Byline: James Fallon, London, and Joanna Ramey, Washington

LONDON — The Body Shop International last week reacted with its usual vigor to the latest critical salvo about its operations, this one coming from Boston-based Franklin Research & Development, one of North America’s largest specialists in socially responsible investments.
Franklin scored the British beauty company for what Franklin saw as an overly aggressive response to criticism and for cultivating what it charged was a misleading socially conscious image.
Body Shop’s “extremely combative” responses quash any constructive attempts to make changes, Franklin said.
The report also said Body Shop’s marketing of its products as containing natural ingredients overshadows the fact that they often contain synthetic ingredients. Franklin also took issue with Body Shop’s Trade Not Aid program — recently renamed Direct Trading — in which products are developed using ingredients from indigenous communities.
Activists and anthropologists were cited “who feel the projects are, in fact, patronizing and exist more for the benefit of the Body Shop’s image.”
In June, as reported, anticipating a drop in the Body Shop’s stock price due to mounting criticism from social activists and journalists, Franklin sold its 45,950 shares in the company.
Reacting to the Franklin report, Body Shop said it is being held up to a level of scrutiny applied to few other firms and indicated it will not change its operations.
“Franklin’s major criticism is that we defend ourselves too aggressively,” the company said in a statement. “When it comes to protecting our company, our shareholders and our reputation, we will continue to act quickly and forthrightly.”
Echoing comments made to WWD by its chairman, Gordon Roddick, several weeks ago, Body Shop further said that while it may not be perfect, its programs such as Trade Not Aid and the Big Issue newspaper — sold to help the homeless — are at least attempts to address specific issues.
“Show us other U.K. firms that are doing as much as us,” it said. “At least we’re trying. We’re highlighting the issues.”
The negative tone of Franklin’s report differs, however, from that of another report issued this month by Eiris, a London-based ethical investment research service that praised Body Shop and said it was being unfairly criticized.
The controversy over Body Shop’s business practices has caused its stock price to fall sharply since the year’s high of $4.17 (2.64 pounds) at current exchange. On Friday, however, its shares closed up on the London Stock Exchange at $3.25 (2.06 pounds), a gain of 9 cents (6 pence).
Asked whether Franklin’s standards might be too high for a company to meet, senior analyst Simon Billenness at Franklin, said, “We’re trying to hold The Body Shop to its claims, and we think that is reasonable.”