External CSR Communication in the Cosmetic Industry: Best Practice Examples By Paula Pönkänen Elsa Wedendal June 2018 Master’s Programme in Management Supervisor: Merle Jacob Examiner: Bo Göransson Abstract The purpose of this thesis is to investigate how six cosmetic companies, in the forefront when it comes to CSR initiatives and communication, communicate their CSR work externally. The aim is to find current best practices as well as next practices. By researching the field of CSR communication as well as the external CSR communication performed by the chosen companies, a Best Practice Criteria was created. To further deepen the analysis and the discussion, interviews with representatives from two of the investigated companies were performed. The Best Practice Criteria and the interviews were later used to analyse the communicated material and to develop seven best practices themes that were gathered under the headlines of Holistic ​ and In-depth Communication Creates Credibility; Advocacy as a Way of Contributing to Social Sustainability; Think, Do and Talk Locally; Adaptability in The Digital Age; Connecting and Illustrating Through Narratives; Extended Ways of Communicating Product Transparency and ​ Demonstration of CSR Roadmap. Under each best practice theme, the companies external ​ material was thoroughly analyzed to find specific communication practices relevant to other companies in the sector to take notice of. In the discussion, seven next practices developed from the best practices is presented; Further ​ the Integration of CSR in Companies; Corporate Social Advocacy: Do not Only Perform -Inform!; The Importance of Community Connection; Further Local Focus; Utilize Technology in Search for Greater Openness; Illustrate more: Focus on Inclusiveness, Clarity, and Emotion; Eliminate Doubts with Transparent Packaging Information and Increase Your Credibility with ​ Clarity and Preciseness. These were created with consideration regarding how today's best ​ practices are going to develop due to new possibilities and change in demand from stakeholders, as well as due to the overall development of CSR work and communication in the cosmetic sector. The underlying aim of this thesis is to create an inspirational study that will gather valuable information and guidelines for other companies to consider when working with CSR communication. Further, companies may use this study for benchmarking within the cosmetic industry. Keywords: CSR, Communication, Cosmetic Industry, Best Practices, Next Practices 2 Acknowledgements Thank you to our supervisor Merle Jacob who guided us through this process. We would also like to thank the interviewed representatives from L'Oréal and KICKS for their time and expertise. Paula wants to acknowledge her parents Sirpa and Olli and brother Pekka, as well as beloved Sanna and Pasi for the continuous support before, during and after her studies. Her amazing friends and lovely roommates also deserve a thank you for the emotional labor that goes into listening and guiding her in her academic and personal path. The studies in Management would not have been the same without the experiences from her professional life along the years; this has provided valuable inspiration on how she views leadership, dynamics, and collegiality in organizations. Paula would also like to thank professor Ulf Johansson from The School of Economics for the fantastic mentoring under the period of her studies in Lund. Thanks for opening our eyes to new stages of opportunity and strength. Elsa wants to thank family and friends for support and inspiration throughout the year. A special thank you is being sent to all those close ones who helped with the processing of the studies in Management, by always being there when conversation or indeed fun and distraction were needed. The Master's in Management would also not have been the inspiring and challenging experience it was without the amazing lecturers, to which Elsa would like to say thank you. Finally, she also wants to express her gratitude to the coffee percolator in her corridor for faithful service during the year. 3 Table of Contents 1 Introduction ……………………………………………………………………………6 2 Purpose …………………………………………………………………………………7 3 Research Questions ……………………………………………………………………8 4 Theoretical Framework………………………………………………………………..9 4.1 Knowledge Frame…………………………………………………………………….9 4.2 Useful concepts……………………………………………………………………….9 4.2.1 Corporate Social Responsibility (CSR) ……………………………… .………....9 ​ 4.2.2 Cosmetic industry ………………………………………………………………...9 4.2.3 External Communication ………………………………………………………...10 4.3 Background of CSR in the Cosmetic Industry……………………………………….10 4.4 CSR Communication Framework………………………………………………...….13 5 Methodology …………………………………………………………………………...17 5.1 Qualitative research method …………………………………………………………17 5.2 Observation of External Communication Material…………………………………...18 5.3 Interview procedures ……………………………………………………………...….19 5.4 Criteria for Best Practice ………………………………………………………...…...20 5.4.1 Codes, Standards, and Principles ………………………………………………...20 5.4.2 Transparency and Reporting …………………………………………………......21 5.4.3 Verification, Certification, Monitoring, Consulting ………………………….….21 5.4.4 Innovation & Uniqueness ………………………………………………………..22 5.5 Validity and Reliability ………………………………………………………………22 5.6 Ethical considerations …………………………………………………………….….23 5.6.1 No harm to participants ……………………………………………………….…23 5.6.2 Informed Consent ………………………………………………………………..23 5.6.3 Invasion of Privacy ……………………………………………………………....23 5.6.4 No Deception is Involved ………………………………………………………..24 5.7 Limitations of the Research ………………………………………………………….24 5.8 Participating Companies ……………………………………………………………..25 5.8.1 Criteria for Participating Companies……………………………………………..25 5.8.2 L'Oréal…………………………………………………………………….………25 5.8.3 KICKS…………………………………………………………………….………25 4 5.8.4 Lush………………………………………………………………………………26 5.8.5 The Body Shop……………………………………………………………...……26 5.8.6 Weleda……………………………………………………………………………26 5.8.7 Unilever……………………………………………………………………..……26 6 Data Analysis & Findings………………………………………………………...…...27 6.1 Holistic and In-depth Communication Creates Credibility …………………..……...29 6.2 Advocacy as a Way Of Contributing to Social Sustainability ………………...…….30 6.3 Think, Do and Talk Locally …………………………………………………….…... 31 6.4 Adaptability in the Digital Age ………………………………………………..….…33 ​ 6.5 Connecting and Illustrating Through Narratives ……………………………….....…34 6.6 Extended Ways of Communicating Product Transparency …………………….…....35 6.7 Demonstration of CSR Roadmap …………………………………………………....36 7 Discussion ………………………………………………………………………..…….38 7.1 Further the Integration of CSR in Companies ………………………………….…....38 ​ 7.2 Corporate Social Advocacy: Do not Only Perform -Inform! ………………..……....39 ​ 7.3 The Importance of Community Connection: Further Local Focus …………………..40 7.4 Utilize Technology in Search for Greater Openness ………………………….….…..42 7.5 Illustrate More: Focus on Inclusiveness, Clarity and Emotion ………………..……..42 7.6 Eliminate Doubts with Transparent Packaging Information ……………………....…43 7.7 Increase Your Credibility with Clarity and Preciseness ………………………....…...44 8 Conclusion and Future Research …………………………………………………......46 9 References ………………………………………………………………………...…...48 10 Appendix ………………………………………………………………………....…...52 10.1 CSR Communication Questionnaire: Best Practices Example …………...……..….52 ​ 10.2 Participant Consent Form ……………………………………………...………..…..53 10.3 Observation Form for Researching External CSR Communication Data ….……….55 5 1. Introduction Corporate Social Responsibility (CSR) is more widely discussed today than ever before. Two decades ago, CSR was mainly practiced by a few green or socially responsible companies- now some form of CSR has become de rigueur for middle-sized and large companies. This is especially true in the cosmetic industry, where considerations such as responsible sourcing and social impact are leading the industry towards being one of the most ethically considerate in the world. The external communication strategy is an integral part of the overall implementation of CSR and consists out of much more than the mere conveying of CSR initiatives. A well-chosen and utilized strategy should provide both motives for the present and fuel for the future, and attract the interest of new stakeholders, hence leading to both business and CSR growth. We, the authors of this thesis, are interested in investigating how cosmetic companies work with communicating their CSR-initiatives to the customer, and in discussing what aspects of CSR communication is best practice- and what should be done next. By analyzing external communication of sustainable companies, we aim to explore topics such as what features of external communication are working and why, and how come customer interaction is crucial for the implementation and development of CSR initiatives. The idea is to investigate examples of best practice CSR communication, thus creating hands-on guidelines which could prove valuable for executives and others within the cosmetic industry to consider when working with CSR communication now and in the future. 6 2. Purpose It is a common belief that the importance of quality CSR communication in cosmetic companies will only continue to grow and have an even more significant impact on customer’s decision-making in the future. The cosmetic industry already provides plenty of versatile and in-depth examples on how to communicate CSR, due to the industry adapting to the necessity of CSR initiatives