by Real Business - Thursday, 30th August 2007

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It’s May Day and on London’s Oxford Street a rag-bag of anti-capitalist protestors are venting their frustrations about global warming, world poverty, fair trade and much else besides.

But neither Gordon Roddick nor John Bird (far right), old friends and partners who are sipping tea in the nearby Charlotte Street Hotel, have any plans to join them. Roddick, who founded the Body Shop with his wife Anita, and Bird, who is editor-in-chief of the Big Issue, have spent much of their lives proving that capitalism need not be incompatible with human rights, social justice or environmental awareness.

“It’s all so unfocused – we’ve never had anything to do with it,” says Roddick, who is almost as well known for his ethical campaigning as for his company’s peppermint foot lotion. Bird, whose magazine for the homeless is credited with rescuing hundreds of people from the streets, is just as sceptical. “The only way global capitalism will change is if consumers take decisions themselves.”

But it would be a mistake to think that material success has blunted the pair’s fiery determination to change the world for the better. For much of the day they have been talking to potential backers about their new venture capital fund called Social Brokers. The £30m vehicle will invest in start-ups that empower the disenfranchised and promote social justice. The fund will also offer seed money to ventures based on alternative technology and renewable energy.

Roddick, an old hand in the City after 15 years as co-chairman of a public company, is leading discussions with investors. But the initial inspiration belongs to Bird. “I was sitting on a beach in California,” he says. “I was trying to work out a way in which the Big Issue could develop the concept of a business response to social issues. I thought of an investment fund that might grow into a kind of bank offering ideas and opportunities as well as finances – which is why it’s called Social Brokers.”

The pair have no qualms about asking profit-driven institutions and rich individuals to back ethical investments. They are not collecting for charity, they say, and they are armed with a feasibility study by management consultants McKinsey & Co which shows that both the number of deals and the rate of return will make Social Brokers an attractive proposition. “Independently we get brought a lot of projects and there are many social issues like housing and renewable energy that need addressing,” says Roddick. “There’s so much out there. There won’t be any deal flow problems.”

The fund will close at the end of the year, but Roddick and Bird will no doubt continue a friendship that began more than 20 years ago in an Edinburgh bar with a drunken discussion about the size of their respective noses. “We nearly had a fight,” says Bird. Roddick recalls that he was accosted by an ex-con with a failed marriage and a passion for poetry (ie, Bird) that they still share. They seem an unlikely partnership. Roddick is quietly spoken while Bird is unlikely to use a polite word where an Anglo-Saxon one will do.

But they kept in touch and when Roddick – inspired by the New York publication Street News – had an idea to launch a similar newspaper for the homeless in the UK, he asked Bird to take a £300,000 investment and become its editor. Bird was worried about involving himself with “do-gooders” but, after much argument, he finally agreed. Eleven years on, the Big Issue has a turnover of £3.7m, seven editions around the world, and plans to take the concept to more cities in Europe and America.

From the start, Roddick knew Bird would be the ideal editor. “He refuses to accept the norms or rules of conventional behaviour,” says Roddick. “He and Anita are very much alike. They both have full-blown anarchy in their hearts. They are both a complete nightmare to deal with but they are entertaining, and things happen around them.”

Roddick, says Bird, is equally tenacious. “He has an ability to say ‘let’s get on with it’. I call it belligerent dedication. He doesn’t give in to the social blackmail of popularity. The money helps, of course.”

For both men, entrepreneurial flair and straightforward business acumen are tools they use to achieve their broader social objectives. They believe that, unless a venture has a combination of drive and organisation, it has little chance of success, however noble or charitable its aims. “It would be a nightmare if everyone in the business was 100 per cent about the environment or social justice,” Roddick says. “You need people who just turn up and get on with the boring stuff, and those who are motivated by profit.”

Roddick in particular is pleased that more and more companies, from oil giants to retailers, are realising that corporate social responsibility is good for business. “It’s moved out of the realm of being a crackpot idea and into every boardroom and part of every annual report.”

These days the pair spend much of their time moving and shaking in wider business and political circles instead of dealing with day-to-day management. Bird devotes hours each week to meeting local councils, charities and his vendors to ensure that the homeless are free to sell the Big Issue on the UK’s streets. Later this year he will publish his autobiography and he even has plans for a new publishing venture, the details of which remain secret. Roddick, who stood down as co-chairman of the Body Shop in February, has spent the past few months in Brussels, Amsterdam and Sweden encouraging business leaders to take action on climate change. With Anita, Roddick still owns 25 per cent of the company they founded and he remains on its board as a non-exec director. He is also working on a recording venture with former Eurythmics guitarist Dave Stewart called Artists Network, which will give musicians a bigger say in the production and promotion of their work and an equal share in album profits.

Bird, himself a reformed hell-raiser, is keen for banks and other institutions to give failed entrepreneurs and others who have somehow lost their way, another chance to prove themselves. “When I met Gordon I was on the run, no-one believed in me, and I didn’t add up to much,” he says. “Maybe we should start a portfolio of investments in first-time business failures – because they would be bound to succeed next time.”

Roddick, too, has regrets. The biggest is taking the Body Shop to the stockmarket in 1987 even though the business had plenty of cash. “There are many companies for which flotation is appropriate because they have trouble raising finance – we were not one of them,” he says. But the promise of fast cash and rapid expansion eventually proved too tough to resist.

Their backers demanded rapid growth and big profits, which proved difficult to square with the Roddicks’ views on human rights and the environment. “We tried to go private on a couple of occasions but when it came down to the wire we were just changing one landlord for venture capital and mezzanine debt – which would have been even more aggressive.”

Now, having stepped back from the business, Roddick can pursue his social and environmental goals free from clashing corporate objectives. “We see opportunities in projects where no-one else wants to go,” he says.

Further ahead the pair are planning an internet venture that remains under wraps for now. “It will give people the power to be equal to the professionals,” is all Bird will say. If past history is any guide, it will certainly feature their particular brand of campaigning capitalism.

SOAP BOX

On British enterprise culture:
“Brits are the most entrepreneurial people in the world given the opportunity and the training. We have a broader perspective and we’re more prepared to take risks than Americans.” – Roddick

“We need to teach the past in order to understand the future. We need to know the history of business and how people invented and achieved. When you read British history it’s about somewhere that didn’t exist.” – Bird

On campaigning capitalism:
“We wanted to be a good business and have good ethics. We have been very noisy on campaigns and issues because that is the way we wanted to do business. The company has learned to live in the public arena.” – Roddick

“We had tremendous opposition from charities and the public and from government appointees but the proof is in the pudding – once we got it going it worked.” – Bird

Catherine Wheatley is a business journalist and former editor of the Enterprise section of Sunday Business.

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