus Development Corp. and Levi Strauss & Co. But there are many lesser-known responsible companies such as Wegman's Food Markets of Rochester, N.Y., which, in 1992, provided $3.6 million for college scholarships to 2,250 part-time employees.

Framing the debate over business' responsibility to its community, Michael Novak of the Washington-based American Enterprise Institute, a think tank, says, ``On one extreme are people who say the primary aim of business is to achieve an end which is hard enough - sustained profit.'' The other extreme thinks business is ``immoral and needs to be redeemed by benevolent acts.''

The middle ground, however, is where profit remains a primary aim for business, but goals also include ``human factors like building a community ... within an organization and linking it to the larger world.''

Yet even among those committed to the middle-ground ideals of the movement, there is great disagreement over how much social responsibility can penetrate the profit-driven corporate ethos. ``Some companies join [the movement] just to buy off their critics or for public relations reasons,'' Mr. Novak says.

A recent Roper poll for Boston-based Cone/Coughlin Communications found that, after price and quality, one-third of Americans consider a company's socially responsible practices most important in deciding whether to buy a brand. Many businesses have responded by trying to burnish their socially responsible image.

But some people say the movement may be more than a marketing ploy. Joel Makower, author of ``Beyond the Bottom Line: Putting Social Responsibility to Work for Your Business and the World,'' says: ``It is all part of a transformation like the one 200 years ago when the church lost power and government stepped in. Now, as government's abilities and resources wane, business is taking over.''

Ken Lehman, co-chief executive officer of Fel-pro, a Chicago gasket manufacturer, disagrees. ``Government can't count on companies like us to take over.'' Society's ills, he says, are too overwhelming for business to tackle alone. Nevertheless, ``companies should try to do their part,'' Mr. Lehman adds.

Fel-pro provides more than $250,000 in small grants annually for local community organizations - churches, soccer teams, and schools. ``We're not making a dent in the macro-urban problems,'' Lehman says. ``We're just making a little tiny difference in the neighborhoods where our people live.''

However, being socially responsible does not always require a business to open its coffers to the public. The role of catalyst is often just as effective. ``Tapping into employee volunteerism doesn't cost anyone anything, but galvanizing this energy does wonders,'' Ms. Mills says.

And though she disparages the rabid approach of ``Shattered Image,'' Mills says she welcomes more scrutiny. ``I kind of like scrutiny [because] it challenges us ... to be a better company,'' she says.