Natura &Co Holding S.A. Annual Report 2005

FY2005 Annual Report · Natura &Co Holding S.A.

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Natura Brasil
Natura Cosméticos S.A.
Rod. Régis Bittencourt, km 293 - s/nº
CEP 06882 700 - Itapecerica da Serra - SP
Tel. (55 11) 4147 8300
Fax (55 11) 4147 8636
Indústria e Comércio
de Cosméticos Natura Ltda.
Rod. Anhanguera, km 30,5 - s/nº
CEP 07750 000 - Cajamar - SP
Tel. (55 11) 4446 2000
Fax (55 11) 4446 2093
Centro de Distribuição - Matias Barbosa
Rodovia BR 040, km 800, Lote 5
Bairro Empresarial Parque Sul
CEP 36120 000 - Matias Barbosa - MG
Tel./Fax (55 32) 3273 2766
Centro de Distribuição - Uberlândia
Rua Ignês Favato, 301, Distrito Industrial
CEP 38402 340 - Uberlândia - MG
Tel. (55 34) 3222 8202
Fax (55 34) 3232 2126

Natura Argentina
Av. del Libertador, 1295 - 1º piso
Vicente López (1638)
Capital Federal - Argentina
Tel. (54 11) 4837 6100
Fax (54 11) 4837 6005

Natura Chile
Ricardo Lyon, 222 of 201
Providencia - Santiago - Chile
Tel. (56 2) 620 9200
Fax (56 2) 620 9230

Natura Mexico
Homero 823
Col. Polanco - CP 11550
Del. Miguel Hidalgo
Distrito Federal - Mexico
Tel.: (52 55) 5250 9030
Fax: (52 55) 5203 3701

Natura Peru
Av. Del Ejército, 801
Miraflores - Lima 18 - Peru
Tel. (511) 440 1362
Fax (511) 440 1362 ex. 275

Natura Europa
2, carrefour de La Croix-Rouge
Saint Germain de Prés
75006 - Paris - France
Tel. 33 (0) 1 42 22 12 59
Fax 33 (0) 1 45 48 45 54

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annualreport

natura2005

reason

for being

Our Reason for Being
is to create and sell
products and services
that promote
well-being/being well.

well-being
is the harmonious,
pleasant relationship of
a person with oneself,
with one’s body.

being well
is the empathetic, successful,
and gratifying relationship
of a person with others,
with nature and
with the whole.

Vision

Because of its corporate behavior,
the quality of the relationships it
establishes and the quality of its
products and services, Natura will be an
international brand, identified with the
community of people who are committed
to the construction of a better world,
based on a better relationship with
themselves, with others, with nature of
which they are part, with the whole.

Letter from

the Board

he year 2005 gave reasons for enthusiastic
celebration by all who root for Natura’s
success. Once again we achieved superlative

earnings as we continue to garner the results
from our commitment to sustainable development
and to our common future.

For over a decade now, our strategy has
been anchored to the belief that a business can
be a powerful engine for social transformation
and help create a much more just and egalitarian
society, sharing the common knowledge and
promoting the well-being. Well-being of people
with themselves, the world around them
and the nature we all partake.

The permanent challenge is aligning these
principles with our day-to-day business practices.
This way of being and doing business constitutes
Natura's distinguishing trait and helped our company
and our brand to earn the recognition and
admiration of the community, much to our pride.

Natura's management style is characterized
by a dauntless, visionary disposition to mobilize large
social networks and manage, with discipline,
the multiple processes that make up the business
chain, all the way from research and development,
production, distribution, to the marketing and
communication of products and services, while
responding to society’s needs and creating value.

The continual exercise of this systemic approach,
the enthusiastic allegiance of our staff and all
those who interact with Natura add on to the
consistent results we deliver and reinforce
our optimistic vision of the future.

Natura’s gross revenues grew 27.7% in 2005,
or 129.5% in cumulative terms over the past three
years. Earnings were up 32.2% from 2004, amounting
to R$ 397 million. Our stock appreciated by 38%,
above the 27.7% rise in the Bovespa index during
the year, creating outstanding returns for our investors
and shareholders, ratifying the trust bestowed by the
market on our proposition. Besides holding on to the
leadership in the Brazilian cosmetic industry, we are
now the country’s largest direct selling company.

It is also extremely gratifying to confirm that we made
a significant social contribution, sharing wealth in the
forms of taxes, wages, dividends and income.
Our 519,000 Consultants in Brazil and Latin America,
for example, shared some R$ 1.3 billion in income.

Our Consultants are quickly becoming
the leading agents of the changes in attitudes and
behaviors that we work to promote, also spread
– with much enthusiasm – our social and environmental
causes, while marketing 220 million
items to our 50 million consumers.Their involvement
was a deciding factor, for example, in the Educational
Campaign of Young and Adults program and in the
dissemination of the use of refills as a way to reduce
the environmental impact caused by products’ packaging.

Moved by the prospects of spreading this Natura
way of doing business to an even greater number
of people and markets, we decided to boost
investments in the company’s international expansion
program. We opened the doors, in April 2005, to
Maison Natura in Paris, France, the birthplace of
modern cosmetics and later, in August, we started
operating in Mexico, one of the world's largest and
most competitive direct sales markets.The significant

growth in operations in Argentina, Chile and
Peru, which together achieved a 45.4%
gross revenues growth over 2004 reinforces
our confidence to expand the Natura
community internationally.

To prepare for this international expansion,
we embraced a sweeping organizational realignment.
New corporate structures were rolled into place
while the existing ones were reinforced and
energized, lending a new burst of support, efficiency
and speed to operations in Brazil and abroad.
We also took further steps in corporate
governance, appointing a CEO who came from
outside Natura’s controlling group. Under this
renewed structure, the founding partners continue
active in the formulation of the company’s strategy,
sharing their expertise and entrepreneurial vision in
their new roles in the Board of Directors, working
side by side with the executive group.

We are conscious that, by launching a new
research platform, anchored in the sustainable
use of Brazilian biodiversity and in the combination
of traditional knowledge with scientific expertise
and technology, we entered into a field where
the desire to learn and dialogue must be
permanently cultivated.This learning process gave
rise, in 2005, to the unveiling of innovative
products, such as the Chronos Spilol, which
uses jambu, an endemic plant in Brazil’s
Northern region, in its formula. Instead
of posing a hurdle, this experience
reinforces our commitment to dare,
besides validating our confidence
to tread new paths that open up
new business potential.

We believe in our potential because we can
count on highly motivated staff to foster
quality relationships in all our actions.
For this reason we should develop, with
even more commitment, our capacity to find,
train and retain leaders who are aware
of their role in the global community. We are
conscious that our great challenge will be
to face the changes and problems posed
by the company’s accelerated growth, while
continuing to nurture a working environment
rich in motivation, joy, quality, coherent with
our values – this is the determining condition
for our future development.

For all of this years’ great achievements,
we wish to extend our deepest gratitude and
sincere recognition to all those who are part
of Natura’s largest community: our staff, Consultants,
shareholders, consumers, suppliers, community
partners and the public power. We also take this
opportunity to extend an invitation to all those
who also believe that it is possible to disseminate
the Well Being Well and together help build
a better, just and more harmonious common future.

Antonio Luiz da Cunha Seabra
Guilherme Peirão Leal
Pedro Luiz Barreiros Passos
Cochairmen of the Board

Alessandro Giuseppe Carlucci
Chief Executive Officer

Annual Report Natura 2005

2005 Annual Report Natura

Beliefs

Life is a chain of relationships.
Nothing in the universe exists alone.
Everything is interdependent. It is our
belief that the appreciation of the
importance of relationships is the
foundation of an enormous human
revolution in the search for peace,
solidarity and life in all of its manifestations.

The continuous search for improvement
promotes the development of individuals,
organizations, and society.

Commitment to the truth
is the route to perfecting
the quality of relationships.

The greater the diversity,
the greater the wealth
and vitality of the whole system.

The search for beauty, which is the genuine
aspiration of every human being, must be free
of preconceived ideas and manipulation.

The company, a living organism, is a
dynamic set of relationships. Its value
and longevity are connected to its ability
to contribute to the evolution of society
and its sustainable development.

Gláucia Salgado gives swimming
lessons and sells Natura products.
She helps Emily Von Oertzen with her
diving skills as her Mom, Constance,
looks on. Constance will not go
a single day without her favorite
buriti and andiroba exfoliating
vegetable bars of soap
from the Ekos line.

As a friend and Consultant to
Elisa Calfat, Gláucia keeps her
up-to-date on new Natura
products. When they get
together they chat about what
is new, about their lives. Elisa
tells she loves her Architecture
course and will devote time,
this semester, to study the
work of contemporary
Brazilian architects.

There is something new and special
catching her attention: a distinctive
building in Paris that cinches
an important link between
Brazilian and French cultures.

The building of wide spaces and
sensuous curves also fascinates
Emmanuelle Mouquet, a Natura
consumer who has lived in Paris
since she was a child.

Every time she meets her friend Marie Gillot…

...she walks by the building that entices her.

The friends share the dream of visiting Brazil someday.

Its vibrant and
sensuous scents,
colors and unusual
textures that
Emmanuelle got to
know keep drawing
her back to Maison
Natura Paris.

The experience is so enveloping that it transports Emmanuelle back to wide vistas… ...to trails and clear water streams surrounded by thick, exuberant foliage.

Spaces, trails, streams and plants that inspire the innovative products...

...that captivate over 50 million Natura consumers.

And transport them to the exotic forests…

F r e s cas

Especia ri a
atura

N
e
d
s
a
u
g
Á

Just like Petra
Schwartz and Flora
Lopes, Natura
consumers who
celebrate a more
diverse, more
integrated world.

They know that it is
possible to use natural
resources conscientiously,
and they can influence this
movement, which will also
help their country.

A country naturally rich
also in cultural expressions
that shine in a diversity of
dialects and the enormous
talent of its people.

Expressions that Antonio Nóbrega, artist sponsored by the program
Natura Musical, brings to the limelight…

…carrying fun, joy and Well Being Well

to thousands of people across this immense Brazil.

Strategy and
Outlook

Our business strategy is rooted in four
pillars: our commitment to sustainability,
the quality of relations established with our
various publics, the concepts and products
we develop, and Natura’s brand strength,
which all represent our essence.

The prospects favor the materialization
of this strategy, because there is room
for further growth of the markets
we operate in and for the company
within these markets.

the average for all economic sectors.
In the direct sales segment, the numbers
are even more impressive.
While full-time positions job growth has
been exceptionally small in recent years,
direct sales created opportunities and
income for more than 1.5 million people.
In 2005, according to ABEVD (Brazilian
Association of Direct Selling Companies),
they turned over R$ 12.3 billion –
up 20.4% and 51.8% from 2004
and 2003, respectively.

The Brazilian cosmetics, fragrances
and toiletries market recorded another
excellent performance in 2005. According to
Abihpec (the industry association), nominal
growth for the target market, from
January to October 2005 was 16.5%
year-on-year. In real terms, discounting IPCA
consumer inflation (6.4% for the period), the
figure was still a solid 9.5%, much higher than

Based on the industry growth coupled
with the reported results last year, we intend
to take advantage of every possible growth
opportunity in the domestic market
and invest in an international expansion
process while reinforcing sustainable
long-term business platforms, such as
Research and Development, and securing
value and consistent returns to shareholders.

We intend to maintain our leadership in
Brazil’s target market for Cosmetics industry,
building and reinforcing our brand features
in different country regions, by widening
the number of Consultants and increasing
business volume.

In the international operations, our intention
is to consolidate, in 2006, the planning
process to broaden our presence in other
countries. Perspectives are based on the
continuous increase in sales and in the
number of Consultants in every single
market, with sales channel productivity
growth and category orientation besides
the geographical expansion of our operations.

To ensure, in the upcoming years, a domestic
and international expansion process, it will be
essential, not only to grant an increasing
volume of resources in investments dedicated
to research and development and innovation,

We will continue to seize all
opportunities in the domestic market
and to invest in international expansion

but also to maintain its effective usage,
focusing on our differentials. We will
reinforce our choice to deepen our
knowledge of the Brazilian biodiversity
and its application to our formulas in a
sustainable way. Simultaneously, we will
intensify the number of our own research
projects and associations with scientific and
academic networks in Brazil and abroad.

Another challenge is to develop and improve
organizational structures, which in addition
to supporting current expansion, also offer
sustainability to future growth.These
structures are shaped in order to broaden
the concern, be it in planning or be it in the
management of our activities, that we have
towards the socioenvironmental performance,
which is part of Natura’s essence.

Annual Report Natura 2005

2005 Annual Report Natura

Company

profile

Natura’s two passions – for cosmetics
as a vehicle of self-knowledge
and the exaltation of well-being
and human connections as a way
to express life – granted it a privileged
spot in Brazil’s corporate landscape.
We are one of the most admired
companies in Brazil, also leader in the
domestic industry of cosmetics, fragrance
and personal hygiene and our brand
is one of the most valuable brands
in Brazil. Our product portfolio now
consists of approximately 600 products,
in the categories make-up, fragrances,
solar protection, skin care and hair care,
among others.

Over the last years, we have achieved
consistent rates of growth, much higher
than the average gains by the domestic

cosmetics and direct sales sectors which,
in their turn, have already been surpassing
the growth rate of Brazil’s economy.
In 2005 gross revenues amounted
to R$ 3,243.6 million, 27.7% more than
in 2004. One of the cornerstones of this
expansion is the constant search for
excellence in our products and services,
essential to establish and cement quality
in our relationships with our publics.

We are at the frontline of the
Brazilian companies that invest the
most in research and development.
Currently, Natura houses a large and
integrated research, manufacturing and
logistics center at its headquarters
in Cajamar, São Paulo. There are also
commercial and distribution units
in Itapecerica da Serra, in the state of

São Paulo, and in Uberlândia and Matias
Barbosa, in the state of Minas Gerais.

In 2005 we produced more than 200
million items sold to our 50 million
consumers in over 5,000 Brazilian cities
through direct sales. We ended 2005
with 4,128 employees and 519,000
Consultants – independent professionals
who purchase and resell our products –
in Brazil and the other countries
where we operate: Argentina, Chile, Peru
and Bolivia. Since 2005, we are also
present in Mexico and France.

With our daily business fully integrated
with our beliefs, we maintain and develop
a socially and environmentally responsible
management, rooted in two pillars.
The first one is ethics, transparency and

One of the foundations
of our growth is the quest
for excellence in our
products and services

open communication channels with
all the publics who interact with the
company. The other one is the
establishment of targets compatible
with the sustainable development.
These are initiatives that belong to our
dream of contributing to build a better
world. Since 2004 Natura is a public
company, with shares listed in the
Novo Mercado at São Paulo’s Stock
Exchange, Bovespa.

Annual Report Natura 2005

2005 Annual Report Natura

Products
and concepts

Our beliefs and world vision bring forth
concepts that breathe life into the products
we create.They are developed from
a deep commitment to integrate all
possible facets of individuals (physical,
emotional, intellectual and spiritual)
and their family, professional and social
relationships as well as those with the
environment. For us, a new product must
be an instrument of information,
consciousness and eagerness
for perfection.

In 2005 our product portfolio
consisted of approximately 600 products,
in the categories make-up, facial and body
treatments, personal hygiene, fragrances,
hair care, solar protection, children’s line,
among others (to get acquainted with our
complete portfolio, visit Natura’s website
at www.natura.net).

Three lines among them stand out for
symbolizing with eloquence Natura's world
vision and convey the values we hold dear:
Chronos, Mamãe e Bebê, and Ekos. Not
coincidentally, all these lines were created at
significant moments of our corporate history
and carry universal concepts.

Natura Chronos was the first line to face
head on the prevailing beauty standards
and stereotypes. For the sake of coherence,

Our products are also instruments for
the broadening of individual awareness
and of the desire for perfection

we adopted a new concept for anti-signs
skin care and established an innovative
standard communication, in the early 1990s,
by valuing the Truly Beautiful Woman,
showing that it is possible to feel well and
beautiful regardless of age.

The mother-child bonding determines,
to a large degree, how that baby will later
relate to the self and the world.This bond
inspired the Mamãe e Bebê line, in which all
products were specially developed to
stimulate this essential relationship through
the five senses – touch, smell, vision, hearing,
breast-feeding –, opening up a universe
of feelings and sensations.

The Natura Ekos line started a new cycle
in the company’s history by proving that
innovation can be delivered straight from
nature. All products in this line lead to
personal and collective well-being. Beginning
with the use in their formulas of
biodiversity elements, all of which Natura
strives to extract in a sustainable manner.
Their benefits, scientifically proven,
rescue the values and experiences
accumulated by traditional populations
through the centuries.

2005 Annual Report Natura

History

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1969
Antonio Luiz da Cunha
Seabra starts Natura, a
store and a laboratory
in São Paulo.

1974
The company chooses
the direct sales model
and gathers the first
Natura’s Consultants.

1979
Natura launches its first
men's line, named Sr. N.

Sistema Natura is
established due to the
creation of new companies.

1981
The first lines of
make-up and fragrances
are launched.

1982
Natura sets foot abroad
for the first time.
Destination: Chile.

1983
In another pioneer move, in
Brazil, Natura starts offering
refillable products, among
other Brazilian retailers.

The Séve line opens up a new
niche: bath oils.

1984
Launch of the
Erva Doce line.

1986
Chronos launch marks
the first generation
of a line of anti-signs
facial treatment.

1989
Merge of the
companies that
integrated the
Sistema Natura.

1990
Natura defines and announces
its Principles and Beliefs: the
importance of relationships,
commitment to truth, continual
search for perfection, diversity as
an engine of vitality, affirmation of
a beauty that is free from
stereotypes and manipulation,
and the corporation as a
promoter of social enrichment.

1992
Natura charges ahead with
the adoption of corporate
responsibility initiatives.

The concept Mulher
Bonita de Verdade shows
that true female beauty
is not a matter of age,

but of self-esteem.

1994
The Mamãe e Bebê line
is launched, advancing the
parent-child bonding process.
One of its innovations was
the proposal of Integrated
Massage Method, based on
Shantala techniques, which
fosters the mother-child
closeness by touch from
pregnancy through the early
years of the child's life.

Operations are launched
in Argentina and Peru.

1995
Natura starts
Crer para Ver program,
the objective is to
contribute to the
improvement of public
education in Brazil.

2000
Launch of the Ekos line,
made from Brazilian
biodiversity in
sustainable ways.

1998
Establishment of The
Board of Directors.

2001

The company opens Espaço
Natura in Cajamar, within
São Paulo metropolitan region.

Natura establishes a relationship
with Global Reporting Initiative
(GRI) and is the first company
in Latin America to follow its
guidelines. In its Annual Report
GRI develops models of
voluntary reports on social
and environmental impact
caused by corporations.

2002
Establishment of
Sustainability Committee.

2004
Natura's stock is listed
with São Paulo Stock Exchange
(Bovespa) Novo Mercado.

Natura is issued
an NBR ISO 14001
certificate.

2005
Maison Natura opens its doors
to the public in Paris and
operations begin in Mexico.

Chronos Spilol is launched
the flagship for the latest
generation of anti-signs skin care.

It uses the extract from a Brazilian
native plant from Amazon, known
as jambu (Spilanthes oleracea).

Natura is issued
an NBR ISO 9001 certificate.

2005 highlights

Milestones

• Instituto Nacional da Propriedade
Industrial (Inpi) recognizes Natura's
brand name value; the company obtains
the NBR ISO 9001 certification.

• Alessandro Carlucci is named Natura’s first
CEO who came from outside the controlling
group, crowning the professional process
and the enhancement of corporate
governance procedures.

• Maison Natura opens its doors to the
public in Paris, France, and the company
launches operations in Mexico; the
internationalization process gains momentum.

• Consolidated gross income grows 27.7%,
well above the growth of our target-market.
Cumulative growth in the past three
years soared to 129.5%.

• Natura’s shares are selected to be part of
the well-known domestic and international
stock indices: IBrX 100, ISE, itag and MSCI.

• Operations in Chile, Argentina and Peru
show a consolidated growth of 45.4% in
weighted local currency terms.

• Chronos Spilol is launched; it is also the first
anti-signs facial cream formulated from a
Brazilian botanical source obtained by
organic, sustainable methods, the jambu.

• The entire line of Natura bars of soap
turns vegetable, now produced from palm
kernel oil instead of animal fat.

• The Ministry for the Environment grants
Natura the first ever license to a domestic
cosmetics producer to access Brazil’s
biodiversity genetic heritage, with
the breu-branco extract.

• Natura’s Consultants are mobilized
to promote the Young and Adult
Education, a Ministry of Education
program. As a result 66,600 people
over age 15 were sent back to primary
schools, and, in another campaign,
to accelerate the sale of refills.

• Natura was elected, for the third consecutive
year, the Best Place for Women to Work,
according to Exame business magazine and
Great Place to Work® Institute; and for the
second consecutive year, the Most Highly
Regarded Company in Brazil – from
CartaCapital magazine and InterScience.

Challenges

• Manufacturing and logistic issues,
resolved in the second semester,
temporarily hampered production
and order fulfillment routines
in the first half of the year.

• Difficulties to find suppliers, particularly
in traditional Northern region and
neighboring communities, which complied
with the sustainability criteria demanded
by Natura’s certification processes.

• A slight drop in the favorable
responses to the Organizational
Climate Survey, to 70% in 2005 from
73% in 2004, signaled the need to
improve personnel relations.

• Difficulties to meet, in a manner coherent
with our beliefs, the pledged ratio of
disabled workers, due to the rapid increase
in our personnel and the extended search
for candidates with the necessary skills.

Annual Report Natura 2005

2005 Annual Report Natura

Methodology
and key
indicators

For the fifth consecutive year,
Natura reports its economic, social
and environmental activity in an
integrated format, in line with the
permanent quest for the sustainable
development of business.

The information on our economic
performance is in accordance with
the guidelines from the Brazilian Security
and Exchange Commission (CVM), and
the Associação Brasileira das Companhias
Abertas (Brazilian Association of Publicly
Traded Companies – locally, Abrasca).

For indicators of social and
environmental performance, Natura follows
the guidelines from Instituto Ethos de
Empresas e Responsabilidade Social, and
the Global Reporting Initiative’s
(GRI) models. Instituto Ethos was formed
in 1998 to mobilize, increase awareness
and help companies manage their business
in a socially responsible manner.

GRI, created in 1997, is an independent
international agency that develops

protocols aimed at volunteer usage
that permit gauging the economic, social
and environmental impact of the
companies’ activities, products and services.
GRI is supported by foundations,
institutes, companies and organizations
throughout the world. It counts
on the help of several sectors of the
public interested in accurate and
transparent information. Since 2004,
Natura is an Organisational Stakeholder
and cooperates with a working group
responsible for developing the third issue
of the GRI Guidelines. To facilitate the
finding of GRI indicators related to several
of our activities on the following chapters,
its number will come in brackets right
after the correspondent theme (see GRI
Index on page 143).

Besides following these entities’ guidelines
to prepare its reports, Natura adopts
transparency communication tenets issued
by Associação Brasileira de Comunicação
Empresarial (Brazilian Association
of Corporate Communication –
locally, Aberje) to which it is associated.

Performance
Key Indicators

Consolidated Gross
Revenue Growth
(R$ million)
CAGR (2001 - 2005) = 29.1%

6
9
3
5
2

2
0
1
9
1

2
1
1
4
1

0
8
6
1
1

6
3
4
2
3

+27.7%

0
6
3
1

EBITDA Growth
(R$ million)
CAGR (2001- 2005) = 42.7%

Net Revenue Growth
(R$ million)
CAGR (2001- 2005) = 27.1%

EBITDA Margin
Growth (%)

4
4
6
5

7
1
3
4

+30.8%

1
3
9
9

5
5
7
8

7
5
9
2 2
9
9
1

9
8
2
3
1

2
2
8
2
2

4
4
2

7
4
2

2
2
2

1
0
2

6
6
1

7
9
6
7
1

+29.0%

+0.3pp

2001

2002

2003

2004 2005

2001(1)

2002

2003

2004 2005

2001

2002

2003

2004 2005

2001

2002

2003

2004 2005

Business Performance

Consolidated business volume(2) (R$ million)
Consolidated business volume per Consultant(3)

(R$ per Consultants/year)

2001

1,644.0

2002

1,951.7

2003

2,652.5

2004

3,531.1

2005

4,496.2

8,349

8,875

10,283

11,277

11,984

Change
05/04

27.3%

6.3%

1. Natura Empreendimentos
2. Business volume is the estimated amount of orders by Natura’ s Consultants, based on the estimated profit margin of these Consultants, excluding revenues from the supporting

material that is provided to them. It covers Brazil, Argentina, Chile and Peru.

3. Considers the average number of active Consultants - those who made at least one order during the sales cycle. Each cycle lasts three weeks. It covers Brazil, Argentina, Chile and Peru.

Annual Report Natura 2005

2005 Annual Report Natura

Financial Performance(1) (R$ million)

Domestic gross sales
International gross sales(2)
Other sales

Gross operating revenues
Net operating revenues
EBITDA(3)

Operating income(4)

Net income
Investments
Financial income
Total assets
Shareholders’ equity and profit-sharing debenture(5)
Net indebtedness(6)

2001
1,140.3
27.7
–
1,168.0
875.5
120.3
72.3
9.5
7.1
(35.5)
599.9
208.8
205.0

2002
1,375.2
35.0
1.0
1,411.2
993.1
199.2
121.1
21.7
25.2
(44.3)
646.6
225.9
119.1

2003
1,860.3
47.9
2.0
1,910.2
1,328.9
295.7
230.4
63.9
23.9
(30.1)
723.9
354.2
(19.0)

2004
2,472.0
66.8
0.8
2,539.6
1,769.7
431.7
395.4
300.3
83.1
(2.8)
1,016.4
436.1
(91.1)

2005
3,149.7
92.6
1.3
3,243.6
2,282.2
564.4
532.9
396.9
111.6
11.3
1,368.9
521.4
(200.2)

Change
05/04
27%
39%
63%
28%
29%
31%
35%
32%
34%
-504%
35%
20%
120%

1. Operations in Brazil, Argentina, Chile, Peru, France (starting in 2005), Mexico (starting in 2005) and exports to Bolivia.
2. Operations in Argentina, Chile, Peru, France (starting in 2005), Mexico (starting in 2005) and exports to Bolivia.
3. Earnings before financial income, profit-sharing debentures, income tax, depreciation and amortization.
4. Operating income after financial income.
5. Total shareholders’ equity and profit-sharing debentures.
6. Excludes profit-sharing debentures.

Water Consumption
per Unit Sold(1)
(liters/unit sold)

Total Energy Consumption
(Energy Matrix)(2)
per Unit Sold
(kjoules/unit sold)(3)

Water Reuse
(% of total water treated at the
Effluent Treatment Station)

Research and
Development
Number of Products
Launched

5
6
1

2
2
1

7
8
0

7
6
0

3
6
0

)
4
(
1
2
5
2
1

7
5
2
0
1

2
5
8
7

7
3
0
6

8
1
5
5

5
9
3

0
9
2

0
6
1

0
5
5

5
6
1

3
1
2

2
8
1

7
1
1

1
9

D
N

2001

2002

2003

2004 2005

2001

2002

2003

2004 2005

2001

2002

2003

2004 2005

2001

2002

2003

2004 2005

Waste Destination (%)

Incinerated(5)

Disposed of in landfill sites

Recycled(6)

4
0
0
6

2
0
4
3

4
9
5

8
5
2
6

1
9
1
3

2
5
5

0
2
9
6

0
4
4
2

0
4
6

1
4
3
7

9
0
1
8

0
2
1
2

3
4
5

9
0
6
1

2
8
2

Generation of Waste
per Unit Sold
(grams/unit sold)(7)

Investments in Innovation
(R$ million)

)
8
(
5
5
3

9
9
2

2
9
2

6
5
2

7
7
2

1
7
6

4
7
4

5
5
3

+41.5%

2
7
2

8
8
2

2001

2002

2003

2004

2005

2001

2002

2003

2004 2005

2001

2002

2003

2004 2005

1. In 2005 there was 5.6% reduction in relative water consumption. Main reason was the gain in productivity derived from large-scale production of items for resale.We ended 2005 with 5.3%
reduction over the forecast amount.
2. Energy Matrix is the total energy used by Natura, that comes from various sources (electricity, diesel and LPG).
3. In 2005, relative energy consumption decreased 8.5%.The main driver was the gain in productivity derived from large-scale production of items for resale, 5.3% reduction over the
forecast amount.
4. Approximate value. In 2001 total unit was considered for the calculation.
5. Incineration decrease was due to actions, taken that gave priority to the recycling of solid waste.
6. Improvements were implemented in the segregation process of materials and the change in operational waste destination (equipments for tissue protection) contributed to 10.5%
increase in the waste recycling index in 2005 compared to 2004.
7. Absolute volume of waste posted an increase of 34% in 2005, surpassing the growth in the number of units sold, which was 25% over that of the previous year. Greater volume
in production and actions for cleansing of inventory were important drivers in the increase of the absolute volume of waste.
8. Approximate value. In 2001 calculation was made on the basis of units billed.

Our businesses are based
on establishing quality relations
and defining goals compatible
with sustainable development

not related to the corporate law nor to
the business, but exists to enhance the
chain of relations and people’s quality of life.

The matrix does not fully reflect Natura’s
efforts to promote a socially responsible
management. Instead, it reports the
investments made in the pivotal facets
of this management style.They are:

• Monitoring the quality of Natura's
relations with its publics about respect
to ethics, transparency and the efficiency
of the dialogue channel, including themes
not directly linked with the business
(Fundamentals line).

• Promoting sustainable development –
be it local or in a specific region, be it for
fostering diversity, education, quality of life
and culture (Socioeconomical line).

• Protecting the environment
(Environmental line).

The declared values designate effective
investments above the legal requirements
(see the description of the considered actions
at matrix in Highlights of Investments in
Corporate Responsibility on page 108).

Investment
in Corporate
Responsibility

During the past decade Natura
has intensified and refined
its socioenvironmental management
practices, rooted in the quality of its
relations and the definition of corporate
goals compatible with sustainable
development. These principles now have
become part of the company’s initiatives
in all areas. Some results of this
process were the choice of renewable
compounds from Brazil’s biodiversity
as its technological platform, the
socioenvironmental assessment
of suppliers and the development
of packaging with the least possible
impact on the environment.
The Annual Report aims to
discuss these actions.

To focus attentions on the critical aspects
of these strategies, Natura devised a
supporting tool for managers to plan
and visualize specific actions towards each
sector of the public the company relates to:
The Corporate Responsibility Matrix.

This matrix, therefore, allows
to highlight Natura’s investments
on corporate responsibility matters,
or, better said, on those groups of actions

Annual Report Natura 2005

2005 Annual Report Natura

Corporate Responsibility
Investment Matrix
(in R$ thousands)

Natura’s Funds
Fundamentals
Socioeconomical
Environmental
Subtotals

Management expenses

Funds generated
by Consultants
Net funds
raised by the
Crer pra Ver Program

Personnel,
families and
third parties
189.3
7,995.8
46.6
8,231.7

Consultants
214.0
-
-
214.0

Supplier
communities
-
896.3
-
896.3

Natura stakeholders
Cajamar and
Itapecerica
da Serra
17.0
410.4
-
427.4

Consumers
194.1
-
-
194.1

Suppliers
98.7
60.0
-
158.7

Government
and society
2,054.2
1,578.5
1,299.5
4,932.2

Shareholders
-
-
-
-

TOTAL
2,767.3
10,941.1
1,346.1
15,054.5

All stakeholders
2,559.6

Total Natura’s funds

% of net sales

TOTAL
2,559.6

17,614.1

0.8

Personnel,
families and
third parties

Consultants

Supplier
communities

Natura stakeholders
Cajamar and
Itapecerica
da Serra

Suppliers

Government

and
society

Consumers

Shareholders

TOTAL

N.A.

3,041.7

N.A.

3,041.7

Total funds generated
by Consultants

3,041.7

Tax funds
Tax incentives

Personnel,
families and
third parties
-

Consultants
-

Supplier
communities
-

Note: N.A. = Not applicable.

Suppliers
-

Natura stakeholders
Cajamar and
Itapecerica
da Serra
-
Total tax incentives
GRAND TOTAL

Consumers
-

Government
and society
2,723.9

Shareholders
-

TOTAL
2,723.9
2,723.9
23,379.7

Key social indicators

Destination of Funds per Type
of Stakeholder (R$ million)

Satisfaction
(favorability %)

Consumers(1)(2)

Suppliers(1)(2)

Consultants(1)(2)

5
9

6
9

8
9

3
9

8
7

3
8

2
8

2
8 9
8

9
8

1
9

Shareholders
Personnel
Government

Consultants
Suppliers

396.9
306.4
727.2

1,348.9

1,731.7

307.5
247.3
547.8

1,059.3

1,365.9

51.7
110.6
329.3
493.2
601.9

97.6
155.1
380.0
585.5
679.3

191.6
177.8
502.1

795.8

942.2

2001

2002

2003

2004

2005

Mar Mar Oct
2001 2002 2003 2005

Jan

Jan
May
2002 2004 2005

Jun

Mar Oct Oct
2001(3) 2002(3) 2003(4) 2005

Jan

Jan
2006

Consultants

Number
of Consultants(5)
(in thousands)

9
1
5

3
3
4

5
7
3

9
9
2

2
2
3

Suppliers

Personnel

Environmental Classification
of Suppliers (%)(6)

Employees, In-house Outsourced
Employees and Temporary Workers

Suppliers
evaluated
as A(7)

1
4

9
1

Suppliers
evaluated
as A/B(8)

Suppliers
evaluated
as B(9)

6
3

4
2

9
2

4
1

Temporary workers
In-house outsourced contractors(10)
Employees

201
285

3,293

259
1,051

88
769

230
802

2,884

2,986

3,555

679

1,209

4,128

2001

2002

2003

2004

2005

2004 2005

2001

2002

2003

2004

2005

1. From now on, the survey results will be published considering the period during which it was carried out.
2. Reported data refer to surveys conducted from January 2001.
3. Consultants surveys results from March 2001 and October 2002 are not comparable to the others due to methodology changes.
4. Consultants survey results of October 2003 were altered in this report to make them comparable to similar surveys conducted in other periods because they refer to the same methodology
used in later periods.
5. Consultants in Brazil, Argentina, Chile and Peru.
6. The suppliers classification began in 2004.
7. Between 90% and 100% meet the requirements.
8. Between 80% and 89% meet the requirements.
9. Between 60% and 79% meet the requirements.
10. We are considering the in-house outsource employees at Companies units.

Annual Report Natura 2005

2005 Annual Report Natura

Competitive

advantages

Research and Development

Our investments in this area grew 41.5% in
2005, to 2.9% of net revenues (GRI EC1).
These figures place us among the Brazilian
companies that invest the most in research,
development and innovation.The end
results, transformed into new products,
were particularly rewarding in 2005.

proved to be effective against signs of aging.
The line also counts on another anti-signs
compound, Elastinol, developed with
the help of Professor Ladislas Robert
at Paris 5 University. During 2005, studies
for the launch of a fourth generation of
Elastinol were concluded.The use of both
these compounds lends further flexibility
to the development of the Chronos line.

We rolled out 213 new products
and the innovation index, which
measures the revenue share of products
launched in the last 24 months, rose
to 69.8% from 63.2% in 2004.

Another highlight last year was the
conversion of our entire line of soap
to vegetable oils. Now all our bars
of soap are made from palm-kernel oil
instead of animal fat.

The anti-signs Chronos skin-care line
epitomizes Natura’s values. In 2005 the
line included a new formulation with Spilol,
extracted from a native plant, the jambu,
from the Brazilian Northern region,
obtained through techniques developed
proprietarily by Natura’s researchers, which

Equally important to the transmission
of the company’s values, the Ekos
line – which marked the start of the use
of products from Brazil’s biodiversity
as a platform for product development –
incorporated some exclusive items for
the inauguration of Maison Natura in Paris,

in April 2005.These new products, currently
exclusive to the French store, will soon be
available in Brazil and other countries.

Natura is already the unquestionable leader
in the fragrances market. In 2005 we
accelerated specific research projects to
include more essential oils in our lines.
This work required hiring scientists and
researchers and will permit the addition of
new extracts besides priprioca, breu-branco
and pitanga, unique to our perfume lineup.

Another important achievement, targeted
for June 2006, is the bringing foward of the
elimination of all animal testing in the
product development process. We
accelerated the reformulation of our
internal process for safety assurance of
products.Today Natura is one of the few
Brazilian companies that develop
and conduct in vitro testing in its own
laboratories. In addition to these tests,

As part of our continuous
innovation process, we seek
to establish partnerships
with the scientific community

we developed an evaluation model with
a database and advice from external
specialists, under the coordination of the
Product Safety Committee.This model
ensures the integrity and harmlessness
of the products before they are sold
for human consumption (GRI PR1).

In our quest for innovation we have sought
partnerships with research institutes and
universities.The Natura Campus Program,
in conjunction with Fundação de Amparo
à Pesquisa do Estado de São Paulo (Fapesp)
was especially active last year, with the
development of various projects with
six universities in the state of São Paulo.

Annual Report Natura 2005

2005 Annual Report Natura

AWARDS
AND RECOGNITIONS

Brand

Relationships

The Natura brand epitomizes the
company’s essence and the contents of
our Principles,Vision and Beliefs statements.
As the company’s most valuable intangible
asset, the Natura brand is crucial for our
international expansion process and as
such we devote special care to strengthen
our brand and disseminate it to other markets.

An important initiative in 2005 was the
consolidation of the Brand Management
System to manage the entire process
involved in branding – language, training,
contents development, advertising and
secondary-brand management.

The result was clear in the number of awards
conferred to Natura as one of the most
valuable brands in the country, according to
different research institutes and other media
(see the table “Awards and Recognitions”)
(GRI SO4). Another significant recognition
came from the Instituto Nacional da
Propriedade Industrial, Inpi, acknowledging
Natura as a highly renowned brand, a status
shared by brands with undisputable authority
and outstanding clout that stem from their
tradition and the quality and trust they
inspire. With it, the protection of our
brand is no longer limited to the cosmetics
industry but reaches out to all
sectors of economic activity.

Throughout its history Natura has been recognized for its ethical
and transparent relations with its diverse publics groups. Among
the most important awards and recognitions received in 2005 the
following deserve mention (see the complete listing on page 117):

Most Highly Regarded Company in Brazil – CartaCapital magazine
and InterScience (second consecutive year).

Best Place for Women to Work – Exame business magazine and
Great Place to Work® Institute (third consecutive year).

Model-Company in Social Responsibility – Guia Exame de Boa
Cidadania Corporativa (sixth consecutive year).

Social Report Award – Associação Brasileira de Companhias
Abertas (Brazilian Association of Publicly Traded Companies);
Associação dos Profissionais de Investimento do Mercado de
Capitais (Analysts and Investment Professionals in Capital Markets
Association); Instituto Ethos de Empresas e Responsabilidade Social
(Ethos Institute of Companies and Social Responsibility); Fundação
Instituto de Desenvolvimento Empresarial e Social (Corporate and
Social Development Institute Foundation) and Instituto Brasileiro de
Análises Sociais e Econômicas (Brazilian Institute of Social and
Economic Analyses), fourth consecutive year.

Abrasca Award – Best Annual Report, Listed Companies, fourth place.

Aberje São Paulo Award in the categories Investor Relations, Media
Diversity and External E-News – Associação Brasileira de Comunicação
Empresarial (Brazilian Association of Corporate Communication).

Aberje Brazil Award in the categories Media Diversity and
External E-News – Associação Brasileira de Comunicação
Empresarial (Brazilian Association of Corporate Communication).

Top-of-Mind Award in the category Product and Beauty
Cream – Folha de S. Paulo news daily.

Empresa de Valor 2005 – Valor Econômico business daily.

Fourth Most Valuable Brand in Brazil – ISTOÉ business magazine
and Instituto Interbrand.

Environmental Merit Award – Federação das Indústrias do Estado
de São Paulo (second consecutive year).

Guided by our belief in ethics, transparency
and dialogue, in 2005 we continued to
develop efforts to better define and refine
the relationship with our various publics.

Consultants and consumers
Natura’s Consultants are a crucial part of
our business. We therefore stimulate and
value their role in generating income in
these times marked by a dearth of formal
jobs. In 2005 we distributed R$ 1.3 billion
to our Consultants, 27.3% more than in
2004 (GRI EC13).

We opened 2005 with 433,000 Consultants
and added another 86,000 (10,000 of them in
other countries), to close the year with
519,000. Consolidated business volume grew
by 27.3% over 2004 and productivity per
Consultant in Brazil increased to R$12,300
which represents a raise of 6.6% over
that of the previous year.

We invested strongly in training and
strengthening contacts. As a result
of a series of meetings, workshops
and product launch events, we managed
to reduce Consultant turnover.

The Internet has been growing as a vehicle
of interaction with the sales force: in 2005
approximately 100,000 Consultants in our
roster had frequent access to our website, in
comparison with 70,000 in 2004 (GRI EC13).

Surveys conducted by our quality
control areas had detected a few areas
of dissatisfaction among Consultants, be they
related to on-demand product availability
or to irregularities at delivery. Changes in
stock management policy were promptly
conducted and reduced these issues.
The conclusions of consumer satisfaction
surveys have been taken to a multidisciplinary
group for solutions (GRI PR8).

Segmentation strategies helped improve
our relations with specific customer groups.
The first group addressed was our younger
constituencies – Consultants as well as
customers. Among efforts to better reach
them, we launched the Natura Mov,
a movement designed to inspire the creation
of a better world. In addition to a magazine
named after the program edited with specific
language to young people, printed on recycled
paper, Natura Mov has a website.

We developed another program for
the Mamãe e Bebê line, for Consultants
and expectant mothers. Its main vehicle is a
website with information on parenting
and child care, with bulletin boards where
young parents exchange tips and opinions.
This website registered over 50,000
unique users in 2005.

Personnel
Natura’s staff plays the leading role in the
construction of a socially responsible company
and the establishment of substantive
connections with our distinct publics.Their
personal and professional well-being
and their identification with our culture
and guiding beliefs are issues we take seriously.

Natura hired 573 new people in 2005 to back
up the business international expansion
process at home and abroad, increasing the
work force by 16%. At year-end, we had a staff
of 4,128, of which 3,575 in Brazil and 553
abroad (GRI LA1 and LA2).

Expansion issues also led to profound changes
in corporate structure to support business
expansion and the internationalization process.
The executive group grew to 292
professionals, 25.5% more than in 2004. At the
same time, the new business challenges
demanded more investment in training and
skill development, which in 2005 totaled
365,264 hours, or 101 hours per employee,
including trainees (GRI LA9).

Annual Report Natura 2005

2005 Annual Report Natura

The expansion of the company posed
challenges that involved complementary
actions.The satisfaction index tallied
by our yearly Organization Environment
survey, conducted by an independent
specialized firm, slipped slightly to 70% from
73% in 2004 (GRI HR10). Although we are
still a market reference, this
was a sign that we need to redouble
efforts on employee relations to be
chased in 2006 by all company managers.
Despite this fact, we maintained our
capacity to attract and retain talents.
Personnel turnover in 2005 fell to 7.64%
from 7.81%, and we received 44,884
more applications for internships and
trainee programs, 16.9% more than
in 2004 (GRI LA1 and LA2). We were
selected as the Best Place for Women
to Work for the third consecutive year
by Exame magazine and made it to
the list of 100 best places to work
in Latin America, by the same vehicle.

Besides hiring aggressively in 2005
and establishing Human Resources
processes at the international operations,
we also sought to attract professionals
at all levels, at all capacities, with skills
compatible with the company’s expansion
in other countries, even for positions
in Brazil. International experience
and adaptability to other cultures rank
high among these requirements.
We also started to offer summer
internships, partnerships and exchanges
with foreign universities. Another
program, Natura Educação, which offers
tuition reimbursements, grew significantly
in value and range, to promote

Improve relations with all our
publics is a constant goal at all
the company’s departments

the development of a growing number
of employees (GRI LA16).

We had some difficulties in 2005
to fill all the positions available for people
with disabilities, in a form consistent with
our beliefs. Another important step forward
was a partnership with Serviço Nacional
de Aprendizagem Comercial (Senac),
to train people with disabilities
to work as administrative assistants
(GRI LA10, HR4 and HR8).

Suppliers
We consider our suppliers as partners
in corporate responsibility and not only
as mere providers of products and
services.They are also a special public
in the role to disseminate our
sustainable corporate practices.

To strengthen our relations with
suppliers, we expanded and improved
our certification process in issues of quality,
logistics, innovation, contract, service and
responsiveness, traceability, to ensure and
reward the efforts by suppliers (GRI EN33).
The roster of certified suppliers grew 60%
in 2005. At the same time, the number
of certified suppliers to work with Natura
tripled in 2005, after they reached enough
punctuation in our scale to fulfill a number
of requirements, including quality and social
and environmental responsibility.

2005 Annual Report Natura

AN EXPERIMENT
IN DEVELOPMENT

Natura in 2000 started a pilot project with the community of São
Francisco do Iratapuru to materialize the strategy of using Brazilian
biodiversity elements as a technological platform for its products.

in Amapá, at the Iratapuru River
The Iratapuru community,
Sustainable Development Reservation,
is constituted by 32
families who, through a cooperative, supply Brazil nuts, copaíba
and breu-branco. Natura purchases these products from a partner
that buys the ready-to-use extracts from this cooperative, but
monitors contracts and prices, paying the cooperative a percentage
of the net income from the sale of the final products we
manufacture with those materials. At the same time, we follow up
with routine sustainability assessments to help establish a short- and
long-term development plan for the community.

One of the first steps, at the beginning of this project, was a physical,
geographical and socioeconomic assessment of the community as a
base for a local plan for sustainable development.

We also conducted meetings to establish production processes
that met Natura’s demands and to set fair prices. A fund with a
percentage of the revenues from the net sale of finished goods
produced with the community’s materials was constituted. This
amount of money is to be used to finance local projects of
sustainable development that require the approval of all parties
involved: the community, Natura and other partners.

Three materials cultivated by the Iratapuru community – Brazil
nuts, breu-branco and copaíba – earned in 2004 a certification of
sustainable forest management according to the criteria of Forest
Stewardship Council, FSC.

Producers of biodiversity elements

Among these suppliers, there was one
particular group with whom we maintained
a special relationship – the communities who
extract the Brazilian biodiversity components
used in our products (GRI EN7). We
endeavored to build a sustainable model
based on a tighter relationship with
the producing communities, counting
on the support of Non-Governmental
Organizations and local governments.

As part of this learning process, in 2005
we observed the need for a more
encompassing management plan to allow
the Iratapuru community, at Amapá
(Brazilian Northern region), to meet an
increased demand.The plan includes
governance requirements, such as more
transparency, accountability and reliable
performance benchmarks.

There were also advances in other regions.
Surveys and assessments of present and
future local development needs for three
communities surrounding Belém, constituted
by 50 families (that supply priprioca, for the
most part), were completed. Also of relevance
was the establishment of dialogue channels
with the communities of Médio Juruá, in the
Amazon, that supply andiroba.This contact
had posed challenges and relationship
improvements, because the families that form
this community, constituted by 378 families,
are widely scattered through the area.

But, still there is much to improve in the
relationship with these communities.

Each of these regions has peculiarities that
hamper the establishment of a blanket-
type relationship model. But some
principles are essential regardless of local
particularities: fair treatment to all
communities, participation protocols
for all decision processes, social capital
investment (improvement gains with
teaching and learning processes)
and sustainable harvesting methods,
with investments in the improvement
of handling skills.

Natura in 2005 was the recipient of the
first-ever license granted by the Ministry
of the Environment to a Brazilian cosmetics
manufacturer to access the country’s
biodiversity genetic heritage, related
to breu-branco (GRI SO1).

Despite all the milestones surpassed last
year, we still have a long way to go, with
the identification of needs from both
parties and the definition of solutions
to improve relations with suppliers
communities and ways to foster significant
improvements on their quality of life.

Neighboring communities
Natura is headquartered in Cajamar
(home of the administrative headquarters,
the laboratories, the manufacturing facilities
and warehouses) and Itapecerica da Serra
(commercial and marketing departments)
in São Paulo. We consider ourselves
part of these communities and feel partly
responsible for their future (GRI SO1).

In Cajamar, with approximately 55,000
people, a three-party group constituted by

To help improve the quality of life
at the communities that produce raw
materials is a great challenge

representatives from private entities,
the City Hall and district government
and civil groups had already signed
an agreement, in 2004, to implement
in the city the Agenda 21 (sustainable
development action plan devised at the
First UN Conference on the Environment,
Eco-92). During 2005, the group rolled
out Agenda 21 Escolar, which promoted
student-teacher debates and educational
workshops in the municipal districts.

Moreover, the neighboring
communities in Cajamar organized
into groups, identified their social
and environmental problems and
elected representatives for a Town Hall
Meeting, which took place in December.
During the meeting the representatives
presented the issues brought up
by their respective neighborhoods
and identified their differences and
common concerns. During the first
semester in 2006, a new meeting
will discuss solutions for the
problems detected.

In Itapecerica da Serra, Natura
undertakes community service at the
Potuverá district, with approximately
10,000 people, where its offices are
located. During 2005 we continued
promoting activities to identify local
leaderships and together they
concluded an assessment of
the community’s living conditions.

Annual Report Natura 2005

2005 Annual Report Natura

We regard the company as an
important agent in the quest for
solutions for the future of society

Government, society
and trade association

We seek to establish a dialogue with all levels
of government not to discuss subjects related
to our industry but also participate in
initiatives to improve social conditions in
Brazil. During 2005 we joined Programa
Oficial de Educação Previdenciária, through a
partnership with the Brazilian Direct Selling
Association, (ABEVD), aimed at inducing
Consultants to pay in their social security
contributions.This project involved training
managers and sales promoters to collaborate
with federal officials, work that is scheduled
to proceed through 2006.

Another important initiative is the Crer para
Ver program, which channels the revenues
from spontaneous sales of a specially
developed product line to public education
projects. In 2005 this program launched the
Education of Young and Adults campaign,
developed in partnership with the Education
Ministry and Fundação Abrinq (see
Responsible Management on page 64).

We also have marked a presence in
important national forums. During 2005,
Natura was the Brazilian representative in the
committee that discusses ISO 26000 norms,
aimed at establishing standards to classify
socially responsible companies.We also made
official our support to the Conferência das
Partes da Convenção sobre Diversidade
Biológica (COP-8) in 2006, which takes place
in Brazil for the first time.

As for trade associations, we developed
a joint project with Associação Brasileira

de Higiene Pessoal, Perfumaria e Cosméticos
(Abhipec), for the selective collection
of used packaging (please refer to the
Responsible Management section on page 64).
We also renewed, with the Brazilian Direct
Selling Association (ABEVD) our
commitment to the Código de Conduta
Diante dos Vendedores Diretos
e entre Empresas (GRI PR6 and SO7).

Shareholders
A public company since May 2004, Natura
lists its stock at Bovespa’s Novo Mercado,
the segment that groups the companies
committed to the highest level of
corporate governance and regard for
the shareholders in Brazil.

Natura goes beyond this formal
commitment and regards its shareholders
not only as investors, but also partners
in the constitution of its responsible
management. In this respect, it works to
extend to all of them a fair and egalitarian
treatment, with absolute transparency (see
Corporate Governance on page 66).

Health professionals
Growing investment in research and
development and technological advances
brought by scientists and physicians
investigating new compounds gave cosmetics
a therapeutic role.This is why we do our best
to participate in medical circles.

The release of Chronos Spilol in 2005 –
with its main ingredient extracted
from the jambu plant, which went
through extensive scientific testing –
brought us an opportunity
to meet with many opinion makers
in the field of dermatology.They also
became acquainted with our
Cosmetic Monitoring system –
a set of practices and protocols to
prevent the incidence of possible adverse
effects from cosmetic products.

Annual Report Natura 2005

Glaúcia Aparecida Barichello,
Ailma Dias dos Santos and Maria Aleluia Pereira Lima,
employees of Natura.

Responsible Management

Keeping a transparent relationship with
our clients and keeping management goals
compatible with sustainable growth are
essential to Natura’s socioenvironmental
goals. We also implement specific measures
to bring these objectives into our planning
and administrative routines.

In 2005, we integrated the
environmental management process,
corporate responsibility and community
relationship which previously were
spread within the company.

Natura also has a Corporate
Responsibility Management System that
assesses the quality of the company’s
relations on ethics, transparency and
efficiency in its communication channels.
Perceived weaknesses are subsequently
addressed to, priorities are established
and plans of actions put into effect.
In 2005, further segmentation
of the groups assessed facilitated
the evaluations, promising much
more precise results for 2006.

The most crucial activities on socially
responsible management are monitored
through the Corporate Responsibility
Investment Matrix (please refer to the chart
in Highlights of Investments in Corporate
Responsibility section on page 108). In the

case of environmental goals and indicators,
we use the Natura Environmental
Management System based on the ISO
14001 norms.These two systems feed
our planning cycle and our strategic map,
on which socioenvironmental goals have
the same importance as financial goals.

During 2005 we have started implementing
the Social Responsibility Management
System in international operations, training
team leaders in a first stage, then building
up a foundation for corporate responsibility.
Lastly, team members are trained.

Simultaneously, the ISO 14001 norms
were implemented in the French
operation. Our French division, much like
our operation in Mexico – both launched
in 2005 – has sustainability as a core
goal since its inception.

Another highlighted initiative in 2005
was the mobilization of Consultants
so that, besides divulging our products
and concepts, they whould also disseminate
our values in the economic-financial, social,
and environmental fields. Also noteworthy
is the Young and Adult Education, a Ministry
of Education program supported by
Natura. As a result, 66,600 individuals above
the age of 15 re-enrolled to complete their
primary schooling, nationwide. Consultants
were also encouraged to persuade their
clients to purchase product refills,

which led to a growth in sales of refills to
17.4% of total products sold from 15.3% in
2004, reducing the average environmental
impact of packaging in Brazil.

We continue to conduct Life Cycle
Analyses of our packaging to devise ways
to reduce their environmental impact
(GRI EN14 and EN15).The Research and
Development Department started, in 2005,
to study new refills for liquid products and
new packaging for the orders sent to our
Consultants. At the end of the fiscal year,
these projects were nearing completion.
We also launched a new research platform
to develop alternative recycled materials
to package new products.

To further mitigate the environmental
impact from our packaging, we signed
up a recycled pilot-project organized by the
Brazilian Association of Personal Hygiene,
Perfumery and Cosmetics Industry, locally
Abihpec, in Santa Catarina.

We comply with strict ISO 14001
norms regarding the improvement of
environmental manufacturing conditions
within our facilities in Cajamar and
Itapecerica da Serra, allocating investment
and effort to these activities. We surpassed
several of our environmental goals in 2005.

The water usage per unit sold declined
5.6%.The average ratio of reusage of

Our Consultants were organized
to persuade thousands of people
to re-enroll in schools across the country

water rose to 55% from 39.5% in 2004
(GRI EN5, EN12, EN22 and EN32).
The energy consumption per unit sold fell
by 8.5% from that of 2004 (GRI EN3).
The share of incinerated waste in the
total fell to 2.8% from 5.4% in 2004,
and the share of total waste sent
to landfills dropped to 16.1% from 21.2%
of the total.The share of total waste that
was recycled climbed to 81.1% from
73.4% of the total.The amount
of residue generated per unit sold,
however, grew 8.2%, due to increased
use in the Cajamar site and, specially,
to the increase in scrap volume
(GRI EN11 and EN13).

Natura develops clean industrial
processes that cause no air pollution. It is
relatively more difficult to identify sources
of pollution in the cosmetics industry. Since
2000, however, we decided to diagnose,
plan and intervene in emissions from
the fleet of suppliers that delivers Natura’s
products in over 5,000 Brazilian cities
(GRI EN8, EN19, EN30 and EN34).

Annual Report Natura 2005

2005 Annual Report Natura

Corporate

governance

Our corporate governance started
to develop faster in the mid-1990s, when
we hired professional executives to take
over strategic positions. It was advanced by
the establishment of the Board of Directors
in 1998, followed by auxiliary committees,
and the IPO in 2004. In May of 2004
Natura’s stock was listed at Novo Mercado,
which is the highest corporate governance at
Bovespa (São Paulo Stock Exchange),
such as issuing strictly common stock, having
a minimum of 25% float, and extending
minority shareholders the privileges
granted to controlling shareholders in
the event of a transfer of control.

A new page was turned in 2005
with the appointment of a new CEO
not part of the controlling group
completing the separation between
management and ownership. However,
the controlling group continues to share
its knowledge and entrepreneurial vision
at the Board of Directors level. Moreover,
the whole management and governance

structures were realigned to support
plans of domestic and international
expansion processes.

The Board of Directors added two
new committees: Strategy and Corporate
Governance.The first is charged
with making sure the Board’s directives
are fully implemented; the second oversees
the use of good governance practices
and ensures that the Council’s forums
are working smoothly.

The existing committees had their
scope widened.The Auditing and Risk
Management Committee had its name
changed to Auditing, Risk Management,
and Financial Committee and started
to address these issues more deeply.
The Human Resources Committee was
placed in charge of accompanying the
development of the Natura
Management Systems, in addition
to being in charge of team member
development strategies.

Capital Market

A public company since 2004, Natura’s
shares are traded on the Novo Mercado, the
highest in terms of corporate governance in
the São Paulo Stock Exchange, Bovespa. In
2005, Natura’s stock appreciated 38%, while
the Bovespa index grew 27.7%. Since the
public offering in May 2004 up to December
2005, we have shown an appreciation of
182.1% compared to 77.4% in the Bovespa
Index (Ibovespa) for the period.

Appreciation Natura
(Natu3) vs. Ibovespa
Base 100 (05/25/2004)

NATU3
IBOV

+182.1%

+77.4%

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Furthermore, in 2005,
our stocks have been included
in the IBrX100 portfolio in the
Bovespa, an index comprised of
100 stocks with the highest market
liquidity. Our stock was also included
in three indices by Morgan Stanley
Composite Index (MSCI), created
to follow the performance of stock markets
all over the world: MSCI Brazil, (0.53%
weighting for Natura); MSCI Emerging
Markets Latin America (0.27% weighting);
and MSCI EM (0.05% weighting).

Natura is also among the
28 companies that have their stocks
chosen by the São Paulo Stock Exchange
to compose the Corporate
Sustainability Index. The Index was
created with methods developed
by the Getulio Vargas Business
School in São Paulo (FGV-Eaesp)
to identify the companies with
the best performance in
all facts of sustainability.

Annual Report Natura 2005

2005 Annual Report Natura

Shareholding Structure

On December 31, 2005, Natura had
social capital of 85.4 million stocks
(including 432,000 shares kept in treasury),
of which 26.3% as free float.

Shareholders

Number of shares

Percentage

Controllers

Free float

Total stock*

* Does not include shares kept in treasury

62,637,886

22,368,710

73.7%

26.3%

85,006,596

100.0%

Dividends and Interest

In line with the Brazilian Corporate
Law, mandatory minimum dividends
were fixed by Natura’s by-laws
at 30% of adjusted annual
net income. However, the Board
of Directors chose to pay dividends
equivalent to at least 45% of
adjusted net income.
In 2004, we paid 106.5% of free cash
generation(1) and 72.1% of consolidated
net income. For 2005, the proposed
pay-out, submitted to the Annual
General Meeting represents 80.5%
of net income and 95.2% of free
cash generation. This is equivalent
to a net amount of R$ 3.70

1. (net cash generated by operating activities) – (net cash used in
investment activities)

per share in dividends and interest
on capital, a growth of 48% over
the 2004 figure (GRI EC6).

Investor Relations

Our Investor Relations department
attended 17 conferences held
by Brazilian and foreign investment banks
in 2005. It also promoted two road shows
abroad and two within Brazil, besides
attending two meetings held by the
Analysts and Investment Professionals
in the Capital Markets Association
(Apimec) in São Paulo and
Belo Horizonte. Furthermore, it also
hosted five meetings with individuals.

We also try to respond directly
to questions from potential investors.
With this goal in mind, we posted
our Investor Relations website
a vast amount of information
and guidance on the company,
our industry, on the market and all
scheduled events. Below are the dates
for release of operating results
scheduled for 2006 (please refer
to their respective dates below).

Release

Date

First Quarter 2006

April 26, 2006

Second Quarter 2006

July 26, 2006

Third Quarter 2006

October 25, 2006

Annual Report Natura 2005

From left to right: Guilherme Peirão Leal, Cochairman of the Board; Alessandro
Carlucci, Chief Executive Officer; Antonio Luiz da Cunha Seabra,
Cochairman of the Board – Founder; Pedro Luiz Barreiros Passos,
Cochairman of the Board.

Edson Vaz Musa,
Member of the Board and Coordinator
of the Human Resources Committee

Eduardo Zornoff,
Executive Director,
Commercial Modeling

Eduardo Costa,
Executive Director, Branding

Denise Lyra de Figueiredo,
Executive Director, Business Unit

Paulo Lalli,
Executive Vice-President,
Operations and Logistics

Eduardo Luppi Júnior,
Executive Vice-President, Innovation

José Guimarães Monforte,
Member of the Board and Coordinator
of the Auditing Committee

Philippe Joseph Pommez,
Executive Vice-President,
Internationalization

Antônio Siqueira,
Executive Director, Legal Affairs

Andrea Sanches,
Executive Director, Business Unit

Joel Ponte,
Executive Director, Natura Europe

Moacir Salzstein,
Executive Director, Strategic Planning

Rodolfo Witzig Guttilla,
Executive Director, Corporate Affairs
and Government Relations

Pedro Villares,
Executive Director,
Marketing Latin America

Itamar Correia da Silva,
Executive Vice-President,
Operations and
International Logistics

Fernando Pantaleão,
Executive Director, Brazil

Daniel Gonzaga, Executive Director,
Research and Development

Roberto Zardo,
Executive Director, Client Services

Fernando Mesquita,
Corporate Governance Secretary

José David Vilela Uba,
Executive Vice-President,
Finance and Information and
Executive Director, Investor Relations

Claudia Falcão, Executive Director,
Human Resources and Organization

Marcos Egydio Martins,
Executive Director, Sustainability

Renata Ribeiro,
Executive Director, International New Business

Moacir Zeitel,
Executive Director, Sales

Mauricio Bellora,
Executive Vice-President, Latin America

Angel Medeiros,
Executive Director, Logistics

Ítalo Flammia,
Executive Director, Information
and Technology

Hélio Novais,
Executive Director, Finance

Mario de Oliveira,
Executive Director,
Manufacturing

Risk

management

Natura has a risk management system
comprising the following risks: financial,
products, data security, environment,
consistency between values and practices.
This system is basically meant to identify
and evaluate the impact of risks
and take measures to mitigate
them through an infrastructure of
internal controls. According to the
corporate governance model we
adopted (see chapter Corporate
Governance on page 66), questions
related to auditing are managed by
its respective committee.

In 2005, studies were concluded
concerning the implementation
of a specific department focused
on the company’s strategic risks. This
restructuring was started at the end
of the fiscal year and it is set to be
finished by the first semester of 2006.
The department will be coordinated
by the Risk Management Committee,

which is subordinated to the Board
of Directors. In the case of other risks,
we have started investments to perfect
these operations, with the creation
of a specific management system. Risks
are grouped as financial, product, data
security, environmental and consistency
between values and pratices.

Financial
Debts in foreign currency are protected
by exchange rate hedging. For this
reason, variations in exchange rates
do not have significant impact on
the results. As for the effect of the
exchange rate on raw materials,
the prices of which are quoted in
strong currency, as is the case for
imported materials, we monitor trends
and if necessary, contract the purchase
of the foreign currency in the Future
Markets (BM&F). However, we never
undergo operations in the BM&F with
any speculative motivation.

Products
We put a lot of effort into
overseeing the quality of our
products and count on the Product
Safety Committee formed by the
vice-president of Research and
Development, scientists, doctors
and specialized consultants.
The committee establishes policies
for product safety and supervises
toxicological evaluations of all the
ingredients used in our products
(GRI PR1).

Data security
In 2005, we finished the process
of outsourcing of our IT infrastructure
and installed a contingency data
processing center that covers 92%
of the company’s processes, guaranteeing
that business can go on as usual even
in the case of an accident. This center
is always online and in parallel to the
main data processing system.

We have built a risk management system
that encompasses business strategic areas
as well as sustainability related issues

Environment
Natura was recertified according
to NBR ISO 14001 rules in 2005.
With these rules in mind, we use the
Natura Environmental Management
System to monitor environmental risk.

Consistency between values and practice
The Corporate Responsibility Management
System evaluates risks and ethical behavior,
transparency, open dialogue with the
public and adoption of company goals
that are compatible with sustainable
growth (see Responsible Management on
page 64, and the Corporate Responsibility
Matrix on page 108).

Annual Report Natura 2005

2005 Annual Report Natura

Communication

Natura’s communication with its
various publics – consumers, Consultants,
team members, suppliers, communities
supplying biodeversity elements and those
surrounding its manufacturing installations,
government at all levels and society in
general – has a strategic value in policies
and management practices.
Guided by the first understanding
that a company is a dynamic network
of relationships, we aim to improve these
relations, moving towards integration,
transparency and ethics (GRI LA4).

Far beyond the commercial aspect, ad
campaigns, merchandising, public relations
programs and commercial-institutional
publications are seen as an opportunity
to spread our vision of the world.This is
why we not only communicate the
attributes of our products, but also show
the history and values behind them.The
ad campaign for Perfume do Brasil, for
example, exalts the fragrance and
its qualities while showcasing

the communities that produce the
essential oils and discusses
on the sustainable use of Brazil’s
biodiversity. Actions like this one
aim at the dissemination of Natura’s
values and beliefs among its publics,
strengthening the brand (GRI PR9).

Among the activities developed
in 2005, a TV merchandising campaign
showing to thousands of viewers
the importance of working towards
sustainable growth stood out. Another
merchandising theme was the professional
and social role Consultants have and the
fundamental bond between mothers
and their infants. Equally important were
the campaigns for Chronos, for the use
of refills and for Natura’s bars of soap
produced from vegetable oil (see Brand,
Competitive Advantages section on page 56).

Yet another initiative to be noted was
Natura's support to the projects One
Thousand Women for the Nobel Peace

Prize, Biodiversidade Brasil and Natura
Musical (see Highlights of Investments
in Corporate Responsibility on page 108).

Natura is popular in the local press,
with a top-of-mind status in
institutional terms, including stories
and reports on management style
and financial results. With the
listing of the stock, we opened an
additional channel with the
specialized business media.
All this added to our status in media
vehicles devoted to fashion, beauty
and behavior. In 2005 we also
received extensive coverage
in the international press, especially
France and Mexico, where we
inaugurated operations.

We also revamped in 2005 the
“Vitrine”, a magazine-catalogue that is
also the main communication link
with our Consultants, with

Natura’s communication mission
is to strengthen relationships
within principles of
transparency and ethics

a circulation of about 1 million
every 21 days. In addition to
new products and pricing, Vitrine
now consistently carries more
institutional information about
our values. We also created a
new publication for younger Consultants,
the Natura Mov>, focused on
a younger universe, with the purpose of
disseminating information on the company's
values and culture (see Relationships in the
Competitive Advantages
section on page 57).

Annual Report Natura 2005

2005 Annual Report Natura

Key

Results

As we have in the past years,
in 2005 we presented consistent
financial results, without losing sight
of our concern over advances
in the social and environmental realms,
as they form the tripod on which
sustainability is maintained.

Financial Results
In 2005 gross revenues amounted
to R$ 3,243.6 million, 27.7% more
than in 2004, consolidating
the strong growth recorded in the
previous two years and once again,
it was a larger growth than that
for the cosmetics, fragrances
and personal hygiene target market.
This market grew 16.5% from January
to October 2005 in comparison
to the same period in 2004. Net profits
reached R$ 396.9 million, an increase
of 32.2% compared to R$ 300.3 million
in 2004 (GRI EC7).

We also increased our gross margin
(gross profit in relation to net revenues) by

half a percentile point, thanks
to the reduction of costs resulting
from the Real’s appreciation.The
EBITDA totaled R$ 564.4 million, a growth
of 30.8% compared to 2004.
The EBITDA margin remained virtually
flat – 24.7% in 2005 versus 24.4% in 2004.

Natura closed 2005 with consolidated
gross debt of R$ 187.5 million, versus
R$ 134.4 million in 2004. In order
to meet storage and logistics expansion
needs, as well as those of working
capital, we received additional financing
from the BNDES (National Economic
and Social Development Bank),
raising that portion of the total debt
pegged to the Long Term Interest Rate
(TJLP) from 47%, in 2004, to 76%.
The remainder is indexed to the
Interbank Deposit Certificate (CDI).
We also have financing from Finep
(Studies and Projects Funding Agency),
whose resources go for the Research
and Development area. This
is currently being amortized.

Investments

Investment totaled at R$ 111.6 million
in 2005, below the forecast R$ 120 million,
but higher than the R$ 83.1 million applied
in 2004. Resources were allocated mainly
on the third line of separation of products,
in a second vertical warehouse, in
manufacturing equipament, and in IT.
In 2006, we will continue to invest into
logistical processes, especially in the
modernization of the existing lines of
separation and production capacity, aiming
to give the factory more flexibility, as well
as in marketing activities.

Sales channels
The number of Natura Consultants
reached a total of 519,000
(see Relationships, Competitive Advantages
section on page 57) (GRI EC13).

Research and Development
In 2005, investments in Research and
Development moved up 41.5% over 2004
to R$ 67.1 million, equivalent to 2.9% of

net income (see Research and Development,
Competitive Advantages section on page 54).

Manufacturing and Logistics
In 2005 we produced a record 209 million
units in Cajamar’s assembly lines, a growth
of 24.5% related to 2004. An equally
positive fact was the solution of problems
in the logistical area that occured in the first
semester. With the third separation line
operating, as well as investments made
in equipment, the logistical processes were
strengthened.The implementation of the
total productivity management system TPM
was also very important in the more
efficient use of machinery.

At the same time, a series of specific
policies were applied to identify demand
more precisely and thus better plan
production and distribution.These measures
led to a reduction in consumer requests
that could not be attended to due to stock
shortage. Another highlight was the
issuance of the certificate of quality
according to the NBR ISO 9001 rules.

Annual Report Natura 2005

2005 Annual Report Natura

International Expansion

With a growing participation in Argentine,
Chilean, and Peruvian markets – where
activity has increased 45.4% in weighted
local currency and the number of
Consultants reached 36,000 at the end
of the year – Natura’s international base
has grown even more in 2005.

In April, we started operations in France,
center of the cosmetic world. In August,
Natura entered the Mexican market.The
results of both initiatives are in line with
our expectations.

We invested R$ 31.8 million in globalization,
versus R$ 7.5 million in 2004.The increase
was justified not only by the big upturn
in business in the foreign markets in which
Natura was already present, but particularly
by the enormous growth potential in Latin
America and other parts of the world, given
that we are now experienced international
operators and that our business model and
values have met with great acceptance. In
2006, we shall begin operations in Venezuela
and, in the following year, Colombia.

A 2005 highlight was the issuance
of the certificate of quality according
to NBR ISO 9001 rules

Social Indicators

The year’s social highlight was the
Consultants mobilization for the Young
and Adult Education program and the sales
of refills. Another important highlight was
the official installation of the Cajamar
Agenda 21 Permanent Forum following
joint efforts by the company, the local
community and representatives of municipal
government (see Relationships and
Responsible Management, Competitive
Advantages section on pages 57
and 64, respectively).

Environmental Indicators
As holder of the NBR ISO 14001
Certificate, we channeled resources into
improving environmental conditions in our
production procedures, the reason why
we exceeded several environmental targets
in 2005 (see Responsible Management,
Competitive Advantages section on page 64).

2005 Annual Report Natura

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Global Reporting Initiative

Economic, environmental

and social indicators

Once again, Natura combines in a single document the analysis of its
economic, financial, social and environmental data.This integrated model
of information, proposed by the Global Reporting Initiative (GRI),
provides a comprehensive perspective on the activities conducted by
the company, and has proved a valuable tool to improve its commit-
ment to sustainable development.
Natura’s partnership with GRI began in 2000.We were the first Brazilian
organization to follow GRI’s guidelines and participate in their feedback
group. Three missions from GRI visited our headquarters (2001, 2004
and 2005), and we supported the work group that translated its guide-
In 2004, Natura became an Organisational
lines into Portuguese.
Stakeholder, taking part of a group of volunteer institutions interested in
permanent partnerships with GRI, and offering financial support and
help for the continuous development of guidelines for sustainability
reports. Additionally, Natura supports the Stakeholder Council and
Technical Council for the new generation of indicators (G3).
In this edition we restructured the section presenting Natura’s financial,
social and environmental performance.The indicators were reorganized
to clearly underscore the company’s responsible management while fol-
lowing GRI’s guidelines.
To Natura, responsible management can be described as:
1. Establishing high quality relations with all publics based on ethics, trans-
parency and open communication channels; and
2. Defining business
development.
Indicators were thus organized as follows:

targets compatible with

sustainable

Quality
Relations

Targets Compatible with
Sustainable Development

Ethics,Transparency
and Communication
Channels

Personnel

Consultants

Consumers

Suppliers and
Suppliers Communities

Neighboring
Communities

Government

Society

Governance

Economic

Environmental

Social

Direct Impact

Biodiversity

Investment
Matrix

Waste

Water

Energy

Wealth
Distribution

Work and
Revenue
Generation

CO2 Emission

Social Inclusion

Materials

Human Rights

Education

Personnel

Highlights of Investments in Corporate Responsibility

“We are a registered Organisational Stakeholder of the
Global Reporting Initiative (GRI) and support its mission to
develop globally accepted sustainability reporting guidelines
through a global multi-stakeholder process.”

“This report has been prepared in accordance with
the GRI 2002 Guidelines. It represents a balanced
and accurate presentation of our organization’s
economic, environmental and social performance”
Alessandro Carlucci
Chief Executive Officer

These indicators integrate the process of ongoing corporate evalua-
tion,
in which information on social responsibility, partnership and
environmental practices are presented in as many details as the com-
pany’s financial data.
This allows the company to conduct in-depth analyses and develop
action plans not only to establish high quality relations, but also to
assess the environmental and social impact caused by its activities –
guarantee that Natura reaches its targets.
The biggest challenge is still the evaluation of quality of relations from
an ethical, transparency and efficiency of communication channels
viewpoint, especially when we analyze our performance in ways that
are indirectly connected to commercial activities. A second challenge
is the definition of social indicators that express the actual impact
of wealth distribution. Important milestones were achieved in 2005,
such as the inclusion of social and environmental diagnosis into
the corporate planning cycle, and the definition of environmental
targets for the entire company. The analysis of correlation between
economic, financial, environmental and social results still needs further
refining in the compilation stage.
All GRI indicators used by Natura in previous years are present in this
new structure (see Global Reporting Initiative Index on page 143), allo-
cated according to their respective themes.
At the beginning of each section, we present codes, policies and
general management systems, for that theme, followed by codes, poli-
cies and specific management systems for each public. In brackets, the
indicators’ statistics remitting to texts are highlighted to assist the sur-
vey. This way, we hope to provide greater transparency on Natura’s
management evaluation.
The information presented here comprises activities in Brazil and the
international operations (Argentina, Chile, Peru, Mexico and France),
except where otherwise indicated. It should be noted that Natura has
its industrial plant in Brazil.

Quality

of relations

Since its foundation, Natura roots its activities in the belief that a
company is a living organism, a dynamic set of relationships.
Consequently, quality of relations has been a mark of Natura’s
development. The company’s increasing commitment through
responsible business practices in the past decades imparted a new
dimension to this subject. New aspects were taken into account, just
as Natura has grown and entered other countries to face the com-
petition while relating to other cultures.

The challenge of materializing or quantifying the ethical quality of
relations, in all its aspects, in various cultures, drove Natura into action.

In this respect, our communication channels with different publics
have been analyzed and valued as an essential part of the way we do
business. Our challenge is to have open channels to record all ques-
tions raised, confidentially or not, ensuring that these questions are
understood, followed-up and properly addressed, with the help of the
various departments involved.

We believe that these links provide better performance, while
giving us an opportunity to forecast demands and build the future
of our business.

Important milestones occurred in 2005: the preparation of Carta de
Princípios de Relacionamento Natura (the company’s charter on rela-
tions with its various publics), the decision to structure an Ombuds
Service, initially for the internal purposes, and, mostly, the preparation
of a more specific diagnosis, introducing tools into the planning cycle
of all departments to generate even more solid plans for 2006.

Codes, policies and general
management systems

From the beginning Natura adopted a set of values and beliefs that
influences its way of doing business.The direct sales model, for exam-
ple, was chosen owing to the importance of close customer relation-
ships for the company.
To magnify and intertwine these values into routine business practices,
we distribute for every single public we have contact with the
documents Reason for Being, Our Beliefs and Our Vision.
This set of beliefs led Natura to adopt the values of Social
Responsibility, expressed in its Corporate Responsibility Management
System – which polls the public on the quality of relations and imple-
ments proactive solutions for detected critical points.
The Management System enables all company departments to work in
an integrated and structured way, aggregating strategic plans, objectives,
actions and indicators to improve relations with Natura’s publics. Plans
are followed by organized Committees that deal with these matters.
To consolidate Natura’s values and beliefs and support its imple-
mentation by its personnel on a daily basis, in 2005 we prepared the
Carta de Princípios de Relacionamento (Letter on Relationship
Principles) for our diverse publics, to be published in 2006.
We also follow the guidelines established by regulatory agencies for our
business (see Codes, Policies and Specific Management System for each
public on the following pages).

Target for 2006: Release the Carta de Princípios de Relacionamento
Natura (the company’s charter on relations with its various publics).

Personnel
We try to keep a stimulating and creative workplace where
employees feel respected as individuals, recognized for their
contributions and motivated to give their best.This is a daily challenge
that requires attention not only from human resources professionals,
but also from all of Natura’s managers.
As a result of its efforts in this respect, Natura has been elected by
Exame magazine, over the last three years, the Best Company for
Women to Work.

Codes, policies and specific
management systems

In Brazil
Quality controls in employee relations are performed by the
follow-up of indicators from the organizational satisfaction survey,
developed jointly with consultants from the Hay Group.The compa-
ny compiles information on ethics, transparency and communication
channels. From the analyzed results, action plans and guidance for
specific aspects are prepared. In 2005 the organizational satisfaction
survey extended to in-house outsourced contractors, a group of
service providers with a long-standing relation with the company.
The Human Resources department deals individually with enquiries
from employees involving attitudes that do not comply with Natura’s
values and beliefs. However, to further improve employee relations
we intend to structure, in 2006, an Ombuds Service to handle the-
It will be guided by the Carta de Princípios de
ses issues.
Relacionamento Natura (the company’s charter on relations with its
various publics), due out in 2006 (GRI LA4, HR5 and HR10).

Target for 2006: structure an Ombuds Service for Natura’s employees.

See analysis of goals established in 2004 at the end of this chapter.

Employee Satisfaction

Employee satisfaction index (%)

2003
76

2004
73

2005
70

In other operations

Since 2005, Natura adopted
the
organizational satisfaction survey in all countries where it operates
and where there were more than ten survey respondents, to
ensure anonymity. Argentina, Peru, Chile, Mexico and France were
surveyed in 2005.

framework

from

the

Employee Satisfaction index (1)

Argentina
Chile
Mexico
Peru
France

2004
58
N.A.
N.A.
N.A.
N.A.

2005
60
58
76
59
68

See analysis of goals established in 2004 at the end of this chapter.

1. Since 2005 Natura conducts this survey in all its international operations.

Annual Report Natura 2005

2005 Annual Report Natura

Ethics

Natura’s principle is to respect diverse opinions as the base of
ethical relations with employees. It values citizens’ expression and the
democratic process, therefore recognizing the right to organize
unions (GRI HR5).

In Brazil
Relations with labor unions are conducted between Human
Resources and union representatives, following guidelines previously
agreed upon. Natura also offers unions the opportunity to post
information of interest in the company’s premises. Currently, Natura
maintains relations with three labor unions (GRI HR5).

In other operations
Contact with labor unions does not occur at prescheduled, regular intervals.

Transparency
In Brazil
Organizational changes, work opportunities, benefits and other
information pertaining to employees’
interest are published in
internal communication vehicles – posters placed on highly visible
intranet, monthly newsletter (Ser Natura Colaborador) and
areas,
e-mail.The company also holds meetings between employees and the
CEO, where managers also participate. There are also Occasional
Meetings with senior management and their teams (GRI LA4).
There is a multitask team to identify, assess and implement
cost-cutting opportunities and assure balanced results.
Several working groups and committees deal with multi-
departmental and strategic matters related to the company.They are
organized at different levels, meeting regularly and allowing wide and
frequent information exchange among directors, managers and
employee representative groups, always looking for new joint
solutions (GRI LA13).
Employees participate in negotiations related to the Profit-Sharing
Program (PSP) through two committees. One of them is constituted
by managers, supervisors, administrative and operational experts,
who discuss targets with the company’s representatives and unions
and approve the Collective PSP. The other, formed by managers,
approves the Individual PSP jointly with the company’s representatives
and unions. Both commissions are elected by employees through a
formal process conducted jointly with the union (GRI HR5).

In other operations
Information is accessed in a simplified way by small committees, owing
to the lower number of employees in comparison with the headquarters
in Brazil. Moreover, everyone has access to Brazil’s intranet, receiving
the monthly internal newsletter (Ser Natura Colaborador) and also
holding Occasional Meetings.

Communication channels

Natura has various channels available for its personnel to post
suggestions or complaints. Employees are always encouraged to freely
vent their opinions, suggestions, offer solutions and criticize. This may
occur in Meetings with the CEO or Occasional Meetings.

In Brazil
Fale com Natura is a communication channel in which employees can
open up to the company about their doubts, compliments, complaints,
requests, critiques and suggestions, either via e-mail or intranet. Each
department is responsible for addressing the issues raised.

Another important communication channel is the GSCI – Gerenciamento de
Satisfação do Cliente Interno (Internal Client Satisfaction Management), crea-
ted to track the actions of the Organizational Climate Survey. Employees
who participate in this group are elected by their coworkers and, in the
GSCI meetings, present suggestions, critiques and proposals (GRI HR10).

In other operations
Communication between managers and their teams takes place
through Occasional Meetings. There is no formal system to transmit
personnel complaints.

Sales
Consultants

Sales Consultants are the main link between Natura and final
consumers.The option for the direct sale model allows a unique and
very close connection with a huge resource of women and men who
bring to the company Brazil’s diversity and,
increasingly, Latin
America’s. The consulting activity represents an opportunity to earn
extra income, professional development and more. Through it, these
professionals transform the sale of Natura’s products into moments
of inspiration, self-knowledge, relationship and engagement into social
and environmental causes.

Codes, policies and specific
management systems

Natura is signatory to the Código de Conduta de Venda Direta Diante
dos Vendedores Diretos e entre Empresas, a self-regulatory code of
conduct for direct sales companies,
from Brazil’s Direct Sales
Association (ABEVD).The code was prepared in accordance with the
model proposed by the World Federation of Selling Association,
which defends the rights of direct salespeople, promotes loyal
competition in a climate of free initiative, improves the public image
of direct salespeople and the acceptability of direct sales as
opportunities to create income (GRI PR6 and SO7).

Ethics

According to Código de Conduta de Venda Direta Diante dos
Vendedores Diretos e entre Empresas, a self-regulatory code of
conduct for direct sales companies,
from Brazil’s Direct Sales
Association (ABEVD), Natura pledges respect to the rights of its
resellers, providing free educational and training programs to direct
salespeople and offering further opportunities to improve their skills.
To prepare the Consultants to comply with its ethical standards,
Natura offers workshops and classes on the characteristics and
benefits of its products, preparing them to offer adequate advice to
each of their clients.

launched at the end of 2004,

In Brazil
Movimento Natura,
is a vehicle to
encourage and recognize the importance of the sales force in the
dissemination of Natura’s core values, by encouraging them to
motivate their clients to adopt environmental-friendly habits at
home and at work (see social goals established on page 103, for further
information on Movimento Natura).

Transparency

From the recruitment stage onwards, Natura is transparent regarding
the rights and obligations of its Consultants. They are informed,
clearly and in detail, of product costs and sales margins, as well as
credit and payment terms.

At the time of accreditation, Consultants receive a copy of the Código
de Conduta de Venda Direta Diante dos Vendedores Diretos e
entre Empresas, a self-regulatory code of conduct for direct sales
companies, from Brazil’s Direct Sales Association (ABEVD).

They receive periodical printed materials with updated information
on promotions and new products. Natura also provides them with
advance information on products that are about to be discontinued,
as well as price changes.

Communication channels

Relations between Natura and its Consultants are conducted through
periodical meetings, the corporate website and a toll-free number.
Their closest contacts are meetings with their area Sales Promoters.
In these meetings, in addition to receiving handouts with information
on products and sales programs, Consultants watch videos and
participate in discussions on the company's practices and values.
On the internet, Consultants count on the following services: on-line
support to address their doubts and concerns, filing orders, sending
and receiving e-mails with information and promotions, highlights on
recent launches, sales tips and technical information on products.
The Natura Support Center (CAN) manages Consultants satisfaction
levels. A specially trained team provides information and registers
complaints, suggestions and critiques, dealing with all requests and
following up on these processes until they are resolved (GRI PR8).

In Brazil
We carry out an annual survey of Consultants satisfaction to monitor the
relationship developments and come up with improvements:

Annual Satisfaction Survey (1)(2)
(Consultants satisfaction index %)

2
9

8
8

9
8

1
9

2
8

Mar
2001(3)

Oct
2002(3)

Oct
2003(4)

Jan
2005

Jan
2006

1. From now on, the survey results will be published considering the period when it was carried out.

2. Reported data refer to surveys conducted from January 2001 onwards.

3. Consultants survey results from March 2001 and October 2002 are not comparable to the others
owing to methodology changes.

4. Consultants survey results from October 2003 were altered in this report to make it comparable to
similar surveys conducted in other periods and refer to the same methodology used in later periods.

In addition to the annual survey, since 2005 Consultants are invited to
post their opinion on services received from the company at any time
through the corporate website, giving it a continuous stream of
feedback to inform actions to improve our products and services.

Consultants Evaluation
of Natura Support Center

Great/Very good (CAN)

In other operations
Natura does not carry out surveys with this public.

2005
79%

Consumers

Respect to consumers is one of Natura’s most relevant principles - the
company invests in the Consultants education so that relations with
consumers are ethical and clear, conveying Natura’s beliefs and values
in addition to the best possible service.

Codes, policies and specific
management systems

Texts on Natura products labels are in full compliance with
Resolutions n° 211 of July 14th, 2005, n° 79 of August 28th, 2000 and
n° 335 of July 22nd, 1999, issued by Agência Nacional de Vigilância
Sanitária (Anvisa, the national health agency), and meet the guidelines
of the Brazilian Consumer Defense Code. Rules sanctioned by
Instituto Nacional de Metrologia (Inmetro, the national metrics agency)
are also observed (GRI PR2).

Natura has a Product Safety Committee charged with keeping
current the company’s code of product safety and issuing mandatory
reports on product development regarding adequacy for human use.
Only after receiving this feedback, the department in charge of filing
information with Agência Nacional de Vigilância Sanitária (Anvisa, the
national health agency) requests formal authorizations.

Natura’s code of product safety establishes the criteria for pre-clinical and
clinical trials of all products from the research and development
stages all the way through to their market launch (GRI PR1).The main
safety procedure regarding the company’s products is the toxicological
analysis of all raw materials employed in the formulas, according
to international standards. To conduct these tests, we have a
biochemistry lab with in-vitro reconstituted human skin cells, and
state-of-the-art equipment to test cell cultures. These tests follow
guidelines established by international agencies, such as the Food and
Drug Administration, (FDA) in the United States and the European
Union’s Seventh Directive. Natura also has a Consumer Center
where it tests the effectiveness of existing products as well as carries
out performance evaluations of new products.

Natura keeps samples of each lot of marketed products.
It also
enforces cosmetics surveillance, that is, systematic evaluation of
adverse effects of each product it markets. Consumers who have any
type of reaction before the product expiration date are supported by
a specialized team of dermatologists to establish clear cause-and-
effect relations. This information is then transmitted to the pertinent
departments to eliminate potential irritants when required, and also
form the database that helps improve commercial messaging and
future production (GRI PR1).

Natura also has a specific policy for Animal Testing, in which it pledges
to adopt other means of testing to ensure the safety of its products
(see text in this chapter in Society on page 87).

Annual Report Natura 2005

2005 Annual Report Natura

In Brazil
Natura bases its practices on the self-regulatory publicity norms
jointly established with national associations of advertising agencies
and consumer protection to comply with all norms of social
It also has a nonintrusive
responsibility in its advertising (GRI PR9).
internet policy, ensuring privacy and confidentiality of information
provided by website visitors (GRI PR3).
The company is a signatory to Código de Conduta de Venda Direta
Diante dos Vendedores Diretos e entre Empresas, a self-regulatory code
of conduct for direct sales companies, from Brazil’s Direct Sales
Association (ABEVD), aimed at safeguarding fair competition,
respecting free initiative, protecting the public image of direct
salespeople and consumer satisfaction,
including the right to
privacy (GRI PR6).

In other operations
We are developing a policy to ensure that all international operations
follow our ethical principles regarding consumers. Until this policy is
announced,
international operations follow the same guidelines as
Natura in Brazil, tailored to the reality of each country (GRI PR9).

Ethics

In Brazil
To ensure consumers do not feel misled by deceitful messages and
avoid trespassing on the prevailing cultural and moral social standards,
in addition to the regulations mentioned above, we conduct surveys
with consumers before launching each advertising campaign, so that
our commercial messages are properly interpreted.

Advertising agencies working with Natura are required to conduct
business with ethics and corporate
responsibility. Their
practices are aligned to the Conselho Executivo das Normas-Padrão
da Atividade Publicitária, Associação Brasileira de Agências de
Publicidade and Conselho Nacional de Auto-Regulamentação
Publicitária (the industry’s national self-regulatory committees and
councils).They are required to work on pro-bono ad campaigns for
nonprofit organizations and NGOs and seek high standards of lan-
guage and content (GRI PR9).

Target for 2006: Release and implement guidelines for Natura’s
communication management rooted in aesthetics, ethics and transparency.
Natura has no record of penalties or fines related to consumer health
and security; it is in full compliance with the required regulations (GRI
PR4). We also conform to the legislation regarding breach of
advertising and marketing regulations.
In 2004 Natura received a
questionable fine and lodged an administrative appeal; there was no
ruling on this appeal as far as year-end 2005 (GRI PR10).

Numbers and types of breaches of advertising and
marketing regulations

Penalties/Fines

2003
0

2004
1

2005
0

In other operations
We are developing a policy to ensure that all international operations
follow our ethical principles regarding the consumer. Until this policy
is made public, international operations follow the same guidelines as
Natura in Brazil, tailored to the reality of each country (GRI PR9).

Transparency

The company uses product labels and sales brochures as information
vehicles where consumers find detailed information on the products
and their benefits as well as observations on issues related to
concepts that led to their development (GRI PR2).

Natura follows all legal requirements on product labeling. There
is no record of penalties or fines in this respect (GRI PR7), nor has
it received any fines or complaints on any breaches of consumers’
privacy (GRI PR11).

Number of complaints received through regulatory
or official organizations to inspect or normalize health
and security guarantee for the use of products
and services (GRI PR5).

Complaints

2003
4

2004
1

2005
2

Note: There are no rulings on the complaints filed in 2003 or 2004; there is no record
of any irregularity in the company’s products.

Communication channels

Natura pursues excellence in its services to assure client satisfaction.We
are available to consumers through Natura Customer Service (Snac),
which serves as liaison to improve client satisfaction.The service counts
on a trained team to provide information, register complaints,
suggestions and critiques, following the processes until resolution (GRI
PR8). It also has a formal confidentiality policy with the outsourced
contractors that provide this service (GRI PR3).

In Brazil
The consumer relations management system tracks the indicators
extracted from the following evaluation forms:

Annual satisfaction survey(1)(2)
(Consumers Satisfaction Index %)

8
9

5
9

6
9

Mar
2001

Mar
2002

Oct
2003

Jan
2005

1. From now on, the survey results will be published considering the period when it
was carried out.
2. Reported data refer to surveys conducted after January 2001.

Besides the Annual Satisfaction Survey, we launched in 2005
the Instant Consumer Satisfaction Survey, conducted daily. Clients
are invited, through random sampling, to give their opinion on the
support they just received.This way, we have a continuous data stream
to guide improvements to our products and services (GRI PR8).

Consumers Evaluation about
Natura Customer Service

Great/Very good (Snac)

Snac – Natura Customer Service

2005
80%

Total of answered calls

through Snac (thousands)

Percent of complaints/
total calls to Snac

Percent of complaints
not answered (1)

2003

2004

2005

1,804

1,905

1,791

31%

32%

48%

7.0%

2.3%

1. Ratio of complaint calls placed on hold and disconnected/total complaint calls.

Total of active processes involving the
Consumer Protection Code

Administrative Processes (Procon)
Legal Processes (civil and criminal)
Active complaints involving

consumer health and safety

2003
68
45

2004
23
72

2005
17
57

In other operations
The consumer relation management system tracks information
consolidated from Snac calls. Natura does not carry out satisfaction
surveys with this public.

Argentina Chile Peru Mexico(2)

To ensure quality of all purchased consumables, products and
outsourced services and to strengthen the relationship with its partners,
Natura rewards suppliers who demonstrate excellence standards. In this
respect, a follow-up and certification process, based on quality
standards, logistics, innovation, cost, contractual conditions, support and
reliability was created.The evaluation of potential suppliers is carried out
by Natura through a punctuation system that identifies and recognizes
partners who show better practices. With this certification program,
Natura seeks to establish a clear, fair and equitable relationship between
the parties. In 2005 this process evaluated 53 suppliers of consumables
and finished products, which represent 80% of the volume of purchases
by Natura Brazil (GRI EN33).
Natura’s suppliers satisfaction is measured periodically through a
survey carried out by an external institute. The results of this survey
are used as a base to establish action plans to improve these relations.

Snac – Natura Customer Service(1)
2005
Total of answered
calls through Snac
(thousands)

Percent of complaints/
total calls to Snac
Percent of complaints

not answered(3)

35%

47%

Total of active processes involving the
Consumer Protection Code(1)
2005
Administrative Processes (Procon)
Legal Processes (civil and criminal)
Active complaints involving

0
0

consumer health and safety

29%

0.7

16%

Annual satisfaction survey(1)(2)
(Suppliers satisfaction index %)

3
9

3
8

8
7

1. From now on, the survey results will be
published considering the period when it
was carried out.

2. Reported data refer to surveys
conducted after January 2001.

Argentina Chile Peru Mexico(2)

May
2002

Jan
2004

Jun
2005

5
1

0
0

1. The values refer only to 2005.
2. The values refer to September and December.
3. Ratio of complaint calls placed on hold and disconnected/total complaint calls.

Suppliers and
Supplier Communities

Suppliers are a critical part of Natura’s business network and are
jointly responsible for the development of the company. Owing to
this, Natura looks for suppliers that share its beliefs and values and
are in line with its social responsibility and sustainability policies,
committing themselves, among other things, to respect the Child and
Adolescent Statute and environmental laws.

Specific management systems,
codes and policies
General suppliers
In 2005, Natura developed a policy with guidelines and responsibilities
related to the purchase of materials processed in the company. In
addition to defining criteria to be considered in the selection of
this policy shows departments involved, minimum
suppliers,
requirements from potential suppliers and Natura’s responsibilities
regarding its current suppliers.
It also recommends to, whenever
possible, select socioenvironmentally responsible suppliers from co-
operative enterprises or income distribution projects in order
to increase the social benefits of the business. The target for 2006 is
to publish this policy to all current suppliers and make it available
to potential ones.
A specific document for suppliers and third parties, which details the
company’s recommendations on the quality, health and safety at work,
environmental and social responsibility, was also developed. Suppliers
will be encouraged to comply with indispensable requirements that will
be subject to auditing.

See analysis of goals established in 2004 at the end of this chapter.

its potential

local development,

its current situation and

Asset supplying communities
Natura applies selection criteria for supply areas that take into
regarding
account
sustainable production,
logistics, supply and
institutional, regulatory and legal matters. This process also considers
whether characteristics of area and local population are aligned with
the marketing strategy for the product line that is being developed.
In order to follow up the conditions of compliance with purchase
contracts established with the supplying communities and the
providers of raw materials for Natura, there is a relationship program
that involves visits to these communities, whose quality is supervised
by internal committees. In some cases, the program also promotes
the development of local projects. In supply areas of botanical raw
materials, one of the monitoring modes is a certification process that
adopts socioenvironmental principles and criteria (GRI SO1).
For the evaluation of quality of relationship and transparency of
business conditions, anthropological reports are made according to
requirements of the Genetic Patrimony Management Council
(CGEN). Socioenvironmental projects are being elaborated with
communities at Iratapuru, in Amapá, and the surroundings of Belém,
in Pará (GRI SO1).
See analysis of goals established in 2004 at the end of this chapter.

Ethics

Regarding the ethical principles that guide the relationship of Natura
and its suppliers, in addition to the Values and Beliefs of the company,
applied to its general public, Natura respects the Charter of Principles
of the Ethos Institute on Companies and Social Responsibility, which
presents guidelines for operating with integrity, fighting against com-
mercial influence, offering or receiving bribes or tips from any public
or private person or entity. In addition, the company adopts the prin-
ciples of Global Compact, to avoid using services or products from
companies that violate human rights, and benefit from advantages of
states that violate them.
The compliance of these guidelines is evaluated during the diagnosis
phase of the Corporate Responsibility Management System.
In previous years, the information provided about the percent of paid
contracts in accordance with its terms, excluding those paid through

Annual Report Natura 2005

2005 Annual Report Natura

adjusted penalties, was not properly refined.The referred information
is not liable for calculation, since there are no internal control
mechanisms (GRI EC4).

indexes that rate suppliers

Transparency
In Brazil
All matters that influence Natura’s and its suppliers’ businesses are
treated directly with them. Suppliers’ selection or invalidation criteria
are noted in evaluation questionnaires and in quality, price and
relationship
in our certificate
program for this public.
Follow-up letters to main suppliers of consumables are prepared
every three months, where all relevant information to the parties is
reported, such as purchase evolution, consumables stock positions, as
well as quality and corporate responsibility.
Semiannually, departments that maintain relations with main suppliers
carry out a formal self-evaluation, regarding accessibility, proactivity,
ethics, transparency, quality of information and processes, innovation
levels, conduct and negotiation aspects.These evaluations are discussed
in meetings with the presence of the involved parties.

Communication Channels
In Brazil
In 2005, Natura structured two additional communication channels – a
toll-free number and an e-mail addres – that allow suppliers to convey
doubts that they would rather not discuss directly with the company’s
dealers.These will be made public in 2006.

Neighboring
Communities

Natura has its headquartes located in the Municipal Districts of
Cajamar and Itapecerica da Serra, in São Paulo, considers itself part of
the local communities and concerned with their needs and future.
Because of that, the company supports the implementation of a local
Agenda 21, that is helping set up participative processes in these
communities to define their future.
Natura has also formed working groups composed of personnel
to provide support for activities in the areas of education, work
and income generation, environment and relations with local
organizations and groups.

Codes, policies and specific
management systems
In order to build responsible management, the company adopted as
one of its strategic guidelines “to articulate and act as articulation and
facilitation agent for processes of local sustainable development, cap-
turing all opportunities to contribute to the improvement of these
communities quality of life, so as to foster good practices.”

Ethics and transparency
in 2000, Natura began
Even before its establishment in Cajamar,
approaching the communities of this municipality, contributing
towards strengthening local society with the development of leader-
ships and dissemination of the culture of rights, especially among the
younger population. The relationship established with the local gov-
ernment and institutions led to the creation of the City Council of
Child and Youth Rights and the City Fund of Child and Youth, which
receives funds for children programs.The trust established among the
parties also involve the participation of Natura’s employees, the
mayor, secretaries, NGOs and social citizens in the establishment of a

political agenda and in proposing sustainable planning initiatives f
or the community.
To learn more about the programs carried out in these communi-
ties, please refer to description of projects Agenda 21 – Cajamar,
Working Groups Natura-Cajamar and Natura-Itapecerica da Serra
in chapter Highlights of Investments in Corporate Responsibility on
page 109 (GRI SO1).

See analysis of goals established for this public in 2004 at the end
of this chapter.

Communication channels
Communication between the company and the neighboring
communities occurs mainly through the connections established with
local authorities, citizens and community leaders.
Natura’s direct relationship channel with its neighboring communities
is the toll-free number Fale com a Natura. Its objective is to circulate
information on the company’s projects and induce locals to
participate and address their concerns over these projects. The
company counts on a channel for recording and answering commu-
nications
about
by
the environment, which also may be accessed by neighboring
communities (GRI SO1).

interested

requests

parties

and

Government

As it believes that the company must be an agent of social change,
Natura engages in a range of initiatives in the public sector through
dialogue with all government spheres: Federal, State and Local, which
refer not only to the nature of its business, but to society’s needs.

Codes, policies and specific
management systems
The Governmental Relations department function is, mainly, to establish
a partnership and create relationship opportunities for promotion
and dissemination to society of the concepts of corporate responsi-
bility and sustainable development. Participants in this department also
accompany or represent senior executives of Natura at these events.
In 2005, a Governmental Relation Management System was created,
which defined the process of the department, as well as functions, key
activities and sub-processes related to it. Although the code of
relations with the civil service, as well as policies about campaign con-
tributions, lobbying, corruption and bribing, still have not been formal
ized (GRI SO2 and SO3) – the forecast is for them to become formal
by the end of 2006. Natura bases its relation with the government on
ethics and transparency, which result from its values and beliefs.

See analysis of goals established in 2004 at the end of this chapter.

Ethics and transparency
Natura convenes regular debates on key issues related to the national
political agenda. Sustainable use of biodiversity, industrial policy, foreign
trade, regional development, regulatory matters, technological innovation
are some of the issues discussed by the Congress, the government and
its agencies to which Natura seeks to contribute.

Communication channels

Natura relates with the government in different ways and at diverse
levels. Its particular contribution focus on issues of sustainable use
of Brazilian biodiversity and sharing of income, such as the access to
our heritage, fair trade and income sharing of.There are direct con-
tacts with government officers and indirect ones, through business

associations, such as the Direct Sales Association (ABEVD) and the
Brazilian Association of Personal Hygiene, Perfumery and Cosmetics
Industry (Abihpec). With these actions, the company tries to pro-
mote change and contribute to industry and sector competitiveness
integrating the production
by eliminating productive bottleneck,
chain and providing incentivies to promote its products and brand.

Society

Natura sponsors several organizations, on the belief that it can be
an influencing factor for social change. In this sense, for ten years it
has been involved in programs of public elementary education. In
addition,
it supports and sponsors neighboring communities,
supplying communities and social organizations.

Codes, policies and specific
management systems

Natura includes in this public civil society organizations and society as
a whole.

Due to the demands from a specific set of society about our
manufacturing processes, Natura does everything in order to make
public its position regarding animal testing, as follows.

Animal testing of cosmetics products

• Since 2003, Natura has totally banished the use of animals in

laboratory testing for finished products.

• For over six years, it has been searching for alternatives to reduce
this testing procedure, ensuring the safety of its products. It still
performs limited animal testing for reactions to some raw
materials when there are no alternative methods that may enable
the elimination of health risks for users.

• The goal for 2004 – a 25% decrease in the number of raw
material tests for cosmetics in animals – has been surpassed,
reaching 78.5%. Owing to legal requirements, such as Anvisa´s (the
National Health Agency), Natura performs safety and efficacy test-
ing of phytotherapic categories in animals.

• Natura also invests in alternative testing as part of the development
of new assets and it keeps an in vitro laboratory for the evaluation
of raw materials and products in artificially grown human or animal
cells. It also invests about R$ 1.5 million annually in test development
and in training of professionals who are dedicated to this issue.
These ongoing efforts have enabled the gradual decrease of animal
testing, aiming at the complete elimination of this practice by
December 2006.

• Natura follows the strictest technical and scientific international
procedures based on a principle internationally known as 3R:
Reduction, Refinement and Replacement. This principle is the
guideline for the largest cosmetics industries in the world aiming
at analyzing and developing alternative methods for animal essays.

• The company has created the Natura Products Safety Committee
that, among other functions, has the purpose of establishing the
lowest number of essays requiring tests in animals specially bred
for that purpose.

In this scenario, performing animal testing is becoming less necessary
and it represents an exception in the current reality of the company,
which will do its utmost to eliminate it completely. In the strategic
alternatives approved for the next years, we are committed to
totally eliminating the tests by December 2006. Therefore, whenever
Natura has an innovative launch the company has a commitment to
release it in a transparent way to everyone.
Natura is totally against any kind of unfaithful communication that
accuses the company of indiscriminately using animals in laboratory
testing.This kind of communication aims to mislead public opinion and
does not add value to knowlegeable discussions about the subject.

Tests in animals for phytotherapic products
Natura, due to competent authorities’ requirements (Anvisa), needs
to carry out tests in order to prove the security and efficiency of
phytotherapic products in animals (GRI PR1).

Number of tests in animals

Tests in animals for cosmetics
Tests in animals for phytotherapic

products

2003
308

249

2004
66

200

2005
96

See analysis of goals established in 2004 at the end of this chapter.

Ethics and Transparency

Natura’s relations with several entities of society, from NGOs to busi-
ness organizations, are transparent.The list of organizations which we
are related with are annually published in our annual report (see
“Commitment with Leadership and Social Influence” in the chapter
Highlights of Investments in Corporate Responsibility on page 115).
The company’s policies regarding matters of public interest, as well as
its socioenvironmental strategic opinions, are considered public
domain documents and made available upon request or when we
deem appropriate.

Communication channels

Our relations with community organizations take place in different
ways. From enquiries and specific forums promoted by the
company for common interest issues, evaluation processes of our
management with the participation of organizations and social
leaders as observers,
to attendance of representatives of the
company in forums, committees, councils and conferences.

Governance

Natura has been improving its corporate governance since the mid-
1990s when it placed new executives in strategic positions, to foster
professional management. This process developed further with the
estabilishment of Management Committee in 1998 – followed by the
Auditing and the Risk and Human Resource Management commit-
tees. The highlight of this process was the company’s IPO on May
26th, 2004.

Ethics

No operation regarding ownership structure has been carried out in a
way that it would constitute economic concentration (GRI SO6). (For
further information on Governance, refer to specific chapter on page 66)

Annual Report Natura 2005

2005 Annual Report Natura

Goals Established in Natura’s 2004 Annual Report

Initiative

Committed Target

Results

GRI EN 33

a) Disseminate and practice quality control systems

☺ Target reached. During 2005, all of our suppliers considered strategic, key

established with suppliers.

b) Evaluate 100% of the documentation pertaining to
all “environmentally critical” and new suppliers.

and those deemed of critical importance were informed about the QLICAR
program - 53 of them are under monthly monitoring for criteria of quality,
socioenvironmental responsibility, costs and relationship.

(cid:2) Target partially reached. Regarding productive items and finished

products considered environmentally critical, we closed 2005 with
100% of the documentation evaluated for new suppliers and 95%
for old suppliers.

(cid:2) Target partially reached. 50% of the Providers of transportation services

considered environmentally critical were evaluated in 2005.
The share of nonevaluated suppliers refers to either new ones
(contracts signed in 4Q05) or to those who have not sent
completed documentation required for evaluation.

c) Of the evaluated suppliers in 2004, increase those

☺ Target reached. Of total active suppliers in 2005, 41% were rated

with an A rating to 30% of the total.

in the A category.

GRI HR10

a) Develop a relationship code.

b) Structure an Ombuds Service at Natura.

(cid:2) Target partially reached.The Carta de Princípios de Relacionamento

was prepared but did not receive final approval. Its launch
will occur in 2006.

(cid:3) Target missed. Study comprising evaluation, analyses, model

recommendations and of models and premises was completed.
Implementation will occur in 2006.

GRI SO1

a) Install a multipartite forum to define actions
regarding the Cajamar development plan,
following sustainability principles.

☺ Target reached. District and Town Hall forums were installed between
October and December, after extensive discussion and preparation
processes.

b) Constitute a tripartite working group for implementation

of Agenda 21 in Potuverá, Itapecerica da Serra.

c) Perform assessment in Potuverá.

d) Report socioenvironmental impact of Natura’s

activities in more relevant supplier communities.

(cid:3)

(cid:2)

Target missed.The group of leaders did not form a tripartite group to
foster Agenda 21 in Potuverá.

Target partially reached. Diagnostic assessment was addressed in the initial
stages of the leadership course involving five associations of residents.
To define their working targets, the associations had to start from
a diagnostic assessment of the area.

Target partially reached. Participative diagnostic assessment and local
development planning in the communities surrounding Belém and in the
community of Iratapuru were completed.These studies are yet
to be performed in the communities of Médio Juruá.

GRI SO2

Establish policies on
and bribery.

the

issues of corruption

(cid:3) Target missed.The policy was not prepared during 2005. We chose to
wait for the completion of the Carta de Princípios de Relacionamento, to
later define a policy fully compatible with the relationship principles.

GRI SO3

Establish policy on political contributions.

(cid:3) Target missed.The policy was not prepared during 2005.

We chose to wait for the completion of the Carta de Princípios de
Relacionamento, to later define a policy fully compatible with
the relationship principles.

GRI PR1

Keep below 170 the number of animals used in raw-
material testing of cosmetic products (which represents a
32% reduction from the 2004 target). It would also mean
a 158% improvement over 2004 levels, because some of
the testing scheduled for 2004 was postponed to 2005.

☺ Target reached. A total of 96 animals were used in lab testing for safety of
new raw materials during 2005.The value represents 56.5% of the stipulat-
ed target, reflecting Natura’s policy to reduce testing in animals and use of
in vitro testing of components safety. Again, it is important to point out that,
just as in 2004, animals were not used for safety testing of finished products.

Annual Report Natura 2005

Goals compatible

with sustainable

development

Natura acknowledges that, upon reaching its economic and financial
goals, there are social and environmental impacts produced that must
be regarded as part of the business.Therefore, the company began to
consider impact details in its decision process.
Among the main results in 2005, we highlight improvements in
the assessment of the environmental impact of packaging and
the inclusion of goals to reduce its consequences in the
establishment of performance bonuses, as well as the increase
in refill sales. We also introduced more specific methods to calculate
carbon emissions and sinking.
Intense discussions on the company’s role in the development of the
communities surrounding its corporate facilities and its supplying
communities on the short, medium and long term, as well as ques-
tioning of proposed models, have led us to establish new goals. We
began a critical evaluation of indicators for the social impact of the
business and are in the middle of a redefinition process around the
following focal points: wealth distribution, job creation and income
generation, social inclusion and education.
Natura’s planning cycle opened space to the social and environmental
analysis of each area and included the theme in its 2006 goals definition
in a more consistent way.
Below are our financial, social and environmental results. We begin
each block with the policies and management systems, followed by an
explanation of performance indicators.

Direct Impacts

Performance indicators:

Net sales (R$ thousands) (GRI EC1)

2003

2004

2005

Net sales

1,328,910

1,769,664

2,282,164

Natura does not disclose regional market analyses (GRI EC2).

Cost of goods, materials and services
purchased (R$ thousands) (GRI EC3)

Cost of goods, materials and

services purchased

942,240

1,365,906

1,731,670

2003

2004

2005

Total payroll and benefits (including wages, pensions,
other benefits, and severance pay) broken down by country
(R$ thousands) (GRI EC5)

Brazil
Argentina
Chile
Mexico
Peru
France
Ybios

2003(1)

167,088
4,514
2,620

2004

233,194
5,066
4,343

3,561

4,688

N.A.

2005

277,078
8,500
5,727
5,413
6,589
3,121
(12)

Total Natura

177,783

247,291

306,416

1. Payroll amounts for 2003 broken down for the various Natura operations were corrected in
this report due to previously published figures being preliminary. Note that the total payroll
amount for 2003 is unchanged.

Economic

Codes, policies and general
management systems

The individual and consolidated financial statements that serve as
basis for the economic performance indicators were prepared in
accordance with consolidation criteria from Brazil’s GAAP and
regulatory instructions and decisions issued by the Brazilian
Securities Commission (CVM). These financial statements include
those of the company and its direct and indirect subsidiaries. We
emphasize that these financial statements are audited quarterly and
annually by an independent auditing firm and disclosed to the
market through the CVM site, and Natura’s Investor Relations
department, as well as published on a major newspaper, in case of
annual financial statements. The financial statements of foreign
subsidiaries were converted into Brazilian currency at exchange
rates in effect on the balance sheet dates.

Furthermore, Natura follows the Code of Ethics and Conduct
Standards established by the Association of Capital Markets
Investment Analysts and Professionals, Apimec, in order to establish
conduct standards to these professionals.

The various management processes and systems that are specific
to each economic indicator are under the responsibility of the
Vice-President of Finance.

Payments to providers of capital, broken down by interest
on debt and borrowings, and dividends on all classes
of shares, with disclosure of any arrears on payment
of dividends to preferred shares (R$ thousands) (GRI EC6)
2005
45,453
319,442
362,895

2003
Interest on debt and borrowings
64,439
Dividends and interest on capital(1) 60,331
124,770
Total

2004
33,834
216,352
250,186

1. Values for 2002 and 2003 refer to dividends and interest on capital of Natura Participações.

Increase/decrease in retained earnings at the end
of the period (R$ thousands) (GRI EC7)

Net income

2003
63,884

2004
300,294

2005
396,881

Total sum of taxes of all types paid, broken down
by country (R$ thousands) (GRI EC8)

Brazil
Argentina
Chile
Mexico
Peru
France
Ybios
Total Natura

2003
490,316
6,631
2,173
N.A.
2,964
N.A.
N.A.
502,084

2004
531,346
9,200
3,156
N.A.
4,103
N.A.
N.A.
547,805

2005
706,844
11,086
4,419
223
4,583
N.A.
26
727,181

2005 Annual Report Natura

In 2005, Natura was granted by the district council of Itapecerica da
Serra, São Paulo, Brazil, a tax break in the amount of R$ 716,780.
This amount will be allocated to investments (GRI EC9).
Regarding the total amount spent on infrastructure development for
operations other than the main one (GRI EC12), in 2005, R$ 9,415
million were invested in Brazil, as follows:

In Cajamar:
• Expansion of the Effluent Treatment Plant
• Upgrade of the energy management system
• Adaptation of the waste disposal area
• Installation of monitoring equipment for the vacuum system
• Complementation of parking lot solar-energy lighting
• Acquisitions of furniture and facility improvements

In Itapecerica da Serra:
• Automation of the diesel system in generator
• Reflective painting and thermal insulation of Administrative
Center roof

Investment Matrix

The amount of donations to the communities, society and to other groups
and the total amount spent on environmental concerns are included in
the Investment Matrix in Corporate Responsibility (GRI EC10 and EC35)
(see chapter Methodology and Key Indicators on page 48).

Environmental
Codes, policies and general
management systems

Natura’s socioenvironmental policy assumes that an environmentally
responsible company should identify its impacts on the environment,
minimize the negative ones and maximize those that are positive.
Therefore,
it should keep improving environmental conditions by
minimizing potentially aggressive activities and disseminating knowledge
regarding this management to other companies. This policy contem-
plates responsibility towards future generations; environmental
education; management of the environmental impact of its products
and services and their life cycles; and minimization of material
consumption and output.
Regarding socioenvironmental issues, and as part of its social and
environmental strategic options, Natura intends to:
• Continue mitigating the environmental impacts from our processes,
products and services, especially those related to the major issues in
our future: the sustainable use of water, release of greenhouse gases,
general reduction of waste products, and the efficient use of energy
– as our main focuses from the operational, educational, and public
policy influence standpoint. This makes us face the challenge of
redesigning our business chain and acquiring specific technologies;

• Continue investing in the sustainable use of biodiversity as a way
to promote the conservation of native forests, creating new
agroforestry models;
• Considering that the current knowledge on the use of genetically-
modified materials is insufficient to determine their impact on the
environment and on health, we decided not to use genetically-
modified materials in our products as a precaution.
Natura also abides by the directives in Agenda 21, which signals a
change in the development pattern of the 21st century towards
sustainability. It also follows the guidelines of Global Compact, among
which are the call for preventive action and the development of
initiatives to promote increased environmental responsibility.
In 2005, the company integrated the quality control and environmental
management in Natura’s Integrated Regulatory System (SINN). This
system helps team members engage in their daily activities with the
company’s commitment to the environment in mind, alongside with the
commitment to quality of products and services. The development of
SINN includes elements from the cutting edge of corporate management
– based on the standards NBR ISO 9001:2000 and NBR ISO 14001:2004
– the Criteria for Excellence of the National Quality Foundation (FNQ),
the best market practices oriented towards Natura’s corporate culture.
SINN is also oriented towards the Good Manufacturing Practices (GMP),
systematic and necessary methods to ensure that our products comply
with excellence requirements specified by the market.
In 2005, Natura was certified for NBR ISO 9001. This certification is a
result of Natura’s continual commitment with the quality of its processes,
products and services, seeking to improve these aspects everyday.
In relation to the environmental performance of its suppliers, Natura
possesses clear standards and procedures for supplier selection and
evaluation in accordance with ISO 14001. Suppliers are evaluated at
least every two years through an analysis of their legal documentation
and a self-applied environmental evaluation (see details in Suppliers and
Supplier Communities in the chapter Quality of Relations on page 85).
Natura has not been issued any penalties in 2005 for any legal
infringement regarding the environment (GRI EN16).Through SINN,
all legal requirements concerning the environment are monitored,
allowing for constant interaction between operations and preventing
any irregularity. Moreover, the company monitors the progress of leg-
islative projects through the use of internal discussion forums.
Internal environmental issues are followed up by means of reports
showing goals and action plans established by the areas, the
Sustainability Committee and the Executive Committee.

Biodiversity

Codes, policies and general
management systems

By signing the Biological Diversity Convention during ECO’92, Brazil
and 155 other countries committed to implementing a series
of policies regarding conservation and sustainable use of Brazilian
biodiversity. The first challenge is getting to understand biodiversity
itself, the second is to preserve this legacy and then there is the
complex task of designing a development model that ensures
sustainable use of the components of biological diversity as a whole.
On May 24th, 1994, the BDC was adopted by the Brazilian Congress
for use as a basis for the Brazilian Biodiversity Policy.

Natura adopted a business strategy of investing in a new product
platform based on the sustainable use of natural resources and
respect for regional and local cultural traditions.
With this new model, the company established partnerships with rural
suppliers (traditional communities and family farm groups) in some
regions of Brazil and crafted a network of excellence that promotes
research and development, discovers new natural resources, and seeks
to refine products and processes, adding value to Brazilian biodiversity.
Natura encourages the organization and nurturing of rural suppliers
and seeks to participate in the construction of supply chains to
ensure fair pricing of raw materials, focusing on the promotion of the
social and economic progress of these suppliers and the adoption of
production processes with lower environmental impact. This activity
follows the recommendations of the World Labor Organization, the
Brazilian Statute of Children and Adolescents, environmental certification
programs and current legislation.
In its socioenvironmental strategic options, Natura proposes to
continue investing steadily in the sustainable use of biodiversity,
aiding its conservation.
There are many specific management systems regarding Natura’s
biodiversity project: selection of assets for research, regulation of
this research, development of products and testing; development
of suppliers of all sizes and identifying new supplying communities;
environmental certification; and the processes concerning social
and environmental impacts produced by the production activity on
supplying communities, and others.

Performance indicators

1. Natura’s real estate holdings:
Natura owns no land properties other than those where its business
units are located. Two of these are located in environmentally
important regions, Itapecerica da Serra, a watershed protection area,
and Cajamar, an environmental protection area, both within the
Atlantic Forest biome. These operations comply with the applicable
legal requirements (GRI EN6 and EN29).
The company obtains its botanical raw materials from leased or rented
areas managed by community or rural producers. Concerned that the
resources of the land should be exploited responsibly, Natura strives
to ensure a sustainable exploitation model and study the
environmental importance of these areas.
In 2005 Natura has acquired
no new additional areas for its production activities (GRI EN23).
In 2005 the company increased its built area slightly in the Cajamar
site, which now totals 83,210 m2 as a result of the expansion of the
Effluent Treatment Plant and of the product separation lines.The site’s
impermeable surface now comprises 12.9% of the total land. In the
Itapecerica da Serra site impermeable area remained unchanged at
15% of the land (14,366m2) (GRI EN24).

2. Impacts of Natura’s activities on earth’s biodiversity and ecosystems:
To describe the main impacts on biodiversity linked to activities or
products and services in the various environments (GRI EN7), we will
start by explaining how we select our direct operation areas.
In selecting the areas that can be sources of production inputs (botanical
raw materials such as extracts, oils or compounds) developed with
Brazilian species, or foreign species cultivated in Brazil, Natura’s main
focus is traceability and sustainability, in order to ensure quality and a
reduced impact on the environment.
The company adopts two processes to ensure the sustainable use
of natural resources:
1) Identification of the input sources;

2) Asset certification program for two kinds of management:

a) Management of non wood forest products – The assumption is that
this ensures a continuous supply of raw materials, minimizes environ-
mental impact, and safeguards the capacity for sustainable production.
Forestry certification is designed to assess the asset extraction
process and evaluate adequacy of the management model, under
principles and criteria established by the Forest Stewardship Council,
FSC, which consider social, economic and environmental aspects.

b) Agricultural management – This is done by emphasizing good
production practices and includes agricultural and ecological concepts.
The agricultural certification is designed to evaluate the agricultural
production of assets, under the principles and criteria of the Sustainable
Agriculture Network, SAN, and of the Instituto Biodinâmico, IBD.
Natura’s assets certification process comprises three stages:

Stage I – Internal process to identify and select a potential supply
area. In this stage the company analyzes the types of producers, the
community’s organization and identify the type of management
(agricultural or forest based).

Stage II – Certification design preparation,
including discussion of
processes are discussed with vegetable product suppliers; selection
of certifying authority; with preliminary analysis of the supply area by
the certifying authority, if required.

Stage III – Inspection of the supply areas for certification; implementation
of an action plan to conform with regulations from certifting authority;
obtaining the certifying authority’s official opinion to obtain authorization.
The company analyzes the environmental impacts of forest management,
in their various aspects, such as: (GRI EN7)

Biotic environment(1) – A positive impact since the harvest does not
exceed the area’s capacity limit and may even favor the renewal of the
species, and thus the forest’s dynamics of succession (2); contribution
for conservation of genetic diversity maintained by traditional communities
(on farm conservation)(3).

Physical environment(4) – A positive impact on the soil, since mainte-
nance of the forest man-made environment preserves this resource.
Removal of forest biomass (frequent harvests) has a negative impact
on nutrient cycling(5).

Man-made environment(6) – Positive impact is positive, especially in
preventing the exodus of rural workers to the cities, generating jobs
and contributing to local development.The cultural aspect is benefited
by the recognition of the value of the body of knowledge acquired
through inherited traditions.

1. Biotic environment: flora (original vegetation, seed deposit on the soil, natural regeneration)
fauna (vertebrates and insects) and microorganisms.
2. Forestry succession: it is a process of progressive change in the proportion and composition
of individuals from a vegetal community until this community reaches a state of dynamic
equilibrium with the environment
3. On farm preservation: it is a strategy that complements ex situ preservation and is
characterized as one of the forms of genetic preservation of agrobiodiversity; its particularity
is the fact that it involves genetic resources that are cultivated by the traditional populations,
who have a great diversity of phytogenetic resources and a broad knowledge of them.
4. Physical environment: air, water resource and edaphic resource.
5. Cycling of nutrients: movement of elements and inorganic compounds from the
environment to the organisms and from these organisms back to the environment, by way of
biogeochemical cycles.
6. Man-made environment: settlement of rural workers in the countryside, jobs, regional
development, landscaping.

Annual Report Natura 2005

2005 Annual Report Natura

Raw materials/Ekos

State

Phase I

Phase II

Phase III

Notes

Beginning

End

Beginning

End

Beginning

End

Andiroba
Carapa guianensis
Brazil nut
Bertholletia excelsa
Breu-branco
Protium pallidum
Buriti
Mauritia flexuosa
Chamomile
Chamomilla recutita
Copaíba
Copaifera spp.
Cumaru
Dipteryx odorata
Cupuaçu
Theobroma grandiflorum
Flatsedge
Cyperus articulatus
Guaraná
Paullinia cupana
Lemon grass
Cymbopogon citratus
Macela
Achyrocline satureoides
Maté tea herb
Ilex paraguariensis
Murumuru
Astrocaryum murumuru
Passion fruit
Passiflora edulis
Pitanga
Eugenia uniflora
Rosewood
Aniba ferrea
Raw materials/Other lines

Açaí
Euterpe oleracea
Cacao
Theobroma cacao
Jambu
Spilanthes oleracea

Amazonas

Amapá

Under evaluation

Paraná

Amapá

Under evaluation

Rondônia

Pará

Bahia

São Paulo

Paraná

Rio Grande do Sul

Amazonas

Minas Gerais

São Paulo and
Paraná
Amazonas

State

Rondônia

Bahia

São Paulo/Paraná/
Rio de Janeiro

Phase I

Beginning

End

Phase II

Beginning

End

Phase III

Beginning

End

Traditional
management
Traditional
management
Traditional
management
Traditional
management
Cultivation

Traditional
management
Traditional
management
Agroforestry
system
Cultivation

Organic
cultivation
Cultivation

Traditional
management
Traditional
management
Traditional
management
Cultivation

Cultivation and
traditional management
Traditional
management
Notes

Agroforestry
system
Agroforestry
system
Organic cultivation

Target for 2006: To reach 21 certifications, including six more assets
in Phase III of the certification process. Natura uses assets (oils and
extracts) from 35 native and exotic species in Brazil. Therefore, with
21 certifications we will reach 60% of all certified species.
See analysis of goals established in 2004 at the end of this chapter.
In addition to the certification, conservation of biodiversity is encour-
aged when it provides benefits and products that can generate
economic resources.
Regarding activities and operations impact over protected areas (GRI
EN25), we started from the six categories of protected areas of the
World Conservation Union.
After analyzing these categories of protected areas, we conclude that
two areas that have partnering agreements with Natura fit category
VI: “Resources in protected areas managed to allow the sustainable
use of natural ecosystem.”These areas are the Médio Juruá Extraction
Reserve (located in the state of Amazonas) and the Iratapuru River
Sustainable Development Reserve (located in the state of Amapá).
Both areas were created by the federal and state governments for
purposes of sustainable exploitation of resources found in them.

They generate cash and jobs for the populations that have always lived
in those areas.
The company’s activities of buying resources in the aforementioned
protected and sensitive areas are monitored by the responsible
environmental bodies – the Brazilian Institute for the Environment and
Renewable Natural Resources (Ibama), and the State Environment
Department (Sema), and this monitoring is complemented by the
certification program.The certification process requires the preparation
of management plans and its main benefit is that the impact of
traditional stewardship on the available resources is monitored.
The result of these strategies helps mitigate negative impacts and
potentialize positive ones.
In 2005 Natura did not experience any environmental impacts in
protected and sensitive areas (GRI EN25).
The company uses the management plans as tools to monitor changes
in natural habitats brought about by activities and operations, and to
control what percentages of each area are protected or restored
(GRI EN26).The preparation and execution of Management Plans for
Sustainable Use of the species in the two protected areas (the Médio

Juruá Extractivist Reserve and the Iratapuru River Sustainable
Development Reserve) aid conservation of the local biodiversity.
In 2005 Natura did not experience any changes to protected habitats
as a consequence of its industrial activities. On the other hand, we did
not account separately the parts of the habitat that we protected or
restored as part of our activities.
The company maintains programs and targets to restore and protect
ecosystems and native species in degraded areas (GRI EN27), as
some resources supplied to Natura are produced in such areas.
Natura prioritizes the application of agroecological production mod-
els for vegetable raw materials, and encourages others to do the
same, resulting in a significant aid to conservation of natural resources
such as soil and water, and helping in the recovery of the areas. The
company also considers these models and other environmental
parameters in the selection of new areas.
The existence of an agroforestry production model, created as a
solution for the recovery of degraded areas in the state of Rondônia’s
Condensed Multispecies Economic Reforestation Project (RECA) was
a significant factor for this area to be chosen for the supply of the fruit
called cupuaçu. The company provides incentive for such projects to
thrive by acquiring their raw materials and supporting their certification.
In 2005, Natura provided support for the following initiatives that
focused on the protection and restoration of ecosystems and native
species in degraded areas: the Flora Brasiliensis Project, the Ilhabela
Trails Project, the Rio de Janeiro Botanic Garden, the Fruit Grove
Project, the Environmental Diagnosis Project in Cajamar, and the
Second South America Regional Conference on Climate Changes.
The company also proceeded with the planning of the Forest
Recomposition Project in its Cajamar and Itapecerica da Serra sites,
whose intent is to enrich the green areas of these sites and increase
the diversity of native species and their ecologic relationships. The
company’s goal is to start implementation of this project in 2006. In
addition to that, Natura is a member of WWF’s Brazil Corporate
Club, which develops several environmental protection projects.
We also monitor the numbers of species in IUCN’s Red List that
inhabit the areas affected by our company’s operations (GRI EN28).
Two species used by Natura are in the IUCN’s Red List of Threatened
Species: the maté tea herb (Ilex paraguariensis), classified as low risk,
and the Brazil nut tree (Bertholletia excelsa), classified as vulnerable –
the latter also included in the Official List of Threatened Plants
published by the Brazilian Institute of the Environment and
Renewable Natural Resources (Ibama). In 2005 Natura, in partner-
ship with Embrapa Genetic Resources, designed a project to study
and plan the conservation of these two species.The plan is scheduled
to be carried out early in 2006. In addition to that, the areas that
supply these products to Natura are certified by the Forest
Stewardship Council, FSC, which ensures the application of good
practices in forestry management.

Performance indicators

In Brazil
Water consumption (GRI EN5)

Water consumption (m3)(1)
Water consumption by

product unit sold (L/unit)(2)

2003
110,499

2004
116,367

2005
136,677

0.87

0.67

0.63

1 In 2005, due to a 35% growth in shampoo production (greatest water consumer)
over 2004 and also to a 21% staff increase in the Cajamar site, there was a 17% increase
in water consumption, in absolute terms.
2 In 2005 there was a 5.6% reduction in water consumption. The main reason was the
economy of scale in resale items, which ended 2005 5.3% over the estimated figure.

Target for 2006: To reach 138,540 m3 of water consumption in
absolute terms.
See analysis of goals established in 2004 at the end of this chapter.
The water sources and habitats affected by the company’s water
consumption are those surrounding the Cajamar and Itapecerica da
Serra sites (GRI EN20). Since there is no public water supply system,
all water consumed in Cajamar and Itapecerica da Serra comes from
local artesian wells. The annual volume of water extraction respects
criteria based on water table regeneration with a daily monitoring of
consumption volumes as compared to authorized limits. In 2005,
Natura exceeded its water reuse target, another good result of its
actions for environmental sustainability.

Surface and underground water extraction as a percentage
of available renewable water (GRI EN21), in Cajamar

Extraction

2003
58.2%

2004
70.1%

2005
83%

Note: In 2005 the 18% increase in underground water extraction (Cajamar and
Itapecerica) is mostly due to a growth of 35% in shampoo production (greatest water
consumer) over 2004 and also to a 21% staff increase in the Cajamar site. In 2006,
the extraction of drinking water will be extended geographically.

Percentage of water not incorporated to the product (%)

2003

2004

2005 Target 2006

Water not incorporated

90.2

92.2

89.1

to the product

87.0
This percentage represents the relative water consumption by the
company that was not used as an item in our products. It represents
the water used for industrial and administrative purposes. It is also the
percentage that can be reduced the most by reducing waste.
Target for 2006: To reduce the percentage of water not incorporated
to the product by 87.0%.

Water

Codes, policies and specific
management systems

Natura addresses the specific water issue both in its environmental
policy and its social and environmental strategic options.
In our
operations, a series of initiatives are taken to reduce water consumption
and to recycle water and treat its final effluent before it is returned
to the environment. We have also developed several campaigns
about this issue targeting our suppliers, Consultants and final
consumers. Specific indicators are defined and monitored by company
areas involved with the issue.

Water recycling and total reuse (GRI EN22)

Recycled and reused water (m3)
Reusage percentage in

relation to the total amount
of water treated at the Effluent
Treatment Plant

2003
20,233

2004
29,065

2005
48,760

29%

39.5%

55%

Note: The treated water from its effluent treatment system is used in all Cajamar facilities for the
cleaning of outer walls, fire fighting network, sanitation facilities and ornamental water mirrors.

See analysis of goals established in 2004 at the end of this chapter
Significant water discharges (GRI EN12)

Total effluent treated

volume (m3)

2003

2004

2005

79,580

82,786

93,402

Annual Report Natura 2005

2005 Annual Report Natura

Note: The 13% increase in water outflow in 2004 was due to increases in shampoo
(35%) and cream (35 %) production lines, which generate large volumes of effluents,
and also to the 21% staff increase in the Cajamar site, which contributed to increase
the volume of waste water.

Cajamar treated sewage
Parameter
mg/L
DBO
DQO
OG

Legal
Standard
60
150
20

Average
2003
8.0
34.7
2.3

Itapecerica treated sewage
Parameter
mg/L
DBO
DQO
OG

Legal
Standard
60
150
20

Average
2003
144.0
300.0
22.7

Average
2004
6.6
102.7
3.7

Average
2004
126.0
279.0
24.2

Average
2005
6.1
87.0
3.1

Average
2005
19.4
66.8
6.1

The water source (and related ecosystems or habitats) significantly
affected by the water discharge and drainage (GRI EN32) is the
Juqueri River in Cajamar. However, before discharging, our effluents are
treated at the Effluent Treatment Plant.This plant fully meets all appli-
cable legal requirements, such as Resolution No. 357, article 34, of the
National Environment Council (Conama), and State Decree-Law
No. 8468/76, articles 12 and 18.
Because the Effluent Treatment Plant of Itapecerica da Serra is located
in a watershed protection area, it adopts the system of infiltrating
its effluents into the ground after treatment in a conventional
treatment plant whose efficiency in removing organic contents
reaches 97% on average.
See analysis of goals established in 2004 at the end of this chapter.
In other operations
2005
Water

Chile Mexico(1)

Argentina

Peru

consumption (m3)
Water consumption by

12,037

product unit sold (L/unit) 3.8

549

0.53

N.D.

1. This operation began its activities in August 2005. Figures will be available only in 2006.
Water consumption data have not been calculated for other sites
as their volumes are not considered significant as compared to the
production activity, which is carried out only in Brazil.The offices use
water provided by public utilities. Since these operations have a
commercial nature only, and are carried out in urban areas, no water
sources are affected.

Energy
Codes, policies and specific
management systems

Performance indicators

In Brazil
Direct energy consumption, by primary
source (joules) (GRI EN3)
Joules
Electricity from
primary sources(1)
Self-generated electricity

7.47 x 1013

2003

2004

2005

7.9 x 1013

896 x 1013

(diesel generator)

Diesel fuel used
in generators

LPG consumption(2)

5.02 x 1011

2.88 x 1011 4.38 x 1011

17.3 x 1011
9.95 x 1011 15.1 X 1011
23.5 x 1012 24.65 x 1012 28.1 X 1012

Total energy consumption
2003

2004

2005

Energy matrix
(joules)(3)(4)

Energy consumption –

energy matrix
per product unit sold
(kjoules/unity)(3)(5)

9.99 x 1013

10.47 x 1013

11.92 x 1013

785.2

603.7

551.8

1. Consolidated energy consumption from picking, vertical warehouse, and sewage treatment
station was 98% higher than in 2004. The main drivers were start-up of the third production
line, another vertical warehouse and upgrade of the sewage treatment station.
2 Caloric power: LPG = 11,100 kcal/kg; gasoline = 11,277 kcal/kg (1 kcal/kg = 4,186.8
joules/kg)
3. The energy matrix comprises total energy used by Natura through its various sources
(electric, diesel, and LPG)
4. Energy consumption increased 13% over 2004, however, in a sustainable way, during this
year the company posted a 20% production increase and also the 21% staff increase
in the Cajamar site, in addition to the conclusion and start-up of several capacity projects
(increase in installed capacity).
5. In 2005, relative energy consumption decreased 8.5%. The main driver was the reduction
in the economy of scale in resale items, 5.3% over the estimated one.

Energy Matrix - Natura

Electricity (75.2%)

LGP (23.6%)

Self-generated energy (0.01%)

Diesel (1.2%)

Advanced station – Juiz de Fora/MG
Direct energy consumption – breakdown
by primary sources (joules)
2003

2004

2005

Direct energy
consumption

1.77 x 1011

2.24 x 1011

2.72 x 1011

Natura addresses the specific energy issue both in its Environmental
Policy and its Social and Environmental Strategic Options. In our
operations, a series of initiatives are taken to reduce energy
consumption, such as the installation of movement sensors and the
best planning for the use of this resource. It should be kept in mind
that the company’s plants are located in Brazil, where the energy
matrix is mostly hydroelectric. However,
in cases of energy
shortages or consumption peaks diesel generators are used,
monitored by the responsible employees due to their emissions of
gases that can worsen the greenhouse effect. Specific indicators are
defined and monitored by the related areas.

Advanced station – Uberlândia/MG
Direct energy consumption – breakdown
by primary sources (joules)
2003

2004

2005

Direct energy
consumption

1.28 x 1011

1.76 x 1011

2.30 x 1011

The indirect energy consumption, which refers to production by
outside suppliers whose main customer is Natura, is not monitored
by Natura (GRI EN4).

The company has carried out several initiatives to increase energy
efficiency (GRI EN17):
• Complementation of the solar energy lighting in the Cajamar

parking lot (for the full area of 650 slots);

• Reflective painting and thermal insulation on the roof at Itapecerica
da Serra Administrative Center (an area of 12,600 m2), to optimize
air conditioning energy consumption;

• Hiring of a multinational energy firm to assist with energy manage-

ment actions and identify consumption reduction opportunities;

• Approval of the review and complementation of the Green Building
study, which calls for the sustainable consumption of natural
resources, involving all company units;

• Starting the implementation of the project for use of solar energy to

heat water in cafeterias and dressing rooms;

• Upgrade in the Energy Consumption Management System by

installing energy meters, also in the generator groups.

In other operations
2005
Total energy
consumption(joules) 2.23 x 1011 5.11 x 1011
Energy consumption

Argentina

Chile Mexico(1)

Peru

N.D. N.D.

per product unit sold
(kj/unidade)

71.6

497.7

N.D. N.D.

1. This operation began its activities in August 2005. Figures will be available only in 2006.
The amounts are not considered significant vis-à-vis production plants
in Brazil.
See analysis of goals established in 2004 at the end of this chapter.

Greenhouse gas emissions

Codes, policies and specific
management systems

Natura considers the emission of greenhouse gases one of its
environmental impacts that most require monitoring. That is why, in
2005, the company discussed in its various forums, both internal and
external, how it could effectively and systematically cooperate to
reduce its emissions of carbon and greenhouse gases. Although it has
some ongoing initiatives, the company intends to obtain a detailed
diagnosis and a complete action plan in 2006.
By doing this, Natura will consolidate its position on climate changes,
identification of sources of greenhouse gas emissions, methods for cal-
culating these emissions and potential mitigating actions, including pro-
jects based on Clean Development Mechanisms of the Kyoto Protocol.
Specific indicators are defined and monitored by company areas
involved with the issue.

Performance indicators

Due to the new transportation strategy adopted in 2004, the company
established and consolidated a process for calculating atmospheric
emissions in 2005, and this allowed a better knowledge of CO2
emissions in the direct-sales distribution channel (GRI EN8).
Natura has progressed both in the use of emission monitoring instru-
ments and in its emission reduction projects. In 2006 we will monitor
and disclose data on emissions throughout the distribution chain, and
which should allow us to identify improvement opportunities anywhere
in the chain in Brazil, by means of activities and projects such as the use
of alternative fuels (natural gas and fuel alcohol), and logistical improve-
ments (cargo consolidation). Due to the significant restructuring of
international operations, in 2005 no progress in environmental aspects
was feasible in these operations (GRI EN34).

CO2 emissions(1)(2) (t) (GRI EN30)

Gasoline
Diesel
Alcohol
Emissions of other gases

2003
521.20
7,960.63
25.16
0

2004(3)
N.D.
N.D.
N.D.
N.D.

2005
632.93
11,280.74
209.25
25.81

1. Calculations for CO2 emissions were made with the following considerations: 1.76 kg
of CO2 per liter of gasoline; 2.64 kg of CO2 per liter of diesel; and 0.85 kg of CO2 per
liter of alcohol.
2. Natura understands that indirect gas emissions occur in product distribution carried out
by an outsourced fleet. The data are obtained through information from transportation
companies on fuel consumption for distribution of Natura products.
3. Due to the adoption of a new transportation strategy in 2004, some
of the measures of fuel consumption and emissions need to be restructured,
the reason why this information is not available.
Natura does not perform such analyses for transportation companies
in other countries.
Natura does not monitor emissions from other indirect uses of energy
(exploitation, production and sales) and their implications, such as
business trips, management of product life cycles, and use of energy-
intensive materials (GRI EN19).
Due to its understanding that no significant volumes of NOx and
SOx gases are emitted by its production chain, the company does not
monitor these atmospheric releases (GRI EN10).
Natura proceeded with the use of Isceon gas, which does not
damage the ozone layer in its refrigeration systems. The company
neither emits nor uses substances that are destructive to the ozone
layer (GRI EN9).

Target for 2006: To start mapping the sources of greenhouse gas
emissions, based on the Green House Gas Protocol 2004:

• Direct gas emissions – originate from own transportation and fuel
usage for energy generation (hot boiler water and power generators).
• Indirect gas emissions – originate from electric energy acquired.
• Other indirect emissions – originate from product usage, outsourced
processes, business trips and waste disposed off in landfill sites.

Materials

Codes, policies and specific
management systems

Regarding the materials used in production operations, in addition to
adhering to its quality policy, Natura also selects those suppliers that
are more appropriate from the social and environmental standpoints.
The company has a system that records all production inputs and
other materials coming into the plants.The company monitors these
indicators and has made several improvements in the system.

Performance indicators

In Brazil
Use of materials (other than water) (GRI EN1)
Material consumption
Kilograms
Liters

2004
19,776,023
7,956,295

2003
16,107,163
6,159,544

2005
25,005,092
8,860,798

Note: in 2005 we reviewed all materials volumes and weights registered in the controlling
system for materials consumption, aiming to improve the calculation of this indicator. This
table already reflects the new reported numbers.

Annual Report Natura 2005

2005 Annual Report Natura

Part of the materials used (processed
or unprocessed) is composed of waste from sources
outside the organization (GRI EN2)

Material – metric tons

2003
1,956

2004
2,547

2005
2,888

Note: This number was calculated considering the average rate of reusage of waste
from suppliers.

In other operations
The volume of materials was considered irrelevant when compared
to industrial volumes, which are carried out only in Brazil.

Industrial Waste

Codes, policies and specific
management systems

Natura has a well-structured policy for industrial waste reduction,
and the areas involved with this issue monitor related indicators.
Whenever feasible, waste is integrated into production processes of
other companies.The purchase of waste products from other chains
for internal use refers mostly to recycled paper and packaging items.
Specific indicators are defined and monitored by company areas
involved with the issue.

Performance indicators

In Brazil
Total waste volumes by type and
destination (t) (GRI EN11)
Types of waste
Waste Class I
Waste Class II – A
Waste Class II – B

2003
753.13
2,501.98
377.58

2004
909.09
3,225.53
832.98

2005
1,151.27
3,969.82
824.09

Note: According to the NBR 10004/2004: Waste Class I: dangerous waste (obsolete cos-
metic products, laboratory and clinical wastes, and alcohol); Waste Class II - A : noninert
chemicals (sludge from the Effluent Treatment Plant, paper, cardboard, floor sweeping
wastes, organic wastes and household waste); Waste Class II - B: inert waste (glass,
metal, plastic, and masonry debris).

Destination
Incinerated(1)
Taken to a landfill area
Recycled(2)
1. Incineration decrease was due to actions, which foccused on primarily on recycling solid waste.
2. Improvements were implemented in the segregation process of materials and the change
in operational waste destination (equipment for tissue protection) contributed to a 10.5%
increase in the waste recycling index in 2005 over 2004.

2003
6.40%
24.40%
69.20%

2004
5.43%
21.20%
73.41%

2005
2.82%
16.09%
81.09%

Target for 2006: To increase recycled waste index to 85%.

Volume of solid waste
(grams) by item sold (1) (2)

2003
29.2

2004
25.6

2005
27.7

1. Previous releases of this report had some incorrect numbers due to problems in measure-
ment, which have been corrected.

2. Absolute waste volume posted an increase of 34% in 2005, surpassing items sold
growth, which reached a 25% increase in 2005 year-on-year. Major production volumes
and stocks cleanse were important drivers to this absolute increase in waste volume.

We had no occurrences of significant spills of any chemicals or other
products in 2005 (GRI EN13).

2003
N.D.

Percentage of solid material waste (%)
2004
N.D.

2005 Target 2006
Solid material waste
8.5
This percentage represents the relative amount of solid materials
acquired by the company considered as waste materials at the end of
the process.This indicator calculation began last year, the reason why
we do not have 2003 and 2004 figures.
Target for 2006: To reduce solid material waste to 8.5%.

9.5

In other operations
There is no industrial waste and the volume of other kinds of waste
was not considered significant in relation to the production activity,
which is carried out only in Brazil.

Postconsumption Waste

Codes, policies and specific
management systems
In order to achieve sustainable growth, a company may have to change
production and consumption patterns. Bearing in mind that packaging
materials have a major impact on the life cycle of its products, in 2002,
Natura concluded the first stage of packaging environmental impact
analysis using the Life Cycle Analysis (LCA) Method(1).
In 2003, LCA became a regular part of the company’s product launch
process and, beginning in 2004,
in compliance with a procedure in
Natura’s Environmental Management System, no decisions on new
packaging designs could be approved before a comparative assessment
of the environmental impact of alternatives.
In 2005, the company
included in this assessment all promotional boxes for commemorative
dates, thus increasing the scope and use of this method in the company.
The managers in charge of the Environmental Impact Model, created in
2004, are conducting projects to determine and assess the major envi-
ronmental impact of the products.They are also in charge of monitor-
ing indicators related to these impacts. One of the studies conducted
by this area, the Carbon Content Model, which discusses the determi-
nation of sources (suppliers) of each carbon volume contained in raw
materials used, as presented at an international scientific conference (Life
Cycle Management 2005), will be applied to the whole product portfo-
lio and included in the product development process beginning in 2006.
The evolution of some environmental
indicators of
products, packaging items and gifts is monitored by the company on a
monthly basis.

impact

1. Natura uses the Life Cycle Thinking, which is rooted in the Life Cycle Assessment of prod-
ucts and in the Design for Environmental concept, an integrated approach that considers
concepts, techniques and procedures to access technological and social aspects from prod-
ucts and organizations aiming to continuously improve quality of life. Ecodesign guidelines
views the integration of environmental and procedures issues.

Performance indicators
The significant environmental impacts of the main products and

services monitored in 2005 were (GRI EN14):

• Percentage of products launched for which the Life Cycle Analysis
was performed for the packaging: the 100% target was met in every
month of the year.

• Total impact:

In its Life Cycle Analysis studies, Natura uses the
available databases from the Eco-Indicator 99 methodology(1). As in
2004, in 2005 the target was to reduce the average environmental
impact of packaging materials by reducing the weighted average per
business unit, as well as the total amount, which should not exceed
the total amount of 2004.
The final analysis shows that:
• The weighted average impact per unit sold decreased by 5%.
• The total impact (absolute amount) increased 21%.
• The increase in total impact was mainly owed to the 26% growth

in the number of items sold.

See analysis of goals established in 2004 for this issue at the end
of this chapter.

1. Bibliographic reference: GOEDKOOP, Mark; SPRIENSMA, Renidle; The Eco-Indicator
method for Life Cycle Impact Assessment, 2nd edition, Pré Consultants B.V.,2000.

Percentage of products sold that
are recoverable at the end
of their life cycle, by weight(1)

2003

2004

2005

Target 2006: In Brazil, to increase the ratio of refill sales over total
billed items from 17.4% to 18%.

N.D.

40.4

In other operations

1. 97.5% of all packaging used in products sold by Natura, both in Brazil and abroad, is recycla-
ble and should therefore be recovered.This amounts to 40% of the mass of Natura’s products
(contents and packaging). Since the contents of Natura’s products are either washable materials
or perfumes, they cannot be reused. A percentage of sold items is recovered but we still do not
have a program to measure the exact recovered percentage (GRI EN15).
See analysis of goals established in 2004 at the end of this chapter.
We emphasize that Natura was a pioneer in the sale of refills for its
products.The refill packaging is in average 54% lighter than the regular
product packaging. With the sale of refills, Natura avoided placing
2.2 thousand metric tons of packaging in the market, reducing its
environmental impact.
In Brazil
Refills sales campaign achieved good results. The percentage of total
refills over total items climbed from 15.3% in 2004 to 17.4% in 2005,
up 16% versus the established goal (for further information on
Movimento Natura see Education on page 103).

Percentage of refill sales over invoiced items (%)

2003

2004

2005

Target 2006

Refill sales over
invoiced items 14.9

15.3

17.4

18.0

Goals Established in Natura Annual Report 2004

Initiative

Committed Target

GRI EN 3

Reduce relative energy consumption by 5.5%.

GRI EN 5

Reduce water relative consumption by 1%.

GRI EN 22

Increase treated water reutilization rate from 39.5% to 49%.

Percentage of refill sales over billed items (%)
2005
14.8
4.4
5.8
12.5
8.2

Argentina
Chile
Mexico
Peru
France

2003
13.8
2.5
N.D.
6.5
N.D.

2004
14.3
2.2
N.D.
7.9
N.D.

Target 2006
16.8
10.0
10.0
14.2
10.0

Note: Operations in Mexico and France started in 2005.
Target 2006: In Argentina, increase to 16.8% the ratio of refill sales in
total billed items.
Target 2006: In Chile, increase to 10% the ratio of refill sales in total
billed items.
Target 2006: In Mexico, increase to 10% the ratio of refill sales in total
billed items.
Target 2006: In Peru, increase to 14.2% the ratio of refill sales in total
billed items.
Target 2006: In France, increase to 10% the ratio of refill sales in total
billed items.

Results

☺ Target reached.There was a reduction of 8.5% in relative energy

consumption in comparison with 2004.The reduction came mostly from
the economy of scale in resale items.

☺ Target reached.There was a reduction of 5.6% of the relative

consumption accrued in 2005, in comparison to 2004.The main reason
for this reduction was the economy of scale from resale items.

☺ Target reached.The average percentage of treated water reuse was 55%.
Treated water was used in the entire site of Cajamar, for washing streets
and external walls, fire fighting network, sanitation facilities and ornamental
water mirrors.

☺ Target reached. In 2005, eight assets were included in the Phase III of the
process certification. Four of those are already utilized in Natura products
and another four are in study stages for future use.The botanicals already
employed in Natura products are:
- Jambu: organic certification
- Macela: organic certification
- Cupuaçu: socioenvironmental responsibility
- Açaí: socioenvironmental responsibility

Of a total of 35 native or exotic Brazilian botanicals species, which
are used in Natura’s products (essential oils, fixative agents and
extracts), in 2004, the certification process was completed for eight
of them (23% of the total). In 2005 the target is to include five
more in Phase III of the certification process, achieving a total of 13
certifications (37% of the total).

GRI EN 7

GRI EN11

GRI EN12

Reduce residue generation per unit sold to 2.38 g in 2005 from
2.56 g in 2004.

(cid:2) Target missed.The indicator was 16.3% over the established target; residue

generation rose to 27.70 g per unit sold.

Keep above 90% the monthly average efficiency in removal of organ-
ic debris from discarded effluents in Itapecerica da Serra, vis-à-vis the
minimum of 80% presently required by law.

☺ Target reached. We closed the year with a 95.5% average of efficiency in

the removal of organic debris (DBO).

a) Ensure that 100% of the new products launched during the year

have their packaging analyzed by the Life Cycle Analysis (ACV) tool.

☺ Target reached. All regular products and kits promoted and sold during

special holidays were analyzed through the ACV.

b) Reduce by 2% (from 2004 levels) the weighted average of
environmental impact from Natura’s product packaging.
c) Define environmental performance indicators for products and

include related information on their respective labels.

GRI EN14

☺ Target reached.The reduction was over 4%.

(cid:3) Target partially reached.The indicators were defined; calculation of these
indicators began, and during 2006 will be added to product labels.

d) As there is no model available for Life Cycle Analysis of raw material
in the cosmetic industry, Natura will develop a model in 2005. It
will be applied to the shampoo line Ekos and submitted for
international evaluation.

☺ Target reached.The Model of Intrinsic Carbon was developed and applied
to the Andiroba Shampoo line.This work was presented at the congress
of Life Cycle Management 2005, in Barcelona.

Annual Report Natura 2005

2005 Annual Report Natura

2003

2004

2005

1. France and Mexico operations started in 2005.
2.The operation was not able to calculate the ratio.

Social
Codes, policies and general
management systems

The company in 2005 held a series of discussions to define social and
environmental plans for its various areas, devoting time devising ways
to attain goals and indicators capable of conveying a clear picture of
the business’s social impact.
This business performance will be evaluated through five major
dimensions: (I) wealth distribution and work and revenue generation,
(II) social inclusion, (III) human rights, (IV) education and (V) Human
Resources actions – complemented with a detailed description of our
internal social impact.
Natura adopts management practices consistent with the time-hon-
ored principles of the Universal Declaration of Human Rights, such as
freedom and equality without distinction as of race, color, gender,
language, religion, nationality or social origin (GRI HR1). It is also one
of the first Brazilian companies signatory to the Global Compact,
a UN initiative to mobilize the international business pursuit of the
fundamental values regarding human rights, work, environment and
the fight against corruption.
To further involve our personnel and Consultants, Natura used several
communication vehicles.The brochures, videos, websites and other media
adressed the following subjects: millennium development objectives;
education campaign for youth and adults; reduction of the environmen-
tal impact; Brazil’s biodiversity; women’s entrepreneurship and leadership;
breast-feeding; and sustainable development, among others.
However, these were not isolated actions. Many activities developed
by Natura are contemplated in the Millennium Goals. Some examples
are the programs Crer para Ver, Agenda 21 in Cajamar and project
“One Thousand Women for the Nobel Peace Prize,” supported by
Natura (see further information about these programs in chapter
Highlights of Investments in Corporate Responsibility on page 108).
To keep track of its social goals, Natura uses, in addition to depart-
ment-specific procedures, a Corporate Responsibility Management
System (SGRC). With it, the company conducts diagnosis and makes
recommendations for action plans directed at improving relationships.
These plans then become goals and benchmarks which are followed
up by a committee in each department.
The system works with the support from the Corporate Responsibility
Network, constituted of employees from all departments. One of the
network’s main roles is to act as facilitator in the diagnosis stage, which
identifies key issues in Natura's relationships with all its different publics:
personnel, Consultants, consumers, communities, suppliers, shareholders,
government, society and the environment. In 2005, approximately 50
participants in the Corporate Responsibility Network disseminated
the principles of responsible management throughout the company,
to help their colleagues understand those principles and translate
them into daily actions.

Wealth distribution, work and
revenue generation
Codes, policies and specific
management systems

Natura’s main channel of wealth distribution is its Consultants (resale),
a concrete opportunity to generate income.The company provides its
Consultants, free of charge, with multiple training programs on subjects
finance, beauty, health,
such as product technical specifications,
well-being, quality of life and sustainability principles, among others.
Many departments devote time to these activities, monitoring related
benchmarks and adopting specific policies when required.

Natura has other initiatives and policies that create work and income
generation opportunities for suppliers and neighboring communities
(Cajamar and Itapecerica da Serra, both in São Paulo). The indicators
are periodically tracked by the Sustainability Committee.

Performance indicators
Wealth distribution per public (R$ million)

307.5
247.3

547.8

396.9
306.4
727.2

1,059.3

1,348.9

1,365.9

1,731.7

191.6
177.8
502.1

795.8

942.2

Shareholders
Personnel
Government
Natura Consultants (1)(2)
Suppliers

2003

2004

2005

1. Estimated values at suggested retail prices.
2. Consultants in Brazil, Argentina, Chile and Peru.

Work and revenue generation
(GRI LA1)

Brazil

Personnel
Temporary
Third party(1)
Trainees
Argentina

Personnel
Third party(1)
Trainees

Chile

Personnel
Third party(1)
Trainees
Mexico(2)

Personnel
Third party(1)
Trainees

Peru

Personnel
Third party(1)
Trainees

France(2)

Personnel
Third party (1)
Trainees

2,696
230
780
13

3,177
259
1,000
37

157
4
1

61
13
0

N.A.
N.A.
N.A.

72
5
0

N.A.
N.A.
N.A.

205
2
0

70
24
0

N.A.
N.A.
N.A.

103
25
2

N.A.
N.A.
N.A.

3,575
679
1,161
41

237
2
0

93
24
0

70
16
0

133
6
0

20
0
0

1. Residents allocated to company units are considered third party.
2. France and Mexico operations started in 2005.

Jobs - Brazil (GRI LA2)

2005
Positions in Cajamar
2,281
Positions in Itapecerica (1)
1,294
3,575
Total
1. The sales force (sales promoters, sales managers, marketing managers, sales supervisors
and field assistants) is fully accounted for in Itapecerica da Serra.

2004
2,044
1,133
3,177

2003
1,681
1,015
2,696

Job creation and employee retention

2003

2004

2005

Social Inclusion

Brazil

Jobs created in the period
Turnover ratio (%)

Argentina

Jobs created in the period
Turnover ratio (%)

Chile

Jobs created in the period
Turnover ratio (%)

Mexico(1)

Jobs created in the period
Turnover ratio (%)

Peru

Jobs created in the period
Turnover ratio (%)

France(1)

Jobs created in the period
Turnover ratio (%)

55
6.53

28
7.10

7
7.40

N.D.
N.D.

12
16.00

N.D.
N.D.

481
7.81

48
16.00

9
20.20

N.D.
N.D.

31
15.53

N.D.
N.D.

398
7.64

32
11.90

23
25.37

70
7.14

30
21.68

20
N.D.(2)

Internal opportunities

Percentage of new job

positions filled by existing
employees

2003

2004

2005

54%

38%

49%

One of the most relevant indirect income opportunities created by
Natura (GRI EC13) concerns its 519,000 independent Consultants,
as shown on the chart below.

Natura Consultants(1) (thousands)
2003

Brazil
Argentina
Chile
Mexico
Peru

355
10
3
N.D.
7

2004

407
13
5
N.D.
8

2005
483
18
6
N.D.
12

1. The figures refer to available Consultants - those who placed at least one order in
the past sales cycles.

Wealth Distribution – Consultants (1) (2) (R$ million)

Brazil
International operations
Total

2003
776.0
19.7
795.8

2004
1,031.8
27.6
1,059.3

2005
1,311.6
37.2
1,348.9

1. Estimated values at suggested retail prices.
2. 2003 figures were changed to be in accordance with the Brazilian Association of Direct
Sales, ABEVD.

Codes, policies and specific
management systems

Natura focuses on issues of social inclusion regarding its personnel,
with policies fostering egalitarian work opportunities. The compa-
ny takes a clear stand on diversity and equality in its beliefs and val-
ues and will spell out its position in a relationship code to be pu-
blished in 2006.

Performance indicators

People with disabilities

In Brazil
Natura has long designed specific programs and policies to include
people with disabilities in its work force. In a year of vigorous hiring
keeping stable at 5% the ratio of people with disabilities in the staff
became a challenge involving more departments (GRI LA10,
HR8 and HR4).
We have an agreement with the Public Prosecution Service
(Conduct Agreement) through which we can consider Natura’s
four companies as one unit in order to meet the quota. Despite a
significant effort in 2005, we still found it difficult to hire people with
appropriate education for the positions at administrative depart-
ments. In the operational departments, the number of people with
disabilities is rather significant.
Yet, the most important action last year was the establishment of a
partnership between Natura and the National Business Learning
Service (Senac) to develop a training program for people with dis-
abilities for functions of administrative assistance. The first course
graduated 20 people. Natura is committed to hiring some of these
graduates as administrative assistants.There is a plan to expand the
scope of this training program to include other functions.
After hiring, our focus moved to prepare the involved departments
(and to prepare the manager who will work with him/her directly)
to welcome and work efficiently with the new employee, even
preparing inclusion activities. Whenever a specific department
embraces its first employee with disability, everyone from the team
is invited to participate in an activity in which they learn to help the
new co-worker.
We also adapted training materials so that people with disabilities
have easy access to and comprehension of the contents. We use
simultaneous translation for sign language in courses attended by
hearing-impaired people, we make voice recognition software avail-
able for visually-impaired people and invest in resources for sign
translation in all departments to quicken the inclusion process of
the hearing-impaired. Each of them also count on a mentor familiar
with sign language, who helps with socializing issues.
The company also carries, on a bimonthly basis, an awareness activity
with employees and third parties in how to work with the
disabled and provides sign language courses, the ‘Curso de Libras’ for
those who need it to carry out their duties.
To identify potential employees with disabilities we tap local community
resources and institutions such as Laramara, for the visually-impaired,
Derdic,
for physical
disabilities, among others.

for the hearing-impaired and Semis/AACD,

In the communities that supply assets from biodiversity, it should be
noted that family income from the sale of industrial raw materials for
companies that process them for Natura is demand-driven and
therefore account for a share of the overall family income.

Target for 2006: To reach 5% of employees with disability over the
total number of employees.

See analysis of goals established in 2004 at the end of this chapter.

Annual Report Natura 2005

2005 Annual Report Natura

In other operations
Natura does not yet have programs for hiring people with disabilities
similar to those described for Brazil.

Women
In Brazil
Our operation is focused on valuing and supporting breast-feeding.
The mother returning from maternity leave is provided with a special
and welcoming space in the nursery for breast-feeding. The nursery
team is oriented to call the mother at breast-feeding periods, wher-

ever she is, so she can, calmly and appropriately, experience this
important moment with her baby.
The company even maintains a specific program for Woman Health,
which has as its main purpose breast and cervical cancer prevention,
In
also covering topics such as menopause, PMT and pregnancy.
addition to that, there is a gynecologist on duty in our clinic to meet
the needs of our personnel.
The table below shows numbers of employees and management
body composition, the man/woman proportion and other indicators
of appropriate cultural diversity (GRI LA11), as well as wage outline
in Brazil and other operations(1).

Total of personnel

People with disabilities

Percent against the total
of personnel

Percent of management positions
against the total of management

Percent of director‘s positions against
the total of director‘s positions

Women

Percent against the total
of personnel

Percent of management positions
against the total of management

Percent of director‘s positions against
the total of director‘s positions

Black and pardo women

Percent against the total
of personnel

Percent of management positions
against the total of management

Percent of director‘s positions against
the total of director‘s positions

Black and pardo men

Percent against the total
of personnel

Percent of management positions
against the total of management

Percent of director‘s positions against
the total of director‘s positions

Over 45 years of age

Percent against the total
of personnel

Percent of management positions
against the total of management

Percent of director‘s positions against
the total of director‘s positions

2003

2,696

3.9%

0.0%

Brazil(1)(2)
2004

3,177

3.6%

0.0%

2005

3,575

3.6%

0.0%

In other operations – 2005
Argentina

Chile

Mexico

237

0.0%

2.3%

0.0%

Peru

0.8%

0.0%

62.4%

62.2%

63.1%

81.0%

95.0%

84.0%

79.0%

56.4%

55.2%

50.9%

41.0%

5.38%

33.0%

16.7%

17.6%

16.7%

0.0%

42.0%

N.D.

20.3%

24.0%

N.D.(3)

7.3%(3)

6.0%(3)

N.D.

0.0%

N.D.

31.7%

29.4%

N.D.(3)

5.1%(3)

4.4%(3)

N.D.

0.0%

9.2%

7.9%

11.0%

12.0%

10.3%

25.0%

23.5%

20.0%

0.0%

19.0%

24.0%

0.0%

7.7%

0.0%

2.0%

0.0%

1.5%

0.0%

1.5%

0.0%

18.8%

25.0%

16.7%

0.0%

1. The staff racial origin was informed by the individuals themselves, using the national statistics agency (IBGE) criteria, which is the only one officially available in the country: "race: white,
yellow, indigenous, black or parda". The expression “black or pardo” denotes the sum of the number of personnel who marked the white, yellow or indigenous options. The company
recognizes that this classification does not comply with the claims of reclassification of several social movements within the country. Race reclassification was conducted in December 2004.
The records for 2003 were disregarded.
2. The total of personnel with disabilities increased to 128 from 114. The goal for 2005 was to achieve 5% of employees with disabilities as a percentage of the total.
3. The percent of employees who self-classified themselves as “black or pardo" at management level is very low. The company considers this as a matter that will require specific action plans.

Wage Profile (R$ thousand)

2003

Brazil(1)(2)(3)

2004

2005

In other operations – 2005

Argentina

Chile

Mexico

Peru

Women – total

Monthly average wage for
plant workers
Monthly average wage for
office workers
Monthly average wage for
managers
Monthly average wage for
directors
Men – total

Monthly average wage for
plant workers
Monthly average wage for
office workers
Monthly average wage for
managers
Monthly average wage for
directors

Black and pardo women

Monthly average wage for
plant workers
Monthly average wage for
office workers
Monthly average wage for
managers
Monthly average wage for
directors

Nonblack and nonpardo women

Monthly average wage for
plant workers
Monthly average wage for
office workers
Monthly average wage for
managers
Monthly average wage for
directors

Black and pardo men

Monthly average wage for
plant workers
Monthly average wage for
office workers
Monthly average wage for
managers
Monthly average wage for
directors

Nonblack and nonpardo men
Monthly average wage for
plant workers
Monthly average wage for
office workers
Monthly average wage for
managers(5)
Monthly average wage for
directors

860.64

(4)

870.35

(4)

903.88

(4)

660.51

618.46

N.A.

3,608.05

3,792.59

4,064.13

1,035.84

1,623.46

3,629.43

1,082.27

8,872.45

(5)

9,895.06

(5)

9,786.40

(5)

5,448.98

4,750.19

7,009.77

5,298.79

N.D.

22,722.94

25,677.50

N.A.

15,340.37

N.A.

1,088.90

(4)

1,084.34

(4)

1,114.57

(4)

697.50

1,239.19

N.A.

3,177.31

3,466.81

3,643.37

1,593.84

3,672.38

3,174.24

1,305.20

9,979.63

(5)

11,112.94

(5)

10,244.69

(5)

8,783.10

6,630.26

7,009.77

12,607.99

34,081.84

35,717.84

35,089.75

N.A.

17,012.20

26,981.00

N.A.

N.D.

894.81

922.63

3,853.29

3,864.14

N.D.

10,946.30

10,135.38

N.D.

N.A.

683.58

N.A.

N.D.

859.58

893.39

660.51

618.46

N.A.

3,782.67

4,113.82

1,035.84

1,623.46

3,629.43

1,387.17

9,827.29

9,764.19

5,448.98

4,750.19

7,009.77

5,298.79

N.D.

22,722.94

25,677.50

N.A.

15,340.37

N.A.

N.D.

1,072.10

1,091.70

3,039.28

3,073.38

N.D.

(5)

10,153.27

(5)

7,817.69

(5)

N.D.

N.A.

854.48

N.A.

N.D.

1,097.87

1,128.68

697.50

1,239.19

N.A.

3,571.55

3,747.42

1,593.84

3,672.38

3,174.24

1,348.12

N.D.

(5)

11,164.56

(5)

10,357.05

(5)

8,783.10

6,630.26

7,009.77

12,607.99

N.D.

33,717.84

35,089.75

N.A.

17,012.20

26,981.00

N.A.

1. Race reclassification was conducted in December 2004.The records for 2003 were disregarded.
2. Human Resources department corrected 2004 figures due to final data compilation. Please consider the above-released numbers.
3. Bonuses paid to sales managers and sales promoters were included in this calculation. Sales force personnel, when divided into categories, reinforces women monthly average wage, excluding
plant work category.
4. The production plants classify workers into seven wage levels, the average wage difference between men and women is a consequence of the fact that 97.9% of women are at wage levels 1,
2 and 3 (who earn lower wages), while 77.5% of men are at these baselines. Electricians, manipulators, mechanics, machine preparers and lathe operators, who earn higher wages,
are mostly men.
5. Among office workers, comprising six wage levels, the average difference between men’s and women’s wages stem from the fact that 68.4% of women are at the three lower management
levels while 58% of men are at these baselines. The difference between monthly average wage for black and mulatto men in managerial posts and men with no black ancestry is due to the first
group classification as juniors wage group.

100 Annual Report Natura 2005

2005 Annual Report Natura 101

Human Rights

Codes, policies and specific
management systems

Brazil is a signatory to the International Labor Organization (ILO)
conventions, which determine the need of unions to represent
employees in their interests and negotiations with their employers.
Natura complies with the related laws (GRI LA3). The right of free
association is respected by Natura, who recognizes the right to labor
organization (GRI HR5). In Brazil, the relationship with unions is con-
ducted through meetings between the Human Resources depart-
ments and union representatives.
The company is also affiliated to Fundação Abrinq, a nongovernmental
organization whose mission is to promote human and citizenship
rights of children and adolescents. As a member of this organization,
Natura is committed to following the Child and Adolescent Statute
(ECA), which ensures full compliance with systems to guarantee
children and adolescents’ rights (GRI HR6). Moreover, as a holder of
the seal Empresa Amiga da Criança, also granted by Fundação Abrinq,
Natura must comply with requirements related to the eradication of
child labor. Therefore, we enforce specific child and forced labor
clauses in the contracts signed with suppliers (GRI HR6).

Performance indicators

Labor Organization

In Brazil
Workers are mandated by law to pay a trade union tax. As a result,
the percentage of personnel represented by independent union
organizations or other legal representatives is 100% (GRI LA3).

In other operations
Natura follows the established law of each country. In Argentina,
28.5% of employees are represented by the collective bargaining
agreement of the Perfumers’ Union (norm: 157/91).

Suppliers

Human rights are part of our procurement decisions, including the
selection of suppliers and contractors (GRI HR2). The company
assesses human rights performance within the supply chain and
contractors through surveys and monitoring systems (GRI HR3).

In Brazil
Natura included in its system of rules and procedures considerations
about contractors and third parties, requiring that their contractor’s
employees are legally registered in accordance with the Brazilian labor
codes (Consolidação das Leis Trabalhistas, CLT); this process is moni-
tored by our Legal Department.
It has also adopted a qualification process for new general suppliers,
who are evaluated on socioenvironmental responsibility issues. In
2006, Natura will issue a manual informing suppliers of their obliga-
tions. Moreover, matters of child and forced labor are part of the
standard contract between Natura and its suppliers, according to
our policies of exclusion of child labor and in compliance with pro-
visions of ILO’s convention 138 (GRI HR6) and forced and compul-
sory labor (GRI HR7).

Natura even requires that suppliers of botanical assets do not disturb
their respective environmental balances, do not take advantage of
child labor, comply with all labor laws and policies for the prevention
of forced and compulsory labor and that they respect the communi-
ties’ way of life as well as their traditions. Monitoring is carried out
through management plans, projects with good agricultural practices
and processes of asset certification.

In other operations
Natura does not have similar initiatives in other operations, which
function in compliance with the respective laws and corporate
regulations of each country.

Personnel
There is no specific training for employees on policies and practices
concerning all aspects of human rights involved in our operations
(GRI HR8). However, various discussions and initiatives covering
these subjects are conducted. Examples are sustainability
courses for managers, and discussions related to Natura’s Carta de
Princípios de Relacionamento.

In Brazil
In 2005, Natura performed awareness activities with its personnel on
topics related to human rights. The main focus was pregnancy and
maternity support. In order to prepare expectant mothers, Natura
offers orientation courses twice yearly. The topics addressed are
pregnancy physiology, postural and emotional aspects of pregnancy,
breast-feeding, baby care,
legal benefits, healthcare and nursery. The
course is aimed at employees and their spouses as well as outsourced
employees. The company’s medical clinic is staffed with an Ob-Gyn
physician and a nutritionist to assist pregnant workers and new mothers.
In the security department, employees are partially trained on human
rights issues (GRI HR11). All teams attend a 120-hour initial course,
followed by biennial refreshers, on, among other subjects, ethics,
discipline and criminal law matters; they also receive semiannual
workshops to reinforce the commitment to these matters.
Furthermore, Natura develops a series of activities (whether in or out
of the company environment) regarding HIV/Aids (GRI LA8). Natura
adopted a policy that ensures attendance and treatment of HIV-positive
employees and their dependants, apart from establishing partnerships
with public organizations. Prevention campaigns are carried out
periodically, especially during Carnival, Labor Day,Valentine’s Day and
World Aids Day. The company also holds an Aids Prevention
Program to promote behavior changes and combat discrimination
and segregation.
Natura is part of the Conselho Empresarial Nacional para
a Prevenção de HIV/Aids (National Business Council for HIV/Aids
Prevention), constituted by 24 guest corporations, founded in 1998
by the Ministry of Health. Our company is recognized by the Joint
United Nations Programme on HIV/Aids, UNAIDS, for its contribu-
tion to the fight against HIV/Aids in Brazil.

In other operations
Natura does not have similar initiatives in other operations, which
follow the established laws of each country and corporate guidelines.

Indigenous communities
Natura does not carry out activities with indigenous communities, but
recognizes and respects the different cultures and the rights of the
many sociocultural groups that live in Brazilian territory (GRI HR12).

Education

Codes, policies and specific
management systems

Natura invests in the education of its personnel and supports the
return to school of Consultants and adults in Brazil.The company also
develops national campaigns to improve public education.
The departments responsible for corporate education and corporate
responsibility run all educational activities. Indicators are tracked by
the Education and Sustainability committees and by commercial
department forums, which operate campaigns for the entire society.

Performance indicators
Policies and specific programs for skills management or learning
for life (GRI LA17).

In Brazil
Natura’s policy is to provide employees with 100% of the technical
education required to perform their duties, as well as to support their
personal and professional development.
We restructured Corporate Education programs in 2005, in a way to
disseminate our Values and Beliefs for all new employees. Besides, we
developed and improved the programs Integração do Colaborador,
Integração Executiva, Negócio Natura, Meio Ambiente and Paixão por
Produtos. Other focuses of Corporate Education were the
programs Gestão de Pessoas, Oficina de Linguagem and Workshop do
Modelo Comercial, important to managers’ development on Natura's
essential issues: Brand, Products, Relationships and Sustainability.
Corporate Education also trained all employees to ensure NBR ISO
9001 certification was obtained. During the year, some 5,784 training
hours were held for this certification.
The company also develops Natura Education and Executive
Education programs, which offer scholarships (technical, graduation
and postgraduation).

Scholarships offered by the Natura Education Program(1)
Courses
Technical/professional
Language
University
MBA and Postgraduation

2004
35
90
100
N.A.

2003
39
100
82
N.A.

2005
74
82
119
90

Enrollment in the program X granted scholarships

Enrollments
Granted Scholarships (2)
% granted/enrollments

2003
468
228
48.7%

2004
365
230
63.0%

2005
644
377
58.5%

1. Data do not include scholarship renewal.
2. Data include scholarship renewal.
Its objective is to increase access to formal education and prepare
Natura’s personnel and their relatives to work. Approximately 2,000
staffers benefited from the program in its five years. In 2005, 68
scholarships were granted to employees’ children,
in addition to
another 74 technical, 119 university, 90 MBA and graduate school
scholarships, plus 82 language courses.

In other operations
In 2005, Corporate Education programs were extended to
disseminate our Values and Beliefs to employees across all levels.

In Brazil
Movimento Natura
Movimento Natura was created in February 2005, in an effort to
reach out to over 500,000 Consultants with educational programs
on environmental awareness and practices. Movimento Natura is
guided on the precept that small gestures lead to sweeping actions
that can help society. This way, besides selling Natura products, the
Consultants become agents of change in their communities, con-
cerned with the socioenvironmental issues they share.
The projects rolled out by Movimento Natura contemplate the
company’s sustainability benchmark, the Triple Bottom-Line, or the
three icons of the movement: Nosso Negócio, Nosso Planeta and
Nossa Gente (Our Business, Our Planet and Our People). With
respect to the first one, Our Business, Natura promotes a series of
initiatives to recognize and elevate the role of its Consultants.
The Our Planet pillar conveys the importance of preserving the
environment and centers on incentives to the sales of refillable
products. Natura also publishes tips and information on environ-
mental matters on the sales catalogue issued every 21 days, with
themes such as how each one of us can help preserve the environ-
ment and incentives to waste recycling by participating in selective
collection programs and practicing conscientious consumption.
With Our People, Natura challenged Consultants to boost the
number of enrollments and re-enrollments in public schools
throughout the country with the Youth and Adult Education cam-
paign. The goal is to have Consultants identify people of all ages
who have not completed their elementary education and motivate
them to go back to school. Another campaign was Crer para Ver
(Believing is Seeing), in which Consultants volunteer to sell a spe-
cially created line of products, among them T-shirts, cards and con-
tainers, whose revenues are allocated to public education projects.
Natura also conducts awareness campaigns for Consultants on
issues such as the importance of breast-feeding, tips to help cut
infant mortality, women's volunteerism and entrepreneurship,
among others.
With the creation of Movimento Natura, Consultants went on to
earn recognition for their engagement in socioenvironmental issues
in addition to their sales performance. As a result, the company
established some performance benchmarks, such as the number of
refill orders, the number of people re-enrolling in school and sales
statistics on the Crer para Ver (Believing is Seeing) product line.
Movimento Natura garnered encouraging results in its first year.The
sales of refills as a ratio of total sales climbed to 17.4% from 15.3%
in 2004, well above the 16% goal. Sales of Crer para Ver (Believing is
Seeing) product totaled R$ 3.1 million, helping over 66,000
people in several states to return to school – the goal was 50,000.

Crer para Ver Program
The Crer para Ver program raises cash to improve public education
through technical and financial support to teacher education projects.
The program was launched in 1995 and counts on the support of
Natura's Consultants who volunteer to sell products from the Crer
para Ver line. In nine years, the program reached 911,000 children in
3,638 elementary public schools in 21 Brazilian states. In 2005, R$ 3,1
million were collected through the sale of such products, which
financed Projeto Chapada (BA) and Projeto Cinema e Vídeo Brasileiro
nas Escolas (SP), both focused on elementary education.
See analysis of goals established in 2004 at the end of this chapter.

102 Annual Report Natura 2005

2005 Annual Report Natura 103

Project’s name

Partner organization Municipalities

reached

No. of teachers
gathered

Project’s
total amount
(R$ thousand)

Amount support by
the program(1)
(R$ thousand)

Crer para Ver – Supported Projects

5,320

500.0

Primary education

Projeto Chapada (BA)

Cinema e Vídeo Brasileiro
nas Escolas (SP)

Escolas indígenas
da floresta (AC)

Janelas Cruzadas (RJ)

Municipal Departments of
Education and the Caeté
Açu Association

Municipal and State
Departments of Education
and Ação Educativa

Municipal and State
Department of Education and
Comissão Pró-Índio (AC)
Municipal Department of
Education and Instituto
Pé no Chão

Youth and adult education

Caapiá do Rio
de Janeiro (RJ)

Compartilhando
Experiências (SP)

Educadores de EJA
em Ação (SP)

Em Cada Saber um
Jeito de Ser (BA)

Roda Gaúcha (RS)

Municipal Departments of
Education, Latin American
Research Association and
Ação Cultural, Alpac/RJ

Municipal Department of
Education and Ação
Educativa

Municipal Department of
Education, Instituto de Pesquisa
e Estudos de Ribeirão Preto,
Iperp, and Centro de Formação
de Professores de Ribeirão
Preto, Ceforp

Municipal Department of
Education and Instituto da
Pequena Agricultura
Apropriada, Irpa

Municipal Departments of
Education and Centro de
Defesa dos Direitos da Criança
e do Adolescente de Ijuí,
Cededicai

630

226

490

311

195

235

245.0

800.0

600.0

99.9

1,611.5

2,071.7

203.1

180.8

120.0

170.0

263.1

378.0

180.8

119.6

92.0

115.0

120.0

1. These values refer to all past years, not only to 2005.

Crer para Ver Program – Youth and Adult Education Campaign

In 2004, Crer para Ver Program, in partnership with the Ministry of
Education (MEC), increased its participation and launched, in 2004,
a campaign for the education of youths and adults. According to the
national statistics agency (IBGE) 2000 Census, there are 70 million
people over the age of 15 who have not completed their elemen-
tary education, of which 16 million are youths between 15 and 24
years of age. We registered the following results:

1) Financing four teacher graduation projects: Educadores EJA em
Ação (SP), Caapiá do Rio de Janeiro (RJ), Em Cada Saber um Jeito de
Ser (BA) and Roda Gaúcha (RS).

2) Crer para Ver – Inovando a Educação de Jovens e Adultos Award in
partnership with MEC: seven prize winning projects from teachers
and schools which work with EJA.

3) Mobilization of Natura Consultants to voluntarily identify and
persuade potential students to return to school: more than 66,000
were registrared.

4) The campaign for the education of youths and adults is part of
Movimento Natura.

Registrations by Natura Consultants in 2005
Northeast
São Paulo – Interior
Midwest and North
Rio de Janeiro, Minas Gerais and Espírito Santo
South
São Paulo – Capital
Total

No. of registered schools
No. of schools where enrollments were done
Municipalities with schools registered in the campaign
Municipalities with schools where enrollments were done

26,885
12,473
11,930
7,056
6,642
1,674
66,660

13,328
2,791
3,372
1,057

Target for 2006: To reach 15,000 re-registrations in the Youth and
Adult Education Campaign.

Target for 2006: To reach 1,500 registered Consultants in Youth and
Adult Education.

Personnel

Codes, policies and specific
management systems

Our Human Resources Policy contemplates the right to live, free-
dom and personal security, condemns child labor and defends the
freedom of association. It also establishes equitable work and wage
conditions, such as social protections, which include support and
special maternity and infant health care. The company tries to pro-
vide conditions to meet universal educational rights, whether
through scholarships or training staffers and their families.
In its institutional documents, such as procedure manuals for human
resources planning and development, management of organization-
al conditions and personnel training, Natura shows its commitment
to employees, highlighting, among other issues, diversity and respect
to individuality; improvement of relations and ways of work; invest-
ment in education and training for all; assurance of safe working
conditions; creating conditions to fully develop individual potential,
based on criteria of recognition and fair pay for everyone’s contri-
bution (GRI HR1).

Performance indicators

Personnel benefits beyond those established by law (GRI LA12)

In Brazil
• Natura Education Program (please refer to section on chapter

Highlights of Investments in RC, on page 108);

• Building the Future Program;
• Prosperity Program: financial education for staffers;
• Savings Incentive;
• Day care center for employees’ children up to 3 years and 11

months old;

• Pediatric care provided in the day care center;
• Support for staffers in adoption processes;
• Health care plan;
• Dental care plan;
• Psychological support;
• Check-up: full range of laboratory tests, preventive heart disease
imaging diagnosis, nutritional education, reproductive

testing,
preventive testing, and specialist consultations;

• In-company clinic care services for the prevention of metabolic
conditions (diabetes, cholesterol and triglyceride) and cardiovascular
conditions (hypertension);

• Self-help, quit smoking program;
• Telemedicine (ECG via telephone in emergency cases);
• Pregnancy follow-up program: prenatal follow-up at in-company

clinic and classes for pregnant employees and their spouses;

• Physical check-up: carried out before beginning systematic physical

activity in company's gym;

• Clinical services: acupuncture, therapeutic massage, occupational
gym, gynecology, hearing assessment, speech therapy, dermatology,
all available in the company.
disorders

orthopedics,
physiotherapy, global postural rehabilitation (GPR), brief psychotherapy
and hearing assessments in the company;

• Work-related

prevention

service:

• Nutritional Rehabilitation Program assisted by a nutritionist in the

company;

• Natura Club (Cajamar and Itapecerica da Serra) with fitness

services, swimming pool and multisports field;

• Esthetics Center at Natura Club; manicure, pedicure, hairdresser,

beautician, massage and waxing;

• Convenience area with drugstore, seamstress, shoe store, opticians,

insurance, post office and video rental store;

In other operations
Public health care conditions differ a lot among countries. Natura
provides complementary assistance according to local needs; there-
fore benefits are different from the ones offered in Brazil:
• Argentina:

food vouchers; corporate health care; group life
insurance; Portuguese/Spanish classes; benefit program for regional
businesses;

• Chile: food vouchers;
• Mexico:

food vouchers; corporate health care;

life insurance;
savings fund; Prima Vacacional
law (35% more than the legally
required bonus paid at the time of vacations); Aguinaldo law (15
days more than legally required of working days to be paid);

• Peru: corporate health care; dental insurance; personal accident

insurance; loan program.

Formal committees about health and safety, including administra-
tion and workers representatives and part of the work force
assisted by any of these committees (GRI LA6).

In Brazil
Each Natura unit has an Internal Accident Prevention Committee
(CIPA) in compliance with the law – Regulatory Norm no. 5,
Ordinance 3214/78 of the Ministry of Labor. Members of these
committees serve for one year, and the number of participants is
proportional to the company’s staff, according to risk level. Half the
members are chosen by the company and the other half by the
employees, through an election that can be monitored by the
respective union.

In other operations
Information about this issue is not available. The activities in the
international operations are exclusively administrative, therefore less
critical than those in production sites.

Practices on recording and notification of occupational accidents
and disease and how they relate to the LO code of Practice on
Recording and Notification of Occupational Accidents and
Diseases (GRI LA5).

In Brazil
All accidents, with or without disability periods, are logged and analyzed
to study the causes and implement corrective or preventive measures.
Governmental organizations (Ministry of Social Security and Ministry
of Labor) are notified, as well as the unions of the corresponding
professional category, according to the law.
The accident analyses, coordinated by the Labor Security depart-
ment, are conducted by a group constituted of a safety expert or a
work safety engineer, a labor physician, management, the injured
(when possible), witnesses, maintenance people and employees
representatives from the respective Commission. The conclusions
are published in a report containing,
in addition to the basic
description of the occurrence, the correction and prevention
actions prescribed, the party or parties responsible for their
implementation as well as a deadline for implementation.
Through the Programa Quase Acidente, records are made of events
that did not cause injury but nevertheless constituted risk. These
records are also analyzed for implementation of preventive actions.
In 2005, when the TPM2 program – Total Performance Management –
began, a new communication tool of risky situations was developed:
the irregularity of labor security labels. They can be employed by any
plant employee to indicate workplace risks which must be
eliminated or neutralized, whether operational or maintenance-related.

In other operations
Personnel activities are exclusively commercial. Therefore, health and
security matters are less critical than in production plants.There is no
record of absence due to work-related conditions.

Formal agreements with unions or other legal labor representa-
tives regarding health and workplace safety; proportion of labor
force supported by any of these agreements (GRI LA15).

104 Annual Report Natura 2005

2005 Annual Report Natura 105

See analysis of goals established in 2004 at the end of this chapter.

• Funeral assistance.

In Brazil
Natura follows the guidelines related to health and safety governed by
the labor code (Consolidação das Leis do Trabalho, CLT) and the collec-
tive bargaining with the unions that represent employees. Some of
these guidelines, supported by law or union agreements,
include:
short-term disability pay (first 15 days); complementary disability pay
after that period;
filing a work accident report (CAT) with the
National Social Security Institute (INSS); adoption of protection meas-
ures related to working conditions and workers’ security; implementa-
tion of the CIPAs; medical and lab testing assurances as provided by
law, among others. All employees are represented by unions.

In other operations
Natura complies with the respective labor laws of each country.

In Brazil
Typical injuries, lost days, absence rate and death number
related to labor (including subcontracted workers) (GRI LA7)
2005

2004

2003

Number of accidents
with employees
(with absence)
Number of accidents
with personnel
(without absence)
Accidents average
of labor/personnel
Number of accidents
with subcontracted
(with absence)(1)
Number of accidents
with subcontracted
(without absence)(1)
Absence
Lost working days
Investment in prevention
of diseases/personnel (R$)
Investment in prevention of
accidents/personnel (R$)(2)
Number of communications
to the National Social Security
Institute regarding occupational
disease – Cajamar
Number of communications
to the National Social Security
Institute regarding occupational
disease – Itapecerica da Serra

0.007

0.004

34
2.06
16

285.00

121.05

7
3.14
57

11
3.31
69

408.00

407.60

428.93

257.86

1. The figure refers to in-house outsourced contractors.
2. The difference in the value of “investment on accident prevention” between 2004 and
2005 owes to the fact that in 2004 we registered higher expenses with facilities upgrades,
especially those required by law, such as:
•Installation of sprinkler networks and fire hoses in compliance with the Fire Department
contract (requirements);
•Purchase of emergence respiratory equipment;
•Bringing the generators’ diesel tanks up to insurance codes;
•Installation of safety stairways in remote building and gallery locations and height-related
safety equipment.
The improvements in safety equipment in 2005 were not as high as in the preceeding year.

In other operations
2005
Number of accidents
with personnel
(with absence)
Number of accidents
with personnel
(without absence)
Accidents average of
labor/personnel
Number of accidents
with subcontracted
(with absence)(1)
Number of accidents
with subcontracted
(without absence)(1)

Argentina

Chile Mexico

Peru

0.03

0.05

1. The figure refers to in-house outsourced contractors.

Description of programs to support continuous
employability and retirement planning (GRI LA16).

In Brazil
Natura Education Program
Approximately 2,000 employees and their families benefited from
this program during its five years of existence. In 2005, 68 scholar-
ships were granted to employees’ children, plus scholarships for
another 74 technical, 119 university, 90 MBA and graduate work as
well as 82 language courses. For technical courses we reimbursed
50% of the cost, up to the monthly limit of R$ 150.00; for University
and Postgraduation we reimbursed 50%, up to the limit of
R$ 300.00; and for languages 50% of the limit per stage of R$ 300.00.
See the analysis of goals established in 2004 at the end of this chapter.

Executive Education Program
Provides social assistance up to 80% of the cost of MBA, postgraduation
and language courses for personnel and executive graduation
In 2005 the total amount of investments
programs for directors.
reached R$ 253,000.

Building the Future
The program helps employees to plan for longer-term life goals,
involving good health, material comfort and activities capable of
keeping them active after retirement.Their focuses are:
• Quality of Life: comprises issues of health care, healthy habits and

wellness.

• Financial Planning:

focuses on home budgeting skills through
financial education, besides extolling the long-term benefits of
regular savings through Natura Matched Savings.

• Postcareer Activities: focus on personnel over 58 years old.The activities
give them the opportunity to discover new skills and, consequentially,
new ways after retirement. Of an educational nature, the program is
carried out by means of lectures, courses, affinity groups and individual
assistance, structured to help them with their personal needs.

Natura also provides postcareers activities:
• Commercial Training: working in the services industry, helping

the launch of new products or mentoring new employees in
the sales department.

• Corporate Responsibility:
organizations or NGOs.

taking up work

in non-profit

Matched Savings
The Natura Matched Savings Plan was created for all employees and
promotes savings habits; the company matches 60% of employees’
savings up to 5% of their wages.
Even when leaving Natura, the employee can choose to:
• Remain in the program, keeping the savings consolidated by their
contributions, at the same negotiated conditions in the Natura Plan;

• Redeem the balance accrued;
• Transfer the balance into another account.
All Natura employees can join the pension plan, from a basic contri-
bution of 1% to 5% of the monthly wage up to the R$ 10,700.00 limit.

Support Centers
In layoffs related to restructuring, Natura provides former employ-
ees with support services, including counseling, job retraining, com-
puter courses and CV-writing classes; orientation on relocation alter-
natives; personal prospects after retirement; easy access to health
care plans, unemployment insurance social security savings funds;
orientation on financial planning for the family; career counseling and
self-improvement tips.

In other operations
Natura does not promote similar programs abroad at this time.

Training hours per year (GRI EC5) and Investments
in education and training for personnel (GRI LA9).

Goals established in Natura Annual Report 2004

In Brazil
Average training hours per year,
per employee and per category.
2003
33
36

Workers in industrial facilities
Workers in office facilities
Workers in management
positions
Workers in executive positions
Total (average hours/
year/personnel)

66
40

2004(1)
78
61

86
68

2005
122
86

77
22

101

1. From 2004, this indicator came also to consider training for sales promoters and the
Programa Natura Educação, not contemplated in 2002 or 2003.

In other operations
Information not available.

In Brazil
Investment in education and training
for employees (R$ thousand)

Investment(1)

2003
7,053

2004(1)
7,875

2005
12,674

1. In 2005, the amount of investments in education and training for employees incorporate
the sales force (managers, promoters and Consultants) not included in previous years.

In other operations
Investment in education and training
for personnel (R$ thousand)
2005
Investiment

Argentina
10.4

Chile Mexico
81.9
10.9

Peru
N.D.

Committed Target

Results

Reach the target of 5% of people with disabilities in the
total of the company’s personnel.

(cid:2) Target missed. We closed 2005 with 3.6% of employees with disabilities

and postponed the 5% target to October 2006.

a) To maintain fund raising for social projects at
current levels.
b)To reach 50,000 registrations all over the country
by Natura Consultants.

Natura
Educação

a) To extend Natura Educação to outsourced employees
who work in customer service.

b) To include continuing education, postgraduation
and MBA courses.

☺ Target reached. In 2005, the voluntary sale of Crer para Ver products

raised R$ 3.1 million.

☺ Target reached. In 2005, there were more than 66,000 registrations in the

Youth and Adult Education.

(cid:2) Target missed.The extended program to outsourced employees was

not conducted due to possible law implications.

☺ Target reached. In 2005, Natura Educação benefited 90 employees with
scholarships in MBA and postgraduation courses. In 2006, the program
will continue to offer scholarships.

Initiative
GRI LA11

Crer para Ver

106 Annual Report Natura 2005

2005 Annual Report Natura 107

Highlights of Investments

in Corporate Responsibility

This chapter highlights some of Natura’s most relevant projects included in the Investment Matrix in Corporate
Responsibility (presented with respective values in Methodology and Key Indicators section on page 48).

Below are listed projects in different categories. Some are detailed and appear in the matrix in bold.
The choice was made based on examples and nature of action importance.

Natura’s
resources

Fundamentals

Socialeconomic

Personnel, Relatives
and Third Parties

Consultants

Supplier
Communities

• Satisfaction survey

(see page 81)

• Ombuds Service channel,

• Annual satisfaction
survey (see pages
53, 83)

diagnosis

• Internal communication
materials focusing on
corporate responsibility,
environment and
sustainability

• Instant satisfaction

survey (see
page 83)

• Ombuds Service
channel, diagnosis

Suppliers

• Annual satisfaction
survey (see pages
53, 85)

• Ombuds Service
channel, diagnosis

Neighboring
Communities

• Natura Cajamar
working groups
(Relationship front)
• Itapecerica da Serra
working groups
(Relationship front)

Government
and Society

• Sponsorship and

Patronage
• Annual Report
development

Consumers

• Annual

satisfaction
survey (see
pages 53, 84)

• Instant

satisfaction survey
(see page 84)
• Ombuds Service

channel,
diagnosis

• Crer para Ver
Program and
Young and Adults
Education
Program(1)

• Natural or

Botanical Assets
Certification
Program
• Sustainable

development
program

• Relationship with
Ekos line supplier
community

• Events to discuss

socioenvironmental issues

• Natura Award to

Suppliers (considering
suppliers’ social and
environmental behavior)

• Suppliers’

socioenvironmental
mobilization

• Cajamar Agenda 21
• Potuverá Agenda 21
• Natura-Cajamar
working group
(other front)

• Natura-Itapecerica da
Serra working group
(other front)

• Natura’s

sustainability
week

• Diversity program
• Incentive program
to hire disabled
people (see page 99)

• Natura Education

Program
• Sustainability

training

• Nursery, fitness center,

medical services
(see page 103)
• Quality of Life

Program

• Mother’s Day event
• Parties, toys and

Christmas presents

• Sponsorship and

Patronage

• Voluntary work

program

• Development of a

legal framework for
access and use of
Brazilian biodiversity

• Sustainability

education project
• Crer para Ver Program
(Natura’s budget)

• Instituto Criar

(Movimento Natura)

Environmental

• Environmental
consciousness

• Refill Campaign to

• Natural or

• Suppliers’

stimulate the
selling of refill, a
product with low
impact packaging
(see page 96)

Botanical Assets
Certification
Program

socioenvironmental
mobilization(2)

• Cajamar Agenda 21
• Potuverá Agenda 21

• Sponsorship and

Patronage

• Forest re-composition

project

• Energy reduction initiative
• Water reusage

initiative

• Packaging life cycle

assessment

Management
expenses

• Corporate Responsibility Management System
• Environmental Management System
• Teams: Corporate Responsibility, Environment and Social Service
• Operating expenses: Corporate Responsibility, Environment and Social Service

Natura Consultants
generation of income

Personnel, Relatives
and Third Parties

Net income
obtained from
Crer para Ver Program

N.A.

Consultants

N.A.

Supplier
Communities

N.A.

Suppliers

N.A.

Neighboring
Communities

N.A.

Government and Society

Crer para Ver Program

Fiscal resources

Fiscal incentives

Personnel, Relatives
and Third Parties

Consultants

Supplier
Communities

Suppliers

Neighboring
Communities

Government and Society

Sponsorship and Patronage

1. Crer para Ver Program resources.
2. Resources nondeclared in the Investment Matrix in Corporate Responsibility, as they were declared in other trading activities.
Note: N.A. = Not applicable.

All the publics

1. Corporate Responsibility Management System
See complete system description in the Social section, in Codes,
Policies and General Management Systems, page 98,
in the
Economic, Social and Environmental Indicators chapter.

Employees, families and outsourced employees
1. Education Program
See complete program description in Education in the Economic,
Social and Environmental Indicators chapter on page 103.

Consultants
1. Crer para Ver Program – Education Campaign for Youth
and Adults
See complete program description in Education in the Economic,
Social and Environmental Indicators chapter on page 103.

Supplier Communities
1. Certification Program for Natural or Botanicals Assets
Objective: Certify botanical assets to ensure the sustainable
supply of raw materials considering environmental, social and
economical aspects.
Target Audience: The civil society and the scientific community.
Partners:
Instituto de Manejo e Certificação Florestal e Agrícola
(Forestry and Agricultural Management and Certification Institute),
Instituto Biodinâmico (Biodynamic Institute) and Ecocert.
Results: For Natura, both forestry and agricultural management
are the center of conservation of biodiversity . The proper use of
botanical resources in Natura’s products is guaranteed by the Forest
Stewardship Council (FSC), Sustainable Agriculture Network and the
Organic Agriculture certifications granted by the Biodynamic Institute
(IBD) and Ecocert.The certification process fosters preservation by
complying with environmental and social guidelines, establishing a
relationship of trust with consumers.
Eight botanical assets were included on Phase III of the certification
process in 2005. Four raw materials are already present in Natura’s
products and four are in the research stage. The assets already used
in Natura’s products are:
- Jambu: organic certification
- Macela (Camomile): organic certification
- Cupuaçu: socioenvironmental responsibility
- Açaí: socioenvironmental responsibility

2. Sustainable Development Program with Supplier
Communities
Objective: Promote sustainable development in areas where supplier
communities live, aiming at local social and environmental reinforcement
that surpasses trading activity.
Place: Brazil’s Northern region.
Target Audience: Communities that produce assets.
Partners: Different according to each region, local communities, public
entities, NGOs, private sector and universities.
Results: In 2005 the Participative Local Diagnosis (Diagnóstico Local
Participativo) and Iratapuru Sustainable Development Plan (Plano de
Desenvolvimento Comunitário Iratapuru Sustentável – PDCI) were
concluded. Both programs were jointly developed by Amapaz DS, with
the community. The survey represents a balance of the present and a
future vision for 2010 and 2015, an analysis of the current situation
prepared by the community and its expectations for the upcoming
years. PDCI presents crucial actions to be finished in the short and
mid terms, as well as their respective implementation strategies.

However, the community had some difficulty to assume such action as
a concrete proposal of next steps for local development. An action
plan for administrative improvements and ethics management was
defined for 2006.
On neighboring communities, such as Belém, a similar process was
also concluded by the Peabiru Institute, with the elaboration of a
diagnosis and a development plan for Boa Vista, Cotijuba and Campo
Limpo communities.

Neighboring Communities
1. Agenda 21 Cajamar
Objective: Articulate community leaderships and the public sector to
work on a plan for the city’s sustainable development (Agenda 21).
Place: Cajamar, São Paulo.
Target Audience: The Cajamar community.
Partners: Cajamar’s Municipal Government, NGO Mata Nativa, neigh-
boring associations, schools, trade associations, community leaderships.
Results: Analysis results are displayed below, segmented by area
of operation.

1.1 Tripartite Working Group
The Tripartite Working Group formed by Natura, Cajamar’s Municipal
Government and the NGO Mata Nativa focused their efforts on the
organization and set-up of the Agenda 21 Permanent Forum in Cajamar,
officially established at the end of 2005 after a series of educational,
training and discussion activities in the city’s schools and neighborhoods.
Preparatory seminars were held to discuss the meaning of the
participatory planning (Agenda 21) and the importance of the
community’s involvement in the process, with the objective of
creating development opportunities in the city, respecting the
environment and improving living conditions. The starting point was
the diagnostic assessment conducted in 2004.

Seminar table:

Description/local
seminars
Natura

Target audience
Leadership from several
sectors

Natura – Municipal Councils

Advisors/other

Village Scorpios – Rotary

Associates

Date
7/19/2005

8/26/2005

8/30/2005

9/6/2005

9/19/2005

9/20/2005

9/12/2005

9/28/2005

Teachers

Teachers and students

Teachers

Teachers and students

9/29/2005

Teachers, students
and community

Teachers

Ministers

Teachers

Students attending the
fourth grade of
Elementary School

10/4/2005

10/11/2005

10/15/2005

10/19/2005

10/25/2005

10/26/2005

Numbers of
Attendees

444

Suzana Dias State Public School

Élcio Cotrin State Public School

Tenente Marques State
Public School

Vera Zucchi School

Ana Maria Garrido Orlandin
State Public School

School Jundiaí – Caxambu
Agricultural Technical School

Demétrio Pontes Municipal
Public School

Walter Ribas de Andrade
State Public School

Cajamar Evangelical Ministers

São Luiz – Polvilho State
Public School

Antonio Pinto de Campos
State School

Odir Garcia State Public School

Total

As a second step, district forums were held to discuss the 2006 priorities
for each Cajamar district.These priorities were presented at the Town Hall
meeting on December 7th, 2005.

108 Annual Report Natura 2005

2005 Annual Report Natura 109

District forum priorities

Description
Ponunduva
District Forum

Target
Audience
The community
at large

Date
10/4/2005

Polvilho District
Forum

The community
at large

11/11/2005

Cajamar –
Center District
Forum

The community
at large

11/25/2005

Jordanésia
District Forum

The community
at large

12/2/2005

Coordinators
and community
at large

12/7/2005

Agenda 21
Cajamar
Permanent
Forum

Total

Number of
Attendees

274

Description
Enviromental
degradation,
infrastructure,
unemployment

Professional education,
sanitation, leisure

Sanitation, professional
education health

Sanitation, education,
land issues

In the next step the districts will define targets and indicators for the
follow-up of every priority to be presented at the next Town Hall
Meeting in June 2006.The action plans will be defined at that time.

1.2 Education and Public Management
To help implement the Agenda, courses and discussions were held to
provide the attendees with a theoretical basis.
The first course taught a group of young citizens how to use the
Spring software to compile a database for Cajamar, complementing
and updating the information contained in the 2004 city’s diagnostics.
The course on Pluriannual Planning and Annual Budgetary Law (LOA)
aimed at assisting participants in the Pluriannual Planning execution
for the 2006-2009 period, as well as preparing them to follow-up on
the LOA application.
In 2006, the LOA and Urban Master Plan courses will be resumed,
considering the established deadline of October 2006 for the approval
of the municipal Urban Master Plan.

Courses held in 2005

Description/Local
Spring – 4 modules

Pluriannual Plan and the
Annual Budgetary Law

Audience
Leadership from
several sectors

Leadership from
several sectors

Working

80 hours

10 hours

Number of
Attendees
60

1. 3 Projeto Comunidade Ativa (Active Community Project)
To lead the community to identify and establish social and political
interactive workshops were held in two
participation channels,
Cajamar districts: Gato Preto and Paraíso in partnership with the
NGO Mata Nativa, attended by 95 and 76 people, respectively. With
both conceptual and practical sections, field research and project
creation, the workshops sought to establish embryonic democratic
centers for discussions of environmental and social issues, besides the
municipal budget.
Targets for 2006: Consolidate district forums and Agenda 21 Cajamar
Permanent Forum; disclose data collected in Cajamar to the commu-
nity in public research centers and offices; extend the workshops to
another two neighborhoods.

2.Working Groups Natura – Cajamar
Objective: Improve Natura’s relationship with the Cajamar community,
planning and implementing projects on jobs creation and income
generation, education and professional training, environment and
interrelations, in partnership with several of Natura’s divisions.
Place: Cajamar, São Paulo.
Target audience: The Cajamar community.

Partners: Cajamar’s Municipal Government, Cajamar’s Department
of Education and Culture, NGO Mata Nativa and other Cajamar-
based NGOs; public schools, Caieiras’ Department of Education;
NGO SOS Mata Atlântica.
Results: The findings are displayed below, segmented by area
of operation.

2.1 Jobs and Income Generation Initiative
a) Training Cultural Agents
Objective: Provide professional training and prepare community
youth leaderships to work as cultural and social multiplying agents in
Cajamar, promoting job creation and income generation.
Results: The establishment of partnerships with different sectors for
the inclusion of agents as cultural multipliers in the district: 10 agents
hired by the Department of Culture; 6 agents hired by the
Department of Social Services; 6 agents hired as monitors for a
makeup show held by Natura in November and December 2005;
partnerships with performing arts groups for a cultural agent
internship program (Baque Bolado Group and Cia. de Dança Borelli).
The objective of organizing a cooperative or association was not
achieved in 2005. Fifty agents participated in cooperative management
training held by the União e Solidariedade das Cooperativas
e Empreendimentos de Economia Social do Brasil – Unisol/Brasil, and 15
also attended a Serviço Brasileiro de Apoio às Micro e Pequenas
Empresas (Brazilian Support Service to Micro and Small Enterprises)
training in cooperative management.

2.2 Frente Meio Ambiente (The Environment Initiative)
a) Projeto Visita à Natura (Visit Natura Project)
Objective: Promote environmental education through guided visits to
Natura’s facilities, showing processes and programs implemented on-site to
stimulate the development of environmental projects in Cajamar schools.
Results:
Involvement of Human Resources and Environmental
and Engineering areas, coordinated by Natura’s Corporate
Responsibility Department. Twenty visits were held with approxi-
mately 700 students, all attending the 1st year of middle public
state-run schools in Cajamar.

b) Gincana Fazendo Eco – A Cajamar que temos e a Cajamar que
queremos ("Fazendo Eco" Field Day – The Cajamar we have, the
Cajamar we want).
Objective: Encourage students and teachers to know and become
interested in the city;encourage discussion and exchange of ideas in schools
on subjects related to Agenda 21; promote the discussion of citizenship.
Results: About 1,000 students were involved directly in the comple-
tion of 18 challenges with several different activities such as the
gathering of "green books" about the environment; tests about
Cajamar history and statistics data; presentation of choreographies
with the “cities in movement” theme, graffiti with “Cajamar: the man
and his environment” theme; projects of environmental preservation
in schools’ vicinities; exhibition of Fine Arts and models with “Garbage
in its Place” theme; research with Cajamar citizens about their knowl-
edge of medicinal plant properties; the challenge “Quem Sabe, Sabe”
(“Who Knows, Knows”), performed by groups of students of all
levels related to subjects such as the city’s diagnostics, the Budget Bill,
the Pluriannual Plan, the Environmental Protection Area (APA - Área
de Proteção Ambiental), the history of Cajamar, among others. The
gathering challenge obtained 3,500 "green books" that will be
available to all citizens at the city public libraries. Teachers and
students of Cajamar state and city-run schools as well as those
committed to Programa de Educação de Jovens e Adultos (Education of
Youth and Adults Program) took part in the Field Day.

2.3 Frente Relacionamento (The Relationship Initiative)

a) Support to Local Projects
Objective: Deepen Natura’s relationship with the Cajamar community;
support the development and implementation of local projects.
Results: Continuous interaction with the Cajamar’s Department
of Education and Culture through Natura’s infrastructure facilities

(rooms and amphitheater) for the implementation of projects and
activities; R$ 20,000 in financial support for Unicamp (University of
Campinas in the state of São Paulo) to conduct an assessment
of Cajamar’s educational program; donation of hygiene products to
Sítio Agar (a shelter for HIV-positive children).
b) Projeto 0800 – Comunidade Cajamar ( Project 0800 - A tol-free
line for the Cajamar Community)
Objective: Provide a channel of dialogue to identify and follow-up on
community-specific issues.
Result: In 2005, the toll-free line was available to the Cajamar Community.

3. Agenda 21 Potuverá
Objective: Start the process of building up the local Agenda 21, training
the first local social leaderships in support of a future Agenda 21
participatory assessment.
Place: Itapecerica da Serra, São Paulo.
Target Audience: The Potuverá community.
Partners: Five Potuverá district neighborhood associations: Associação
Aldeinha, Ferradura dos Manacás, Alto do Potuverá, Parque Santa Adélia and
Sociedade Futura.
Results: Training courses for leaders in all five Potuverá neighborhood
associations (29 attended but only 12 reached the minimum 50%
attendance record and went on to receive their certificates). Lasting
a total of 33 hours, the training section addressed strategic planning,
legal aspects; preparing projects; budget and cash flow; financial
orientation and fund raising.

4. Natura Working Groups/Itapecerica da Serra
Objective: Improve Natura’s relationship with the Potuverá community,
planning and implementing projects related to educational and
professional training, environment and interrelations, in partnership
with several of Natura’s departments.
Place: Itapecerica da Serra, São Paulo.
Target Audience: Itapecerica da Serra community.
Partners: Municipal Department of Education, Itapecerica’s regional
Department of Education, Municipal Environment Agency, five neigh-
borhood associations, two state-run schools and three city-run schools.
Results: The results are displayed below, segmented by area of
operation.
4.1 Frente Agenda 21 Escolar (Agenda 21 School Iniciative)
Objective: Supervise the Agenda 21 for Schools project implementation
in the Potuverá nucleus, under the coordination of the Regional
Department of Education and Itapecerica da Serra Municipal
Department of Education.
Results: Participation in Agenda 21 monthly meetings at Potuverá
nucleus with two state-run schools and five municipal schools that
chose to hold professional workshops for teachers during 2006,
besides supporting recycling programs in schools.
4.2 Frente Meio Ambiente (The Environment Initiative)

a) Visit Natura Project
Targets: Promote environmental education through guided visits to
Natura’s facilities, demonstrating processes and programs that stimulate
the development of environmental projects in Potuverá district schools.
Results: Visits to the company facilities in Itapecerica da Serra and
Cajamar and a lecture on the environment.The initial planned target
of stimulating the creation of environmental projects in schools was
not achieved due to lack of continuity.

4.3 Frente Educação e Capacitação (Education and Professional
Training Initiative)

a) Future Youth Project
Objective: Help the development and social inclusion of the Potuverá
community’s youths, offering a place for study, research and discussions
on joining the labor market.
Results: 16 weekly meetings and activities for 30 youths from Matilde
Maria Cremm state public middle-school students, with the participation
of seven Natura employees and two outsourced contractors.

4.4 Frente Relacionamento (Relationship Initiative)

a) Support to Local Projects
Objective: Deepen Natura’s relationship with the Itapecerica da
Serra community; support the development and implementation of
local projects, such as the information bulletin and reading spaces,
assisted by the five neighborhood associations, promoting monthly
lectures on various subjects.

Results: Coordination between Potuverá leaderships and Itapecerica
da Serra’s Department of Culture to implement "Reading Spaces" in
neighborhood associations; and for five lectures for the Potuverá
community addressing subjects such as the environment, employment
and the role of neighborhood associations.

b) Projeto 0800 – Comunidade de Potuverá (Project 0800 – A
toll-free line for the Potuverá Community)
Objective: Provide a channel of dialogue to identify and follow-up
community-specific issues.

Results: In 2005, the toll-free line was available to the Itapecerica da
Serra community.

c) Projeto Agente Jovem (Young Agent Project)
Targets: Offer sports facilities for 15-17-year-old teenagers under
supervision of Natura’s club volunteer professionals.
Results: Bimonthly use of the Natura Club’s facilities in Itapecerica da
Serra by 25 youths during the first half of 2005.

Government and Society
1. Crer para Ver Program (Believing is Seeing Program)
Complete program description is mentioned in Education (page 103).

2.Volunteering Promotion Program
Objective: Strengthen the exercise of citizenship by Natura’s
employees through volunteer activities.
Results: The results are described below, segmented by project.

2.1 Novos Olhares – Oficinas de Automaquiagem (New Looks – Self
Make-up Workshops)
Objective: Improve Natura’s sales promoters and Consultants skills
while offering make-up workshops to women with medical and/or
emotional conditions to contribute to elevate their self-esteem and
to improve their life quality.
Place: São Paulo (SP); Rio de Janeiro (RJ); Porto Alegre, Santa Maria
and Pelotas (RS); São Luiz (MA); Goiânia (GO); Belém (PA).
Target Audience: Women suffering from medical and/or emotional
conditions assisted by social organizations and hospitals.
Partners: AC Camargo Hospital (SP); Instituto Brasileiro de Combate ao
Câncer (SP); Hospital Estadual Mario Covas (SP); Instituto Nacional do
Câncer (RJ); Hospital Femina (RS); Hospital da Universidade Federal
de Santa Maria (RS); Hospital Escola da Universidade Federal de Pelotas
Instituto Maranhense Aldenora Belo (MA); Hospital do Câncer
(RS);
Araújo Jorge (GO); Hospital Ofir Loyola (PA).
Results: In 2005, the project was extended to three new locations in
São Paulo (SP), Santa Maria (RS) and Pelotas (RS). 185 workshops
and 2,733 appointments were carried out at the 10 institutions
supported by the project and the number of project volunteers grew
from 170 to 186.
Target for 2006: Extend and consolidate the free participation of
Consultants in the New Looks workshops at the existing locations.

2.2 Truly Beautiful People (Gente Bonita de Verdade) in the
Community
Objective: Allow Natura’s employees to get closer to the social
reality of neighboring communities, by presenting projects and
entities during working hours.
Place: Cajamar, state of São Paulo.

110 Annual Report Natura 2005

2005 Annual Report Natura 111

Target Audience: Municipal and State Schools, Municipal Libraries,
Neighboring communities and publics assisted by such entities.
Partnership: Municipal school Professora Veneranda de Freitas de
Pinto in Cajamar, state of São Paulo; Municipal Library in Jordanésia,
state of São Paulo; State school Professor Élcio José Pereira Cotrim
in Jordanésia, sate of São Paulo.
Results: In 2005 two schools and a municipal library participated in
the project and received Natura’s volunteers. On such spaces,
volunteers developed activities related to culture and education,
with workshops on reading and IT. 54 employees cooperated in 70
visiting periods, divided into two groups.With the reading activities,
it was possible to work with approximately 750 children from
Municipal school Professora Veneranda de Freitas de Pinto and
with the community which attended the Municipal library in
Jordanésia.
IT classes benefited 40 students from state school
Professor Elcio José Pereira Cotrim.

2.3 Collecting Campaign
Objective: Bring to the employee the importance of active
participation; material collection (glasses, books, magazines, newspapers
and comic books) to be donated to institutes.
Place: Cajamar and Itapecerica da Serra, state of São Paulo (SP).
Partners: Municipal Library in Jordanésia (SP) and General Hospital in
Itapecerica da Serra (SP).
Results: During the campaign, 43 glass bottles were gathered and
donated to Itapecerica da Serra General Hospital – Milk Bank. In the
reading campaign (Trilha na Leitura), 223 newspapers, 13 children’s
CDs, 219 comic books and 469 books, totaling 1,983 items, were
donated to Jordanésia Municipal Library, aiming to increase the
archive and community access to such information.

3. Supports & Sponsorships
The guidelines for Corporate Support & Sponsorship seek to align
investment allocations to the company’s strategic choices and to its
corporate beliefs that lead its business behavior, always based on
business ethics and the search for a fair and sustainable business
model. This way Natura supports initiatives from communities,
governmental organizations and the civil society to promote the
best practices in sustainable development, entrepreneurship and
women’s leadership. In addition to that, it supports the strengthening of
community and government organizations thus advancing Brazil’s culture.

3.1 Sustainable Development
Initiatives to promote job creation and the protection of endangered
areas and species.
Main initiatives supported in 2005:

a) Biodiversidade Brasil (Brazilian Biodiversity Project)
Objective: Stimulate discussion on topics related to Brazil’s biodiver-
sity in partnership with Fundação Padre Anchieta – TV Cultura de São
Paulo (public television). This partnership involves three public TV
shows: Biodiversidade Debate (Biodiversity Debate); a documentary
series called Biodiversidade Documento (Biodiversity Document); and
the insert Biodiversidade (Biodiversity), which is part of the TV program
Repórter Eco.
Place: The TV shows are broadcast to all TV Cultura affiliates
throughout the country.
Target Audience: National and international botanic community,
scientific community, academic community and society.
Partners: TV Cultura and Fundação Padre Anchieta.
Results: Production of 39 Biodiversity inserts.
b) Flora Brasiliensis Project
Coordination: Centro de Referência em Informação Ambiental (Center
of Reference in Environmental Information).

Objective: Scan the work Flora Brasiliensis by C.F.P. von Martius;
publish the digital material online,
free of charge; update the
species nomenclature; build a website; integrate the work with data
from European herbariums and the speciesLink network; integrate
the work to other information systems.
Place: Brazil.
Target Audience: National and international scientific community,
academic community and society.
Results: They will be assessed after the project implementation,
in 2006.

3.2 Entrepreneurship and Women’s Leadership
Initiatives that promote entrepreneurship and leadership among
women.
Main initiatives supported in 2005:

a) One Thousand Women for the Nobel Peace Prize

Coordination: Geledés (Black Women Institute).
Objective: Highlight the life work of 1,000 women appointed to com-
pete for the Noble Peace Prize in 2005 due to their examples in pro-
moting a culture of peace.
Place: Brazil.
Target Audience:The society.
Results: Information about the One Thousand Women for the Noble
Peace Prize initiative through an event involving the press, the
business community; publication of a book to be released in March
2006 on the lives of the 52 Brazilian women selected for this initiative.

3.3 Strengthening of the Civil Society and Governmental
Organizations
Actions and initiatives of entities and associations aligned to
Natura’s strategic options and/or representing and promoting the
cosmetics sector.
Main initiatives supported in 2005:

Instituto Fernand Braudel de Economia Mundial

a) Braudel Papers
Coordination:
(Fernand Braudel World Economy Institute).
Objective: Develop research, publications and discussions offering
analyses and effective proposals for Brazil’s social and economic
issues through the publication of the Braudel Papers.
Place: Brazil.
Target Audience: Distribution to a group of 5,000 people comprised of
international agencies,
business representatives, government officials,
academic community, press, and national and international NGOs.
Results: Publication of two editions of the Braudel Papers.

b) Human Rights Universal Conversation
Coordination: Conectas Direitos Humanos (Human Rights Network
Association).
Objective: Promote dialogue, learning opportunities and cooperation
among Southern hemisphere countries in support of the human
rights concept.
Place: Brazil.
Target Audience: Academic community, UN staffers, international
foundations, human rights activists.
Results: Participation of 60 human rights activists from 29 African,
Asian and Latin American countries and, for the first time, from
Eastern Europe in discussions about the creation of an effective
dialogue and strengthening of human rights activists. In addition to
that, the discussions included the themes of access to fairness and
justice, strategies to reduce violence and the cooperation of
universities and international agencies in human rights issues.
Workshops, visits to human rights organizations in São Paulo and a
special conference was performed too.

c) Fundo de Bolsas de Economia (Economy Funds Program)
Coordination: Fundação Getulio Vargas.
Objective: Offer scholarships in Economics.
Place: São Paulo.
Target Audience: Students graduating in Economics at Fundação
Getulio Vargas (SP).
Results: One student was granted full scholarship for the four-year
undergraduate course.

3.4 Natura Musical (Brazilian Culture with focus in music)
Artistic initiatives that improve international understanding and
appreciation of Brazil’s musical heritage. Projects are selected
through public tender and financial support originates from tax
rebates (Rouanet Law and the Culture Incentive Program from the
Minas Gerais State Government).
In 2005, more than 20 projects benefited from Natura’s sponsorship,
favoring projects from all over the country. For a list of all projects
sponsored in 2005, visit www.natura.net/patrocinio.

2005 Sponsorship Investments Total
Natura Resources
Subjects
Sustainable Development

Women’s Entrepreneurship

Strengthening community and governmental
organizations

Natura Musical
Total

Fiscal Incentive Resources
Subjects
Sustainable Development

Natura Musical
Rouanet Law
Culture Incentive Program from Minas Gerais State Government(1)

Others
Total
Total General

1. This amount refers only to the compensated values in 2005.

Amount in 2005
797,199

178,000

982,481

756,357
2,714,037

Amount in 2005
525,000

2,043,671
1,401,230
642,441

155,250

2,723,921

5,437,958

Transparent Relations with Society and Dialogue with Interested Parties
2005 Lectures on Corporate Responsibility area

Event

Lectures

Organization

Lecturer

Date

Location

Audience

4th Environmental Workshop –
Senai/SP

2nd National Conference on State
and Sector Quality Programs,
Productivity and Competitiveness
International Conference on Life
Cycle (CILCA)

Social Responsibility module –
Inaugural class of International
Executive MBA from Administration
Institute – Foundation
2nd International Meeting – Fourth
Open Seminar on Corporate Social
Responsibility – Social Capital, Ethics
and Sustainable Development
Social Responsibility – University
Extension Course

Seminar on Communication and
Corporate Responsibility

6th Week of Managerial Studies

Postgraduation in Administration

Social Responsibility – University
Extension Course

Corporate social responsibility
practices course
International Conference 2005 –
Companies and Social Responsibility

8th Environmental Week – The
Federation of Industries of the State
of São Paulo
2nd Services National Fair
and Legal Supply

Espaço Natura Cajamar:
from blueprint to
sustainability
Competitiveness
and Sustainability

National Service for
Industrial Learning

Movimento Brasil Competitivo

Karina
Aguilar

Roberto
Zardo

03/22/05

03/23/05

Case Study – The new
Natura recycled paper bags

Latin American Association for
Life Cycle Assessment (LCA)

Alessandro
Mendes

04/27/05

Social Responsibility:
Natura’s look

Administration Institute –
Foundation

Pedro
Passos

04/30/05

Panel "Partnerships for a
Sustainable Society"

The Federation of Industries of
the State of Minas Gerais

Pedro
Passos

05/09/05

Selection, Evaluation, and
Environmental Partnership
with Suppliers
The importance of Social
Responsibility in economic
development
Espaço Natura Cajamar:
from blueprint to
sustainability
Espaço Natura Cajamar:
from blueprint to
sustainability
Selection, Evaluation, and
Environmental Partnership
with Suppliers
Corporate social responsi-
bility and sustainability
Responsible Management

Fundação Getulio Vargas

Interrupcion

Eliane
Anjos

Rodolfo
Guttilla

Managerial Faculty from Monsenhor
Messias Educational Foundation

Karina
Aguilar

Minas Gerais Ibmec Institute

Fundação Getulio Vargas

Ethos Institute of Companies
and Social Responsibility

Karina
Aguilar

Eliane
Anjos

Aline de
Oliveira
Guilherme
Peirão Leal

05/19/05

05/23/05

05/24/05

05/30/05

06/01/05

06/08/05

Life Cycle Assessment

The Federation of Industries
of the State of São Paulo

Alessandro
Mendes

06/08/05

How social responsibility
contributed to Natura’s
image construction.

Fenalaw

Rodolfo
Guttilla

06/16/05

São Paulo,
state of São
Paulo
Brasília,
Federal
District
San José,
Costa Rica

São Paulo,
state of São
Paulo

Belo
Horizonte,
state of Minas
Gerais
São Paulo,
state of São
Paulo
Buenos Aires,
Argentina

Sete Lagoas,
state of Minas
Gerais
Belo Horizonte,
state of Minas
Gerais
São Paulo,
state of São
Paulo
São Paulo, state
of São Paulo
São Paulo, state
of São Paulo

São Paulo, state
of São Paulo

Approx. 70 technicians and employees

Approx. 300 attendees, executives and
professionals related to the topics

Approx. 1,000 attendees, NGOs and private
companies representatives

Approx. 30 International Executive MBA
students, several corporate executives

Approx. 250 attendees, representatives from
companies, NGOs, guests

Approx. 30 students from Social
Responsibility course

Approx. 300 attendees

Approx. 600 college students

Approx. 50 postgraduation students

Approx. 30 students from Social
Responsibility course

Approx. 35 student from the Foundation
extension course
Approx. 1,000 attendees, among company
directors and presidents and NGOs,
academics, journalists and sectors specialists
Approx. 200 people from industries,
universities and research institutes

Approx. 30 attendees

Business Models in Corporate
Responsibility International Seminar

Business models examples

Fundación PROhumana

Sustainability report

Local Pro-Agenda 21

GRI Index and Natura
annual report
Sustainability and
competitiveness

São Paulo University
Polytechnic School
Gaucho Program for Quality
and Productivity

2nd Ideas Bandeirantes Forum

Social Responsibility:
Natura’s vision

Bandeirantes Television
Broadcasting, RS

Rodolfo
Guttilla

Camila
Fornazari
Roberto
Zardo

Nelmara
Arbex

06/22/05

Santiago, Chile

Approx. 500 attendees

06/27/05

07/05/05

07/27/05

São Paulo, state
of São Paulo
Porto Alegre,
state of Rio
Grande do Sul
Porto Alegre,
state of Rio
Grande do Sul

Approx. 40 MBA students

Approx. 500 attendees, executives, and
professionals related to the area

Approx. 100 people such as entrepreneurs
and area specialists

112 Annual Report Natura 2005

2005 Annual Report Natura 113

2005 Lectures on Corporate Responsibility Area

Event
Sustainability Management
Specialization Course – Magna Class

Lecture
Sustainable development
challenges

Organization
Fundação Getulio Vargas

Environmental Educational Courses

Local Agenda 21

El Management Responsable

2nd Brazilian Environmental
Communication Congress
Assistants meeting

How to design and achieve
sustainable balance
Annual Report

Secretary of Environment
of the State of São Paulo
Valor Sustenible magazine

Environmental Communication AG

Corporate social
responsibility

II R Training – Development and
Enterprise Performance

Third Quality Seminar

Social Responsibility

Agenda 21

Local Agenda 21

Commerce and Industry Trading
Association of Jaraguá do Sul
(Southern region).
Cajamar Rotary Club

Intrinsic carbon model

Life Cycle Management, LCM

Lecturer
Pedro
Passos

Isabel
Ferreira
Rodolfo
Guttilla
Aline de
Oliveira
Aline de
Oliveira

Aline de
Oliveira

Isabel
Ferreira
Alessandro
Mendes

Date
08/09/05

08/11/05

08/22/05

08/25/05

08/27/05

08/30/05

09/05/05

(continuation)

Location
São Paulo, state
of São Paulo

Audience
Approx. 100 people, among students and
Foundation teachers

São Paulo, state
of São Paulo
Buenos Aires,
Argentina
São Paulo, state
of São Paulo
São Paulo, state
of São Paulo

Jaraguá do Sul,
state of Rio
Grande do Sul
Cajamar, state
of São Paulo
Barcelona,
Spain

Approx. 100 people

Approx. 150 participants

Approx. 50 journalists and other professional
focused on environmental issues
Approx. 60 assistants

Approx. 300 entrepreneurs, students and civil
society representatives

Approx. 30 professionals

Approx. 1,000 researchers, NGOs and com-
panies representatives

Approx. 300 participants, among company’s
directors and presidents and NGOs, students,
journalists and sector’s specialists
Approx. 100 participants, among corporate
responsibility professionals and senior officers

LCM 2005 – Innovation by Life Cycle
Management – 2nd International
Conference on Life Cycle Management
16th Annual Meeting of Latin
American Entrepreneurs

Second Marketing Seminar

5th Brazilian Association of Quality
of Life Congress
1st Public Policies and
Environmental Symposium

Socioenvironmental
responsibility: the sustain-
ability and the investors
Quality of Life

Society and environment:
Natura’s experience in
selection, evaluation and
environmental partnership
with suppliers

Natura and social
responsibility

Latin America Entrepreneurs
Council

Guilherme
Peirão Leal

09/09/05

Santiago, Chile

Febraban – Brazilian Banks
Federation

Marcos
Egydio

09/13/05

São Paulo, state
of São Paulo

National Brazilian Association
of Quality of Life
Environmental Commission of
the City of São Paulo Section
of Attorney’s Association and
Young Attorney Commission

Nelmara
Arbex
Eliane Anjos

09/21/05

09/23/05

São Paulo, state
of São Paulo
São Paulo, state
of São Paulo

Approx. 100 entrepreneurs

Approx. 400 participants, among authorities,
entrepreneurs, students and Cruzeiro do Sul
University representatives

Ethics and Social responsibility:
Commitment or Fashion Trend?

Natura’s Corporate
Responsibility

State of Minas Gerais
Educational Union

Local Pro-Agenda 21

Local Agenda 21

Caxambu permanent Forum

Marcos
Botelho

Isabel
Ferreira

Seminar: Impact of Life Cycle
Assessment in Brazilian Industry
Competitiveness
First International Innova
Quality Seminar
Corporate Responsibility

Environmental Corporate Law
National Conference 2005 –
Biodiversity: a preparation for COP8

Life Cycle Assessment stud-
ies applied to cosmetics
development
Natura: biodiversity
sustainable use
Natura Corporate
Responsibility

Industrial practices in
implementing Biological
Diversity convention
targets: sustainable business

Brazilian Association of Research
Institutions - ABIPTI

Felipe
Maranzato

Innova Quality

University of São Paulo
Communications and Arts
School
Pinheiro Neto Attorney Office,
Brazilian Environment Institute and
Renewable Natural Resources.

Sônia
Tuccori
Cristiane
Samarra

Eliane
Anjos

09/27/05

09/29/05

10/04/05

10/05/05

10/10/05

10/27/05

Uberlândia, state
of Minas Gerais

Approx. 40 students

Jundiaí, state of
São Paulo

Approx. 40 students from Jundiaí
technical school

São Paulo, state
of São Paulo

Approx. 200 industry professional university
and research institutions

São Paulo, state
of São Paulo
São Paulo, state
of São Paulo

Approx. 150 people, among entrepreneurs,
marketing managers and sector’s professionals
Approx. 50 students from the university’s
public relations course

Brasília,
Federal
District

Approx. 50 professionals and students
from environmental law

Corporate Social Responsibility
Seminar

Oppening discussion: CSR
as a management tool

Interrupcion

Maurício
Bellora

11/01/05

Buenos Aires,
Argentina

Approx. 150 participants among several
companies, NGOs and government
representatives

Business and the 2010 Biodiversity
Challenge Meeting

Institutional presentation

Superior School of Advertising and
Marketing - ESPM

Partnership among
companies, organizations
and agencies

Ministry of Environment and
Brazilian Sustainable Development
Enterprise Council, CEBDS
Superior School of Advertising
and Marketing - ESPM

Eliane
Anjos

Aline de
Oliveira

11/05/05

Cajamar, state
of São Paulo

11/17/05

São Paulo, state
of São Paulo

Approx. 40 international representatives from
governmental sectors, finance, students,
industry and NGOs
Approx. 40 students

Annual Report Triple Bottom Line
(GRI) Seminar

Annual Report as a
management tool

Valor Sostenible magazine

Environmental Engineering course

Seminar: Life Cycle Assessment (LCA)
impact on the CF&T industry

Products Life Cycle
Assessment
LCA in Natura’s product
development

State University of Sorocaba

Brazilian Association of Personal
Hygiene, Perfumery and
Cosmetics Industry

It is on the Table - Tá na Mesa

Business sustainability

Municipal Workshop

Environmental and
hydrographic management

The Federation of Commercial and
Services Association of the state of
Rio Grande do Sul - Federasul
Municipal workshop

Conal 2005 – National Convention
"Let the Arrow Fly"

Natura Corporate
Responsibility

Aiesec

Mauricio
Bellora

Felipe
Maranzato
Felipe
Maranzato

11/17/05

11/23/05

11/28/05

Alessandro
Carlucci

11/30/05

Karina
Aguilar

Cristiane
Samarra

12/12/05

12/16/05

Buenos Aires,
Argentina

Approx. 50 companies and NGOs
representatives

Sorocaba, state
of São Paulo
São Paulo,
state of São
Paulo

Porto Alegre,
state of Rio
Grande do Sul
São Paulo, state
of São Paulo

Santa Isabel.
state of São
Paulo

Approx. 60 students from third year
attending such course
Approx. 100 participants among companies
representatives related to the personal
hygiene sector that were interested in
learning about LCA and discussing the
development of Brazilian inventory
Approx. 250 Rio Grande do Sul
entrepreneurs

Approx. 20 municipal employees

Approx. 50 students

Commitment with Leadership and Social Influence
Natura’s representation in Trade Associations and Associations in General

Entity/Association

Natura Representative

Type of Representation

ABC – The Brazilian Association of Cosmetology
Aberje – The Brazilian Association of Corporate Communication
(www.aberje.com.br)
ABEVD – The Brazilian Association of Direct Selling Companies
(www.abevd.org.br)

Abia – The Brazilian Association of Food Industries (www.abia.org.br)

Abihpec – The Brazilian Association of Personal Hygiene, Perfumery and
Cosmetics Industry (www.abihpec.org.br)

ABNT - The Brazilian Association of Technical Standards (www.abnt.org.br)
ABPI - The Brazilian Association of Intellectual Property (www.abpi.org.br)

ABPVS - The Brazilian Association of Sanitation Control Professionals
(www.abpvs.com.br)
ABQV – The Brazilian Association of Quality of Life (www.abqv.org.br)
Abrasca – The Brazilian Association of Publicly Traded Companies (www.abrasca.org.br)
Acelp – The Portuguese Language Corporate Communication Association
Aippi – The International Association for the Protection of Intellectual
Property (www.aippi.org)
Amcham-SP –The American Chamber of Commerce of São Paulo
(www.amcham.com.br)

Amerco – The Association of Corporate Communication of the Mercosur
Peruvian Civil Association of Companies Related to Brazil – Brazil Group
Anpei – The Brazilian Association of R&D of Innovative Companies
(www.anpei.org.br)
Asipi – Interamerican Association of Industrial Property (www.asipi.org)
Aspi – The São Paulo Association of Intellectual Property (www.aspi.org.br)

Asug – The Association of the SAP Users in Brazil (www.asug.com.br)
Audibra – Brazilian Institute of Internal Auditors (www.audibra.org.br)
Bramex – The Mexican Industry,Trade and Tourism Chamber
Trade Chamber of Lima (www.camaralima.org.pe)
Direct Sales Association of Chile
Peruvian Chamber of Direct Sales
The Argentinian Chamber of Cosmetics and Perfumery Industry

Cavedi – Argentinean Chamber of Direct Sales (www.cavedi.org.ar)
Ceal – The Council of Latin American Businessmen (www.ceal-int.org)
Cempre – Corporate Commitment to Recycling (www.cempre.org.br)
CEN – National Business Council to HIV/AIDS Combat

Fundação Getulio Vargas/ Center of Studies of Sustainability (www.ces.fgvsp.br)

Ciesp – The Federation of Industries of the State of São Paulo
(www.ciesp.org.br)

CNI – The Brazilian Confederation of Industries (www.cni.org.br)
Committee of the Upper Tietê Hydrographic Basin
Ethos – The Ethos Institute of Companies and Social Responsibility (www.ethos.org.br)

FNQ – National Quality Foundation (www.fnq.org.br)

Mandate

2005-2008

1. 2004-2006

1, 2. Jun 2004-Jun 2007

Jul 2004-Jul 2008

1. 2004-2005

Jul 1999-Jul 2005

May 2002-May 2005

2000-indeterminate

2004-2005

Elizabete Vicentini
Rodolfo Guttilla

Representative
Chairman of the Decision-Making Council

1. Rodolfo Guttilla
2. Moacir Salzstein
3. Karen Cavalcanti
4. Lucilene Prado
5. Bruno Antunes
6. Márcio Orlandi
7. Kássia Reis

1. Rodolfo Guttilla
2. Renata Novaes
1. Pedro Luiz Passos
2. Rodolfo Guttilla
3. Moacir Salzstein
4. Lucilene Prado
5. Elizabete Vicentini
6. Eliane Anjos
Renato Wakimoto
1. Eneida Berbare
2. Luiz Marinello
3. Renata Franco

1. Chairman
2. Research Committee Chairman
3. Communication Committee Chairman
4.Taxation and Government Relations Committee Chairman
5. Research Committee Member
6. Information Technology Committee Member
7. Legal Affairs and Government Relations Committee Member

1. Director
2. Representative
1.Vice-President
2. Director
3. Foreign Trade Committee Member
4.Taxation Committee Member
5.Technical and Regulatory Committee Member
6. Environment Committee Member
Representative
1. Copyright, Patents, Brands and Technology Committees Member
2.Copyright and Enforcement Committee Member
3.Brands Committee Member

Elizabete Vicentini

Representative

Plinio Yasbek
Helmut Bossert
Rodolfo Guttilla
Renata Franco

1. Pedro Luiz Passos
2. Antônio Siqueira
3. Eliane Anjos
4. Carla Pavão
5. Elizabete Vicentini
6. Eneida Berbare
7. Luiz Marinello
Rodolfo Guttilla
Erasmo Toledo
Elizabete Vicentini

Eneida Berbare
1. Eneida Berbare
2. Renata Franco
Anna Sant'Anna
Mercedes Stinco
Rodolfo Guttilla
Erasmo Toledo
Mauricio Pinto
Erasmo Toledo
1. Alejandro Díaz
2. Jelena Nadinic
Alejandro Díaz
Guilherme Peirão Leal
Eliane Anjos
1. Guilherme Peirão Leal
2. Plínio Yasbek
Nelmara Arbex

1. Guilherme Peirão Leal
2. Itamar Correia da Silva
3. Eliane Anjos
4. Rodolfo Guttilla
Eliane Anjos
Eliane Anjos
1. Guilherme Peirão Leal
2. Nelmara Arbex
3. Rodolfo Guttilla
1. Pedro Luiz Passos
2. Roberto Zardo
3. Sophia Segawa

4. Nelmara Arbex
5.Yara Rezende

Representative – Founder
Representative
Chairman
Representative

1. Administrative Council Representative
2. Member of the Strategic Group – Legal Directors and Vice-Presidents
3. Environment Committee Member
4. Secretaries Committee Member
5.Technical Subgroup Member
6. Industrial Property Task Force
7.Task Force to Combat Counterfeits
Chairman
Director
Director

Representative
Representative
Representative
Representative
Representative
Vice-President
Representative
Director
Treasure
Executive Commission Member
Technical Representative
Executive Commission Member
Representative
Representative
1. Representative
2.Technical Representative
Member of the Advisory Board

1. Director
2. Jundiaí Regional Council
3. Director
4. Member of the Center of Strategic and Advanced Studies
Environment Thematic Council Coordinator
Officer,Technical Chamber of the Underground Waters – CTAS
1. Member of the Decision-Making Council
2. Officer
3. Substitute 1
1. Advisory Council Chairman
2. Planning Director
3. Benchmarking and Processes Management Thematic
Committees Member
4. Social Responsibility Committee Member
5. Intellectual Capital and Innovation Committee Member

1. Sep 2004-Sep 2007

Jan 2004-Dec 2005
1. Mai 2003-mai 2005

1. 2003-2005

114 Annual Report Natura 2005

2005 Annual Report Natura 115

Natura’s representation in Trade Associations and Association in General

Entity/Association

Natura Representative

Type of Representation

Funbio – The Brazilian Biodiversity Fund (www.funbio.org.br)
The Abrinq Foundation for the Rights of the Children
(www.fundacaoabrinq.org.br)

G50 - Latin-American Businessmen Council
GRI – Global Reporting Initiative (www.globalreporting.org)

Ibef – The Brazilian Institute of Finance Executives (www.ibef.com.br)
IBGC – The Brazilian Institute of Corporate Governance (www.ibgc.org.br)
Ibri – The Brazilian Institute of Investor Relations (www.ibri.org.br)
Iedi – Industrial Development Studies Institute
(www.iedi.org.br)
Akatu Institute (www.akatu.org.br)
The Fernand Braudel Institute of World Economy (www.braudel.org.br)
The São Paulo Institute Against Violence (www.spcv.org.br)
Inta – International Trademark Association (www.inta.org)
MBC – Competitive Brazil Movement (www.mbc.org.br)
Sipatesp – Perfume and Beauty Products Industry Union in the State of São Paulo

S.O.S. Mata Atlântica
Uniethos – (www.uniethos.org.br)

Guilherme Peirão Leal
1. Guilherme Peirão Leal
2. Nelmara Arbex
3. Pedro Villares
4. Susy Yoshimura
Guilherme Peirão Leal
1. Rodolfo Guttilla
2. Nelmara Arbex
Jorge Casmerides
Lucilene Prado
Helmut Bossert
Pedro Luiz Passos

Decision-Making Council Substitute Member
1. Decision-Making Council Member
2.Director Committee of the Crer para Ver Program Member
3.Director Committee of the Crer para Ver Program Member
4. Director Committee of the Crer para Ver Program Member
Member
Representative
Stakeholders Council Members
Representative
Representative
Representative
Council Member

Guilherme Peirão Leal
Guilherme Peirão Leal
Rodolfo Guttilla
Renata Franco
Roberto Zardo
1. Pedro Luiz Passos
2. Rodolfo Guttilla
Pedro Luiz Passos
Nelmara Arbex

Steering Council Member
Representative
Representative
Representative
Representative
1. Delegate Representative
2. Director
Council Member
Technical Council Member

(continuation)

Mandate

Nov 2001-Nov 2005
1. Since 1992 and since
1996
2, 3. Since 2003
4. Since 2004

2002-2005

Sep 2000-
indeterminate

1, 2. Jun 2004-Jun 2007

WFDSA – World Federation of Direct Selling Associations (www.wfdsa.org)
WWF-Brasil (www.wwf.org.br)

Alessandro Carlucci
Guilherme Peirão Leal

CEO Council Member
Steering Council Member

Dec 2001-Mar 2006

Contact of Naturas’s Representatives to Associations

Name

Function

e-mail

Leandro Machado

Governmental Relations Manager

leandromachado@natura.net

Contact

(55 11) 4446 2544

Awards and certifications received for social, ethical and environmental performance (SO4)

Award
The Most Highly Regarded
Companies in Brazil

Promotion/Organization
CartaCapital magazine
and InterScience

Objective
The survey recognized organizations that stand out their
business ethics, social commitment, environmental responsi-
bility and civic responsibility awareness.

The Best Companies
according to ISTO É
Dinheiro Magazine

ISTOÉ Dinheiro
Magazine
and Delloite

Recognize the best managed companies in Brazil based on
financial sustainability, human resources, innovation, environ-
ment and social responsibility indicators.

Awarded category
Most Highly Regarded Company
in the sector
One of the 10 most admired
companies in Brazil

Pharmaceutical, Hygiene
and Health

2002 2003 2004 2005

2nd

3rd

1st

2nd

1st

The Best Companies
to Work in Latin America

Great Place to Work®
Institute

The Best Places to Work
in Argentina

Modern Customer
of Excellency in Services

Great Place to Work®
and Clarín daily paper
business section
Consumidor Moderno
Magazine

Election of the Brand that
Respects Consumer the Most
Companies that people
most wish to work for

Rádio Bandeirantes
and Omni Marketing
Forbes Brasil Magazine

Identify companies that were benchmarks in the Best
Companies to Work editions in the Latin American
countries where the Great Place to Work Institute
conducts this survey.
Identify the 100 best companies to work for in Argentina through
a research of organizational environment.

Recognize the companies that stand out as reference in customer
care in their industry and stimulate the companies to continually
improve relations with the demanding Brazilian consumers.

Elect the 10 most recognized brands in the opinion of the
audience in the “respect for consumer” category.

Business Leaders – Gazeta
Mercantil Journal

Exame Guide of Good
Corporate Citizenship

Balanço Anual
Magazine, Gazeta
Mercantil
Exame Magazine –
Editora Abril and
Instituto Ethos

Elect five leading national executives by business sector
from readers’ voting.

Recognize corporate citizenship practices based on criteria
such as coverage, innovation, sustainability, establishment of
partnerships and results of projects.

Guia Exame – The Best
Places to Work

Exame Magazine and
Great Place to Work®
Institute

In-depth assessment of the work environment and the
practices and HR policies, taking employees’ opinions into
consideration.

IR Magazine Brazil Awards

IR Magazine

The Best 25 Companies
to Work For in Peru

Most valuable brands
in Brazil – ISTOÉ Dinheiro
magazine
Best and largest by
Exame Magazine

Great Place to Work®
Institute Peru and El
Comercio
Interbrand/ ISTOÉ
Dinheiro magazine

Exame Magazine

Aberje Award

Aberje – The Brazilian
Association of
Corporate
Communication

Evaluate the best performances in IR among public companies. In
Brazil, the Investors’ Perception Study was performed through an
independent research conducted by Fundação Getulio Vargas from
a poll with 350 investment professionals – analysts and stock mar-
ket administrators working on the stock market in Brazil.

Identify the best 25 companies to work for in Peru by way of
the organizational climate survey.

Honor Brazil’s highest valued brands according to respected con-
sulting firm Interbrand and published by Dinheiro Magazine.

Show the most complete and comprehensive analysis of
Corporate Brazil by way of data obtained by companies –
growth, profitability, financial health, investments in property,
plant and equipment, market share and productivity by
employee.
Distinguish magazines, newsletters, bulletins, videos and cor-
porate communication projects that best met the compa-
nies’ strategic demands during the year.

Natura was one of the 100 Best
Places to Work in Latin America

26th place among the 100 best
places to work in Argentina

Quality of relations. Distinct
among the 38 companies that
have excelled in customer care
service in the Cosmetics category
Socioenvironmental

General ranking

Sector ranking
Leader of the Cosmetics, Hygiene
and Health Sector (Guilherme
Peirão Leal)

Company of reference in Social
Responsibility

Values and transparency
among the 150 Best Places
to Work
Best Place for Women to Work

Grand Prix of Best Investors
Relations Program (companies out-
side IBovespa index)

Best Performance in Investors
Relationship on an Initial
Public Offer
One of the Best 25 Companies
to Work For

Pharmaceutical, Hygiene
and Health

Management Report Mural
Newspaper (SP and Brazil)
Company of the Year (SP)
Relationship with the Investors (SP)
Media Diversity (SP and Brazil)
E-news External (SP and Brazil)

Best Annual Report
Abrasca Award

Annual Report Award

Abrasca – The
Brazilian Association of
Publicly Traded
Companies
Gazeta Mercantil
newspaper

Encourage improvement in the preparation of clearer and
more transparent quality reports and a larger volume of
information and innovative character, regarding both the
information reported and graphic design.
Identify the companies that create the most value for shareholders.

Private Company

Public Company

Personal Hygiene sector

26th

1st
1st

4th

2nd

1st

9th

1st

3rd

4th

1st

1st
1st
1º1st
1º1st

1º4th

1º1st

1st

116 Annual Report Natura 2005

2005 Annual Report Natura 117

Award

Promotion/ Organization Objective

Awarded category

2002 2003 2004 2005

(continuation)

Social Report Award

Bramex Award

DCI Award

Eco – Amcham Award

The Brazilian
Association
of Analysts of Capital
Market (Abamec);
The Brazilian
Association
of Corporate
Communication
(Aberje);
Fundação Instituto
de Desenvolvimento
Empresarial e Social
(FIDES); Brazilian
Institute of Social and
Economic Analyses
(IBASE) and Ethos
Brazil Mexico Chamber
of Industry,Trade and
Tourism
DCI Journal

The American
Chamber of
Commerce (Amcham)

Ecodesign Award

Fiesp/Ciesp, IPT

Executive of Value Award

Valor Journal

FGV Business Excellence
Award

The Brazilian Institute of
Economy and Fundação
Getulio Vargas

Stimulate the compilation and publication of social reports
by the companies; recognize and honor the best social
reports, according to criteria established under this regula-
tion; disseminate the relevance of social reports as an
instrument of transparency.

Overall National

1st

São Paulo State Regional

1st

Identify and recognize initiatives by public or private companies,
individuals and the people who promote environmentally
responsible economic, social and cultural development.
Recognize the companies most highly-regarded by
executives and businessmen.

Identify, recognize and promote social initiative projects
developed by private companies in the fields of culture,
education, environment, health and participation
in communities.
Encourage the development of products with recycled mate-
rial and which consume less energy.
Select the executives that have distinguished themselves in each
industry according to a survey conducted at the top headhunting
firms in Brazil. Leadership, strategic vision and management style are
some of the aspects considered by the selection committee.

Identify and recognize the 12 companies classified in the survey
of “The 500 Largest Companies in Brazil” by business efficiency.
The selection process takes into consideration objective parameters
of recent financial-economical companies performance, with
emphasis on the results of the immediate precedent accounting
period to the award. The top 500 largest companies were chosen
by total assets and net income.

Environmental Responsibility

Most admired company in the
Cosmetics, Hygiene and Health category

Environmental and Social
Responsibility – large companies

Packing design

1st

Executive of Value in the category
Hygiene and Personal Care (Pedro
Luiz Passos)

Chemical sector

1st

The following awards received by Natura involve quality seals that
may be used:
- Exame Guide of Good Civic Responsibility;
- The Best Places to Work in Latin America;
- The Exame Você S.A. Guide – The Best Companies to Work For;
- Social Report Award;
- Valor 100 Award.

Natura is also recognized in Brazil with the titles:
- Children-friendly Company, granted by the Abrinq Foundation for
the Rights of Children and Adolescents;
- Civically Responsible Company, granted by the Assembly of the City
of São Paulo;
- AACD Partnership Company Seal, granted by the Association of
Assistance to the Disabled Child.

Goals Established in Natura Annual Report 2004

Initiative

Target

Results

Biodiversity Brazil

a) Production of 48 Biodiversity TV shows;
b) Production of documentary on theme to be defined;
c) Search for a partner to produce a second documentary;

(cid:1) Target partially reached. Production totaled 39 Biodiversity TV shows.
(cid:2) Target missed.The documentary was not produced.
(cid:2) Target missed. Search did not happen.

d) Initial studies to distribute public television programs in

(cid:2) Target missed. Studies were not conducted.

Latin America.

a) Expand the tripartite working group, involving other local

(cid:2) Target missed. Participating companies joined the local forum and the corporate forum,

Agenda 21 Cajamar

businesses in the process;

b) Publish the results from the diagnostic assessment

to the community;

c) Promote the installation of a Sustainable

Development Forum;

d) Carry out workshops in two additional

city subdivisions.

but did not yet join the tripartite working group.

☺ Target reached.The findings of the assessment were widely released, with hard copies
and diskettes distributed to all public schools in Cajamar and other communities, local
company officers and other community organizations.

☺ Target reached.The district forums and municipal forum were installed in November
and December 2005, respectively, after a long discussion and preparation process.

☺ Target reached.Two more workshops were conducted during 2005, in the neighborhoods

of Polvilho and Gato Preto, with high attendance.

Environmental Merit FIESP

Federation of
Industries of the State
of São Paulo

Annually identify and honor manufacturers that distinguished
themselves in the implementation of an environmental project
with significant results for the affected area.

Environmental Preservation
Ford Motor Company
Award
PNBE Civic Responsibility
Award

Quality of Life Award

Ford and Conservation
International do Brasil

Annually identify the most significant projects carried out in
Brazil for the preservation of Nature.

PNBE

ABQV – Brazilian
Association of Quality
of Life

Publicly recognize the initiatives of businessmen, entities and
individuals who contributed to improve the quality of life of
other Brazilian individuals.
Stimulate the development and the implementation of
quality of life programs in institutions, awarding organiza-
tions that carry out specific and innovative initiatives in this
work sphere and that are successfully improving the quality
of life of their employees.
Award professionals and companies for their contribution to
corporate citizenship.

The Iniative of the year in
Environmental Preservation:
Biodiversity Brazil Project
“O empresário que
queremos” (Guilherme Peirão Leal)

Learning New Eating Habits
Program

Renato Castelo Branco
Social Responsibility Award

State Week for the Fight
against Cancer Award

ESPM – Escola Superior
de Propaganda e
Marketing
Health Department of
the State of São Paulo

Value 1000 Award

Social Value Award

Viagem Award

Transparency Trophy

Valor Econômico
newspaper

Valor Econômico
newspaper with
support from the
Ethos Institute and
Akatu Institute
Viagem e Turismo
magazine
Anefac – Fipecafi –
Serasa

Recognize the institutions that had the best projects against
cigarette smoking.

Program for the Prevention and
Fight Against Cigarette Smoking

Classify the 1,000 largest Brazilian companies by net income,
based on their current financial statements.The 1,000 largest
companies are classified into 27 industries.
Recognize corporate social responsibility practices through
programs developed by companies that serve as reference
and inspire the multiplication of initiatives.

“Empresa de Valor” (Value
Company)
Hygiene and Cosmetics sector.
Responsible Management and
Sustainable Development, Popular
Jury

Identify the best among many items related to tourism.

Select the best financial statements posted during the year.

Grand Award
Ecological Merit Work with
Brazilian biodiversity
1st place among Private Brazilian
Companies

1st

Note: Numbers refer to the company’s position in the award recognition ranking, when applicable.

118 Annual Report Natura 2005

2005 Annual Report Natura 119

Financial

Statements

Natura Cosméticos S.A.

Balance Sheets
As of december 31, 2005 and 2004
(In thousands of Brazilian reais - R$)

Assets

CURRENT ASSETS
Cash and banks
Cash investments (Note 5)
Trade accounts receivable (Note 6)
Inventories (Note 7)
Recoverable taxes (Note 8)
Advances to employees
Related parties (Note 10)
Deferred income and social contribution taxes (Note 9.a)
Other receivables
Total current assets
LONG-TERM ASSETS

Receivables from shareholders (Notes 10.e and 19.c)
Advance for future capital increase (Note 10.d)
Recoverable taxes (Note 8)
Deferred income and social contribution taxes (Note 9.a)
Escrow deposits (Note 16)
Other receivables
Cash investments (Notes 5 and 16.i)
Total long-term assets

PERMANENT ASSETS

Investments (Note 11)
Property, plant and equipment (Note 12)
Total permanent assets

TOTAL ASSETS

Company

Consolidaded

Liabilities and shareholders' equity

2005

2004

2005

2004

Company

Consolidaded

2005

2004

2005

2004

38,882
237,084
302,688
835
508
3,312
4,850
16,404
8,160
612,723

130
1,007
1,432
17,680
23,590
-
-
43,839

516,929
17,674
534,603
1,191,165

26,656
158,631
236,453
1,634
3,009
4,084
833
12,198
358
443,856

172
770
876
12,624
20,370
1,122
-
35,934

373,748
13,231
386,979
866,769

56,198
330,241
316,264
152,307
23,967
5,331
-
25,757
14,799
924,864

130
-
9,574
29,324
29,477
526
3,968
72,999

29,592
202,020
250,066
121,961
18,158
6,949
-
21,630
6,063
656,439

172
-
3,848
21,301
24,256
2,878
-
52,455

5,761
365,284
371,045
1,368,908

8,707
298,822
307,529
1,016,423

CURRENT LIABILITIES

Loans and financing (Note 14)
Domestic suppliers
Foreign suppliers
Suppliers - related parties (Note 10)
Salaries, profit sharing and related charges, net (Note 17)
Taxes payable (Note 15)
Dividends (Notes 10 and 19.e)
Interest on capital (Notes 10, 19.d and 19.e)
Accrued freight
Sundry accruals
Related parties (Note 10)
Other payables
Allowance for losses on swap and forward contracts (Notes 22.b and 22.d)
Total current liabilities
LONG-TERM LIABILITIES

Loans and financing (Note 14)
Allowance for losses on subsidiaries (Note 11)
Reserve for contingencies (Note 16)
Other payables
Total long-term liabilities

MINORITY INTEREST
SHAREHOLDERS' EQUITY (Note 19)

Capital (Note 19.b)
Capital reserves (Notes 19.b e 19.g)
Profit reserves (Note 19.i)
Treasury shares (Note 19.f)
Total shareholders' equity

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

44,942
38,070
-
124,241
30,074
75,536
195,070
17,699
13,786
8,863
-
12,780
2,703
563,764

44,290
4,202
53,843
1,806
104,141
-

230,762
120,678
172,589
(769)
523,260
1,191,165

11,879
17,197
-
102,151
28,272
52,776
113,644
13,623
10,178
4,802
94
9,934
4,544
369,094

19,549
64
3,769
841
60,223
-

230,762
113,122
94,674
(1,106)
437,452
866,769

68,309
148,045
4,115
-
73,122
89,085
195,070
17,699
13,786
9,026
-
13,564
2,703
634,524

119,156
-
90,599
3,232
212,987
8

62,407
89,348
4,172
-
67,618
62,382
113,644
13,623
10,026
4,802
-
12,773
6,138
446,933

71,982
-
59,559
1,885
133,426
7

230,762
120,678
170,718
(769)
521,389
1,368,908

230,762
113,122
93,279
(1,106)
43,057
1,016,423

120 Annual Report Natura 2005

2005 Annual Report Natura 121

Statements Of Income
For the years ended december 31, 2005 and 2004
(In thousands of Brazilian reais - R$, except for earnings per share)

Statements of changes in shareholders' equity (company)
For the years ended december 31, 2005 and 2004
(In thousands of Brazilian reais - R$)

GROSS SALES

Domestic market
Foreign market
Other sales

GROSS OPERATING REVENUES

Taxes on sales, returns and rebates

NET OPERATING REVENUES

Cost of sales

GROSS PROFIT

OPERATING (EXPENSES) INCOME

Selling
General and administrative
Employee profit sharing (Note 17)
Management compensation (Note 18)
Equity in subsidiaries (Note 11)
Other operating expenses, net

INCOME FROM OPERATIONS BEFORE FINANCIAL EFFECTS

Financial expenses
Financial income

INCOME FROM OPERATIONS

Nonoperating (expenses) income, net

INCOME BEFORE DEBENTURES PARTICIPATION AND TAXES

Debentures participation

INCOME BEFORE TAXES ON INCOME

Income and social contribution taxes (Note 9.b)

NET INCOME BEFORE MINORITY INTEREST

Minority interest

NET INCOME

EARNINGS PER SHARE - R$

Company

Consolidaded

2005

2004

2005

2004

3,127,462
-
1

2,457,891
-
5

3,149,654
92,616
1,341

2,472,046
66,782
829

3,127,463
(721,114)

2,457,896
(576,564)

3,243,611
(961,447)

2,539,657
(769,993)

2,406,349
(960,012)

1,881,332
(776,170)

2,282,164
(731,134)

1,769,664
(575,260)

1,446,337

1,105,162

1,551,030

1,194,404

(600,073)
(323,203)
(11,209)
(7,467)
(6,741)
(3,640)

494,004
(11,800)
31,470

513,674
(212)

513,462
-

(458,913)
(249,223)
(12,094)
(7,084)
2,788
-

380,636
(18,301)
21,125

383,460
1,098

384,558
(7,178)

513,462
(116,105)

377,380
(76,969)

397,357
-

300,411
-

(709,190)
(276,144)
(28,577)
(12,289)
-
(3,220)

521,610
(43,453)
54,714

532,871
(1,242)

531,629
-

531,629
(134,747)

396,882
(1)

(535,909)
(216,900)
(31,594)
(11,818)
-
-

398,183
(38,156)
35,414

395,441
(868)

394,573
(7,178)

387,395
(87,102)

300,293
1

397,357

300,411

396,881

300,294

4.6745

3.5431

4.6689

3.5417

BALANCES AS OF DECEMBER 31, 2003
Capital increases:
Capitalization of debentures
(Notes 19.b and 19.g)

Merger of Natura Empreendimentos S.A.

(Notes 1, 19.a and 19.b)
Subscription of shares (Note 19.b)
Purchase of shares (Note 19.f)
Sale of treasury shares by exercise
of stock options (Note 19.f)

Receivables from shareholders (Note 19.c)
Payment of receivables from
shareholders (Note 19.c)

Absorption of excess liabilities through merger
of Natura Empreendimentos S.A., after
the elimination of the merged company's
investment in the Company
(Notes 1 and 19.a)

Absorption of excess liabilities through merger

of Natura Participações S.A., after
the elimination of the merged company's
investment in the Company
(Notes 1 and 19.a)

Absorption of reserve (Note 19.b)
Net income
Allocation of net income:

Legal reserve (Note 19.h)
Profit retention reserve (Note 19.i)
Dividends - R$2.204 per outstanding

share (Note 19.e)

Interest on capital - R$0.347 per outstanding

share (Note 19.e)

BALANCES AS OF DECEMBER 31, 2004
Sale of treasury shares by exercise
of stock options (Note 19.f)

Payment of receivables from
shareholders (Note 19.c)

Tax incentives
Net income
Allocation of net income:
Profit retention reserve (Note 19.i)
Dividends - R$3.357 per outstanding

share (Note 19.e)

Interest on capital - R$0.403 per outstanding

share (Note 19.e)

BALANCES AS OF DECEMBER 31, 2005

Capital

Treasury
shares

Capital reserves
Share
premium

Investment
grants

Profit reserves

Legal

Retention

Retained
earnings

Total

56,387

9,998

10,687

45,544

122,616

138,569

100,000

1,415
34,391
-

-
-

-
-
-

-
-

-
-
(1,415)

309
(3,029)

-
-
-

5,177
-

480

496

-
-
-

-
-

-
-
-

-
-

-
-
-

-
-

-
-
-

-
-

-
-
-

-
-

-
-
-

-
-

-
-
-

-
-

238,569

1,415
34,391
(1,415)

5,486
(3,029)

976

(23,367)

-
(7,058)
-

(29,235)
7,058
-

6,986
-
300,411

(22,249)
-
300,411

15,021
-

-
76,024

(15,021)
(76,024)

-
-

- (186,910)

(186,910)

-
230,762

-
(3,655)

-
105,673

-
9,998

-
18,650

-
76,024

(29,442)
-

(29,442)
437,452

-
-
-

337

4,537

2,053
-
-

249
-
-

-
717
-

-
-
-

4,874

-
-
397,357

2,302
717
397,357

77,915

(77,915)

- (285,237)

(285,237)

-
230,762

-
(1,265)

-
110,459

-
10,715

-
18,650

-
153,939

(34,205)
-

(34,205)
523,260

122 Annual Report Natura 2005

2005 Annual Report Natura 123

Statements of changes in financial position
For the years ended december 31, 2005 and 2004
(In thousands of Brazilian reais - R$)

SOURCES OF FUNDS
From operations:
Net income
Items not affecting working capital:

Depreciation and amortization (Notes 12 and 13)
Monetary and exchange variations on long-term items, net
Reserve for contingencies (Note 16)
Sundry accruals
Deferred income and social contribution taxes (Note 9.a)
Equity in subsidiaries (Note 11)
Proceeds from sale and disposal of permanent assets
Minority interest

From shareholders:
Capitalization of debentures (Note 19.b)
Capital increase through subscription of shares (Note 19.b)
Sale of treasury shares by exercise of stock options (Note 19.f)
Payment of receivables from shareholders (Note 19.c)

From third parties:
Transfer from long-term to current assets
Increase in long-term liabilities
Tax incentives
Minority interest
Total sources

USES OF FUNDS

Additions to property, plant and equipment (Note 12)
Increase in investments (Note 11)
Increase in long-term assets
Decrease in long-term liabilities
Transfer from long-term to current liabilities
Dividends proposed and paid (Note 19.e)
Interest on capital proposed and paid (Note 19.e)

Total uses

Merger of Natura Empreendimentos S.A.
and Natura Participações S.A. net assets (Notes 1 and 19.a)

Company

Consolidaded

2005

2004

2005

2004

397,357

300,411

396,881

300,294

4,989
4,980
10,598
1,626
(5,056)
6,741
559
-
421,794

-
-
4,887
2,288

-
25,007
717
-
454,693

9,991
149,425
1,639
-
-
285,237
34,205
480,497

3,809
(5,601)
16,625
1,168
(4,233)
(2,788)
1,333
-
310,724

107,913
34,391
630
-

-
-
-
-
453,658

7,629
34,975
9,070
18,656
11,809
186,910
29,442
298,491

44,035
9,234
21,638
4,255
(8,023)
-
3,056
1
471,077

-
-
4,887
2,288

-
121,712
717
-
600,681

111,636
-
9,987
-
78,783
285,237
34,205
519,848

34,340
175
31,570
1,420
(9,196)
-
1,828
(1)
360,430

107,913
34,391
630
-

20,122
-
-
37
523,523

76,886
6,179
15,289
-
24,740
186,910
29,442
339,446

23,393

3,383

(DECREASE) INCREASE IN WORKING CAPITAL

(25,804)

131,774

80,833

180,694

REPRESENTED BY

Increase in current assets
Increase in current liabilities

168,867
194,671

170,771
38,997

268,425
187,592

218,908
38.214

(DECREASE) INCREASE IN WORKING CAPITAL

(25,804)

131,774

80,833

180,694

Notes to the Financial Statements
For the Years Ended December 31, 2005 and 2004
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)

1. OPERATIONS
Natura Cosméticos S.A. (the “Company”) and its subsidiaries are
engaged in the development, production, distribution and sale,
substantially through direct sales by Natura beauty consultants, of
cosmetics, fragrances, hygiene and health products.The Company also
holds equity interests in other companies in Brazil and abroad.
The Extraordinary Shareholders’ Meeting held on March 5, 2004
approved the merger of the net assets of Natura Empreendimentos
S.A. and Natura Participações S.A. into the Company.The merger was
recorded based on an accounting valuation supported by a valuation
report issued by independent experts.These mergers did not modify
the activities described in the paragraph above.
The net assets of Natura Empreendimentos S.A. and Natura
Participações S.A. as of January 31, 2004, the accounting date of the
mergers, were R$104,951 and R$75,716, respectively.
After eliminations of intercompany receivables and payables and the
investment balances, as required by Brazilian accounting practices,
the Company recorded net liabilities of Natura Empreendimentos
S.A. and Natura Participações S.A. amounting to R$23,367 and
R$29,235, respectively.

2. PRESENTATION OF FINANCIAL STATEMENTS
The accompanying financial statements have been prepared in accordance
with Brazilian accounting practices and standards established by the
Brazilian GAAP and Brazilian Securities Commission (CVM).
Until December 31, 1995, the Brazilian GAAP established a simplified
methodology for the recording of inflation effects determined to
that date. This methodology, named monetary restatement of the
balance sheet, consisted of the restatement of permanent assets
(investments, property, plant and equipment, and deferred charges)
and shareholders’ equity accounts at the indexes disclosed by the
Federal Government. The net effect of the monetary restatement
was accounted for in the statements of income in a specific account
under the heading “Monetary restatement of the balance sheet”.This
monetary restatement was prohibited by Law No. 9,249, of
December 26, 1995, effective January 1, 1996.
The terminology and grouping of certain accounts in the balance
sheet and in the statements of income, changes in financial position
and cash flows have been changed from the prior year for better
classification and presentation. Such changes included fiscal year
2004, in order to allow comparability between years. Please note
that such changes did not result in any change in the individual
account balances and total balances.

3. SIGNIFICANT ACCOUNTING PRACTICES

a) Results of operations
Determined on the accrual basis of accounting.

b) Cash investments
Consists of highly liquid temporary investments stated at cost plus
income earned through the balance sheet dates.

c) Allowance for doubtful accounts
Recognized based on an analysis of risks on realization of receivables, in
an amount considered sufficient to cover possible losses.

d) Inventories
Stated at the average cost of acquisition or production, adjusted to
market value and for possible losses, when applicable.

e) Investments
Investments in subsidiaries are accounted for under the equity method,
plus goodwill on acquisition of investments, as shown in Note 11.

f) Property, plant and equipment
Recorded at acquisition cost, monetarily restated through December
31, 1995, plus interest capitalized during the construction period,
if
applicable. Depreciation is calculated under the straight-line method,
based on the estimated economic useful lives of the assets, at the rates
shown in Note 12.

g) Deferred charges
Represented by goodwill arising from the merger of shares of Natura
Empreendimentos S.A., into Natura Participações S.A., less the provision
for maintenance of dividend payment capacity, as described in Note 13.

h) Current and long-term liabilities

Stated at known or estimated amounts, plus, if applicable, interest
and monetary and exchange variations incurred through the balance
sheet dates.

i) Income and social contribution taxes

The provision for income tax was recorded at the rate of 15%, plus
a 10% surtax on annual taxable income exceeding R$240. Social
contribution tax was calculated at the rate of 9% of taxable income.
Deferred income and social contribution taxes recorded in current
and long-term assets result from expenses recorded in income,
although temporarily nondeductible for tax purposes. Additionally,
deferred income and social contribution taxes were recorded on tax
loss carryforwards.

Pursuant to CVM Resolution No. 273/98 and CVM Instruction No.
371/02, deferred taxes are recorded at their probable realizable values,
as detailed in Note 9.

j) Loans and financing
Adjusted based on exchange and monetary variations and interest
incurred through the balance sheet dates, as provided for by contract
and mentioned in Note 14.

k) Reserve for contingencies
Adjusted through the balance sheet dates based on the probable loss
amount, according to the nature of each contingency and supported by
the opinion of the Company’s attorneys. The fundamentals and the
nature of reserves are described in Note 16.

l) Swap and forward contracts

The nominal values of swap and forward contracts are not recorded in
the balance sheet. Unrealized gains or losses on these transactions are
recorded on the accrual basis of accounting, as mentioned in Notes
22.b and 22.d.

124 Annual Report Natura 2005

2005 Annual Report Natura 125

m) Financial income and expenses

Represented by interest and monetary and exchange variations on
cash investments, escrow deposits and loans and financing.

n) Interest on capital
For corporate purposes, interest on capital is accounted for as allocation
of income in shareholders’ equity. For tax purposes, interest on capital is
treated as financial expense, reducing the income and social contribution
tax basis.

o) Earnings per share
Calculated based on the number of shares at the balance sheet dates,
excluding treasury shares.

p) Supplementary information
In order to permit additional analysis, the Company presents as
supplementary information the individual and consolidated statements
of cash flows (Attachment I) and value added (Attachment II).

q) Use of estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities as of the date
of the financial statements, and the reported amounts of revenues and
expenses for the reporting periods. Since management’s judgment
involves estimates of the probability of future events, actual results may
differ from the estimates.

4. CONSOLIDATION CRITERIA
The consolidated financial statements have been prepared in accordance
with the consolidation principles established by Brazilian accounting
practices and regulatory instructions and resolutions established by the
CVM, and include the financial statements of the Company and its
direct and indirect subsidiaries, as follows:

Ownership Interest - %

2005

2004

Direct:
Indústria e Comércio de Cosméticos

Natura Ltda.

Natura Cosméticos S.A. - Chile
Natura Cosméticos S.A. - Peru
Natura Cosméticos S.A. - Argentina
Natura Brasil Cosmética Ltda. - Portugal
Commodities Trading S.A. - Uruguay
Nova Flora Participações Ltda.
Natura Inovação e Tecnologia de Produtos Ltda.
Natura Europa SAS
Natura Cosméticos S.A. - Mexico
Natura Cosméticos C.A. - Venezuela

99.82
99.96
99.93
95.00
99.99
-
100.00
99.99
100.00
99.99
99.00

99.76
99.96
99.85
99.99
99.99
100.00
100.00
100.00
100.00
-
-

Indirect:
Natura Logística e Serviços Ltda.
Flora Medicinal J. Monteiro da Silva Ltda.
Ybios S.A. (proportional consolidation -

joint control)

99.99
100.00

33.33

31.93

The consolidated financial statements have been prepared based on the
financial statements as of the same date and consistent with the
accounting practices described in Note 3. Investments in subsidiaries were
proportionally eliminated against shareholders’ equity and net income of
the respective subsidiaries. Intercompany balances and transactions and
unrealized profits were also eliminated. The minority interest in the
Company’s subsidiaries was shown separately.The financial statements of

foreign subsidiaries were translated into Brazilian reais at the exchange
rates in effect on the date of the related financial statements.
In 2005, the Company acquired equity interest, per nominal value, in
Natura Cosméticos S.A. - Mexico, resumed operations of Natura
Cosméticos C.A. - Venezuela, and discontinued operations of
Commodities Trading S.A. - Uruguay.
The shareholders’ equity balances as of December 31, 2005 and 2004,
reported by the Company, differ by R$1,871 and R$1,395, respectively,
from those recorded in the consolidated financial statements due to
the elimination of unrealized profits of subsidiaries. For the same reason,
net income balances reported by the Company as of December 31,
2005 and 2004 differ by R$476 and R$117, respectively, from the
balances in the consolidated financial statements.

Net income

Shareholders’
equity

2005
397,357

2004
300,411

2005
523,260

2004
437,452

(476)

(117)

(1.871)

(1.395)

Company
Elimination of unrealized
profits of the subsidiary
Indústria e Comércio de
Cosméticos Natura Ltda.
with other subsidiaries

Consolidaded

396,881

300,294

521,389

436,057

The operations of the direct and indirect subsidiaries are as follows:

• Indústria e Comércio de Cosméticos Natura Ltda.: engaged principally in
the production and sale of Natura products to Natura Cosméticos S.A.
- Brazil, Natura Cosméticos S.A. - Chile, Natura Cosméticos S.A. - Peru,
Natura Cosméticos S.A. - Argentina, Natura Cosméticos S.A. - Mexico
and Natura Europa SAS, whose amounts are mentioned in Note 10.

• Natura Cosméticos S.A. - Chile, Natura Cosméticos S.A. - Peru,
Natura Cosméticos S.A. - Argentina, Natura Cosméticos C.A. -
Venezuela (currently in the preoperating stage), Natura Brasil
Cosmética Ltda. - Portugal (this company has no activities currently)
and Commodities Trading S.A. - Uruguay (this subsidiary ceased
operations in May 2005): their activities are an extension of the activities
conducted by the parent company Natura Cosméticos S.A. - Brazil.

• Nova Flora Participações Ltda.: holds equity interest in the subsidiary
Flora Medicinal J. Monteiro da Silva Ltda.

• Natura Inovação e Tecnologia de Produtos Ltda.: its activities consist
of product and technology development and market research.

• Natura Europa SAS: engaged in the purchase, sale, import, export and
distribution of cosmetics, fragrances in general, hygiene and health products.

• Natura Cosméticos S.A. - Mexico: engaged in the purchase, sale,
import, export, distribution and storage of cosmetics, fragrances in
general, hygiene and health products.

• Natura Logística e Serviços Ltda.: engaged in the provision of
administrative and logistics services.

• Flora Medicinal J. Monteiro da Silva Ltda.: engaged in the sale of
phytotherapic and phytocosmetic products of its own brand. This
company has no activities currently.

• Ybios S.A.: engaged in research, management and development of
projects, products and services in the biotechnology area, and may also
enter into agreements and/or partnerships with universities,
foundations, companies, cooperatives, associations, and other public and
private entities; provision of services in the biotechnology area; and
holding of equity interest in other companies.

5. CASH INVESTMENTS

Company

Consolidated

ICMS credits on the acquisition of fixed assets are offset at the rate of
1/48, pursuant to prevailing legislation.

2005

2004

2005

2004

9. INCOME AND SOCIAL CONTRIBUTION TAXES

Bank certificates

of deposit (CDBs)
Investment funds

Long term (Note 16.i)

Current

228,106
8,978
237,084

-
237,084

128,841
29,790
158,631

-
158,631

325,231
8,978
334,209

3,968
330,241

165,583
36,437
202,020

-
202,020

As of December 31, 2005, CDBs yield interest rates ranging from 100%
to 102.5% (100% to 101.8% as of December 31, 2004) of the
interbank deposit rate (CDI), and the share in the total investment
portfolio is 97.31% (81.96% as of December 31, 2004). Investments
funds yield interest rates ranging from 101.64% to 101.92% of the CDI
(99.5% to 105.5% as of December 31, 2004).

6.TRADE ACCOUNTS RECEIVABLE

Trade accounts
receivable
Allowance for

doubtful accounts

7. INVENTORIES

Finished products
Raw materials

and packaging

Promotional material
Work in process
Allowance for losses

Company

Consolidated

2005

2004

2005

2004

322,228

250,246

337,104

265,048

(19,540)
302,688

(13,793)
236,453

(20,840)
316,264

(14,982)
250,066

Company

Consolidated

2005
811

3
21
-
-
835

2004
1,604

2
28
-
-
1,634

2005
88,468

2004
57,105

66,165
7,976
6,037
(16,339)
152,307

62,327
9,308
7,617
(14,396)
121,961

8. RECOVERABLE TAXES

ICMS (state VAT)
on purchases
of fixed assets
ICMS (state VAT)

Company

Consolidated

2005

2004

2005

2004

1,918

1,182

11,581

5,194

on purchases of goods

6,946

935

IRPJ

(corporate income tax)

CSLL

(social contribution tax)
COFINS (tax on revenue)
PIS/COFINS/CSLL -
withheld at source
PIS (tax on revenue)
IRRF

(withholding income tax)

Other

Long term
Current

-
-

-
-
1,940

1,432
508

2,701

3,580

8,984

-
-

-
-
3,885

876
3,009

3,091
2,025

860
671

776
4,011
33,541

9,574
23,967

1,420
98

1,896
-

-
3,479
22,006

3,848
18,158

a) Deferred
Deferred income (IRPJ) and social contribution (CSLL) taxes recorded in
the financial statements result from temporary differences (Company
and subsidiaries) and tax loss carryforwards (subsidiaries).These credits
are recorded in current and long-term assets, in view of their expected
realization based on projections of taxable income, considering the limit
of 30% for annual offset of tax loss carryforwards against taxable income,
pursuant to applicable legislation.The amounts are as follows:

Company

Consolidated

2005

2004

2005

2004

Current:

Tax loss carryforwards

1.089

691

Temporary differences:

Allowance for

doubtful accounts
(Note 6)

Allowance for

inventory losses
(Note 7)

Allowance for losses

on swap
and forward
transactions
(Notes 22.b and 22.d)

Other provisions

Deferred income

and social
contribution taxes

Long term:

6,952

4,829

6,952

4,829

5,555

4,895

919

8,533

1,545

5,824

919

11,242

2,087

9,128

16,404

12,198

25,757

21,630

Tax loss carryforwards

375

2,032

Temporary differences:

Reserve for

contingencies
(Note 16)

16,847

12,058

27,809

18,399

Other provisions

833

566

1,140

870

Deferred income

and social
contribution taxes

17,680

12,624

29,324

21,301

As required by CVM Resolution No. 273/98 and CVM Instruction No.
371/02, management, based on projections of results, estimates that the
recorded tax credits will be fully realized within five years.The amounts
recorded in long-term assets will be realized as follows:

2006
2007
2008
2009
2010

Consolidated

2005

19,850
2,146
5,571
1,757
29,324

2004
1,644
3,207
9,796
6,654
-
21,301

126 Annual Report Natura 2005

2005 Annual Report Natura 127

b) Current expense
Reconciliation of income and social contribution taxes:

Income before taxes on income
Income and social contribution taxes at the rate of 34%
Reversal of provision for maintenance of dividend payment capacity (Note 13)
Interest on capital (Note 19.d)
Tax incentives (donations)
Equity in subsidiaries and exchange variation

on translation of foreign investments (Note 11)

Permanent differences
Losses generated by subsidiaries (Note 11)
Other
Income and social contribution taxes: net expenses
Income and social contribution taxes: current
Income and social contribution taxes: deferred
Income and social contribution taxes: net expenses

Effective rate - %

10. RELATED PARTIES
Receivables from and payables to related parties are as follows:

Current assets:

Related parties:

Natura Logística e Serviços Ltda. (a)
Natura Inovação e Tecnologia de Produtos Ltda.(b)
Nova Flora Participações Ltda.(c)

Advance for future capital increase- - Nova Flora Participações Ltda.(d)

Receivables from shareholders(e)

Current liabilities:

Suppliers:

Indústria e Comércio de Cosméticos Natura Ltda.(f)
Natura Logística e Serviços Ltda.(g)
Natura Inovação e Tecnologia de Produtos Ltda.(h)

Related parties- Natura Inovação e Tecnologia de Produtos Ltda.

Dividends payable - Shareholders

Interest on capital payable - Shareholders

Transactions with related parties are summarized as follows:

Natura Cosméticos S.A.
Indústria e Comércio de Cosméticos Natura Ltda.
Natura Cosméticos S.A. - Argentina
Natura Cosméticos S.A. - Peru
Natura Cosméticos S.A. - Chile
Natura Cosméticos S.A. - Mexico
Natura Europa SAS
Natura Inovação e Tecnologia de Produtos Ltda.
Flora Medicinal J. Monteiro da Silva Ltda.

Company

Consolidated

2005
513,462
(174,576)
49,933
11,630
2,147

(3,530)
(1,700)
-
(9)
(116,105)
(125,367)
9,262
(116,105)

22.6

2004
377,380
(128,309)
41,611
10,011
1,649

948
(2,831)
-
(48)
(76,969)
(81,497)
4,528
(76,969)

20.4

2005
531,629
(180,753)
49,933
11,630
2,268

-
(1,932)
(15,952)
59
(134,747)
(146,897)
12,150
(134,747)

25.3

2004
387,395
(131,714)
41,611
10,011
2,089

-
(3,203)
(6,317)
421
(87,102)
(96,736)
9,634
(87,102)

22.5

Administrative structure: (i)

Natura Logística e Serviços Ltda.
Natura Cosméticos S.A.
Indústria e Comércio de Cosméticos Natura Ltda.
Natura Inovação e Tecnologia de Produtos Ltda.

Product and technology research and development:(j)
Natura Inovação e Tecnologia de Produtos Ltda.

Natura Cosméticos S.A.
Ybios S.A.

Lease of properties and common charges:(k)

Indústria e Comércio de Cosméticos Natura Ltda.
Natura Logística e Serviços Ltda.
Natura Inovação e Tecnologia de Produtos Ltda.
Natura Cosméticos S.A.
Natura Empreendimentos S.A.
Natura Participações S.A

Service sales

Service purchases

2005

2004

2005

2004

172,383
-
-
-
172,383

113,596
-
-
113,596

8,575
-
-
-
-
-
8,575

118,749
-
-
-
118,749

71,914
-
-
71,914

8,627
-
-
136
-
-
8,763

-
124,082
34,264
14,037
172,383

-
113,596
-
113,596

-
5,695
1,831
1,049
-
-
8,575

-
84,297
24,355
10,097
118,749

-
71,865
49
71,914

116
5,804
1,753
1,049
27
14
8,763

Company

Consolidated

Total service sales and purchases

294,554

199,426

294,554

199,426

130

172

(f) Payables for the purchase of products. Prices and terms are within normal market conditions.

2005

2004

2005

2004

2,806
1,211
833
4,850

1,007

130

106,470
9,259
8,512
124,241

195,070

17,699

-
-
833
833

770

172

85,874
8,028
8,249
102,151

113,644

13,623

-
-
-
-

195,070

17,699

113,644

13,623

Product sales

Product purchases

2005

-
1,144,178
-
-
-
-

-
-

2004

1,111,577
949,674
-
-
-
-

-
-

2005

924,649
-
13,403
9,623
6,112
1,865
923
675
-

2004

-
13,353
6,800
4,374
-
317
164
17

1,144,178

949,674

1,144,178

949,674

(a) Refers to advances granted for provision of logistics and general administrative services.

(b) Refers to advances granted for provision of product and technology development and market research services.

(c) Amount receivable due to the capital reduction made on January 30, 2004, approved by the shareholders’ meeting held on the same date.

(d) Cash contributions to Nova Flora Participações Ltda. mainly for maintenance of working capital.

(e) On September 29, 2000, April 30, 2002, December 30, 2002 and January 5, 2004, under a stock purchase and sale agreement, a financing in the total amount of R$6,174 was made to two
directors of the Company, with interest rate of 3% per year and maturities between April 30, 2009 and September 30, 2010.This financing was granted to the directors in order for them to
acquire common shares in Natura Empreendimentos S.A. and Natura Participações S.A. In the corporate restructuring completed in March 2004, these shares were exchanged for common
shares issued by Natura Cosméticos S.A.The financing, in the amount of R$2,493 as of December 31, 2005 (R$4,823 as of December 31, 2004), is amortized with dividends and interest on
capital paid by the Company to those directors.

(g) Payables for services described in item (i).

(h) Payables for services described in item (j).

(i) Logistics and general administrative services.

(j) Product and technology development and market research services.

(k) Rental of part of the industrial complex located in Cajamar and buildings located in the municipality of Itapecerica da Serra.

The main intercompany balances as of December 31, 2005 and 2004, as well as the intercompany transactions that affected the results for the years,
refer to transactions between the Company and its subsidiaries, which were substantially carried out under usual market conditions for each type of
transaction.

11. INVESTMENTS

Investments in subsidiaries
Goodwill on acquisition of investment - Nova Flora
Amortization of goodwill - Nova Flora
Goodwill on acquisition of investment - Natura Europa
Other

Company

Consolidated

2005
516,921
-
-
-
8
516,929

2004
373,748
-
-
-
-
373,748

2005
-
8,015
(8,015)
5,753
8
5,761

2004
-
8,015
(5,487)
6,179
-
8,707

The goodwill on the acquisition made by the subsidiary Nova Flora Participações Ltda. was fully amortized in 2005, due to the low expectation of
profitability from 2006 onwards. Liabilities related to this subsidiary are properly reflected in the consolidated financial statements.
The goodwill generated on the purchase of a commercial location where Natura Europa SAS operates is supported by an appraisal report issued
by independent appraisers, attributable to the fact that it is an intangible, marketable asset, which does not suffer any decrease in value over time.
The balance variation between December 31, 2004 and 2005 is basically due to the effects of the exchange variation for the period.

128 Annual Report Natura 2005

2005 Annual Report Natura 129

Indústria e
Comércio de
Cosméticos
Natura Ltda.
432,500
431,705
99.82
432,500
474,699
473,827
21,978

Natura
Cosméticos
S.A. - Chile
44,422
4,404
99.96
44,422
1,454
1,453
(2,819)

Natura
Cosméticos
S.A. - Peru
2,286
2,284
99.93
2,286
948
947
(1,991)

Natura
Cosméticos
S.A. -
Argentina
64,486
61,262
95.00
64,486
89
84
(8,224)

Natura
Cosméticos C.A.
- Venezuela

609
603
99.00
609
248
245
(361)

Natura
Inovação e
Tecnologia
de Produtos
Ltda.
5,008
5,007
99.99
5,008
22,132
22,130
13,917

Natura
Europa
SAS
30,818
30,818
100.00
30,818
13,400
13,400
(14,620)

Natura
Cosméticos
S.A. -
Mexico
14,576
14,575
99.99
14,576
4,807
4,807
(9,754)

Natura
Brasil
Cosmética
Ltda. -
Portugal
111
111
99.99
111
28
28
-

Nova Flora
Participações
Ltda.
2,413
2,413
100.00
2,413
(4,202)
(4,202)
(5,230)

348,385
21,933

346
(2,819)

2,936
(1,991)

2,965
(7,810)

-
(337)

1,028
(5,230)

8,214
13,916

9,854
(14,620)

-
(9,754)

-
-
103,509
473,827

(352)
-
4,278
1,453

(273)
-
275
947

(610)
-
5,538
83

1
-
581
245

-
4,202
-
-

-
-
-
22,130

(2,653)
-
20,819
13,400

238
-
14,324
4,808

-
-
-
473,827

-
-
-
1,453

-
-
-
947

-
-
-
83

-
-
-
245

-
(4,202)
(4,202)
(4,202)

-
-
-
22,130

-
-
-
13,400

-
-
-
4,808

-
(9)

9
(64)
92
28

(64)
64
-
28

Commodities
Trading S.A.
- Uruguai
-
-
-
-
-
-
(20)

Total

-
-
-
597,229
513,603
512,719
(7,124)

20
(20)

373,748
(6,741)

-
-
-
-

(3,640)
4,138
149,416
516,921

(64)
(4,138)
(4,202)
512,719

Shares of subsidiaries
Number of shares (common shares) held
Ownership interest - %
Capital
Shareholders’ equity of subsidiaries
Share in shareholders’ equity
Net income (loss) of subsidiaries

Book value of Company’s investment:
Balances as of December 31, 2004
Equity in subsidiaries
Exchange variation on translation of
foreign investments
Recognition (reversal) of provision for losses
Capital increase
Balances as of December 31, 2005

Provision for losses:
Balances as of December 31, 2004
(Recognition) reversal of provision for losses
Balances as of December 31, 2005
Net balances as of December 31, 2005

12. PROPERTY, PLANT AND EQUIPMENT

Vehicles
Software
IT equipment
Furniture and fixtures
Machinery and equipment
Leasehold improvements
Construction in progress
Other

Buildings
Machinery and equipment
Installations
Vehicles
Software
Land
Molds
IT equipment
Furniture and fixtures
Leasehold improvements
Advances to suppliers
Construction in progress
Other

Annual depreciation
rate - %
20
20
20
10
10
12
-
10

Cost
16,412
5,179
3,832
2,403
1,064
900
8
1
29,799

Annual depreciation
rate - %
4
10
10
20
20
-
33
20
10
12
-
-
10

Cost
144,140
131,819
67,884
24,694
24,885
15,910
36,521
28,772
13,789
1,028
16,813
8,569
6,420
521,244

Company

Net book
value
10,390
3,259
1,479
950
873
715
8
-
17,674

Cost
13,071
3,079
6,868
3,929
960
756
-
6
28,669

Company

Net book
value
119,522
90,008
40,844
16,369
16,314
15,910
14,093
13,722
8,780
824
16,813
8,569
3,516
365,284

Cost
126,990
76,549
64,486
19,953
12,477
15,910
26,879
31,910
12,809
774
19,742
21,478
9,856
439,813

2005
Accumulated
depreciation
6,022
1,920
2,353
1,453
191
185
-
1
12,125

2005
Accumulated
depreciation
24,618
41,811
27,040
8,325
8,571
-
22,428
15,050
5,009
204
-
-
2,904
155,960

2004
Accumulated
depreciation
4,788
1,226
5,624
3,031
610
157
-
2
15,438

2004
Accumulated
depreciation
19,166
32,305
24,757
7,816
5,379
-
20,703
19,094
6,825
175
-
-
4,771
140,991

Net book
value
8,283
1,853
1,244
898
350
599
-
4
13,231

Net book
value
107,824
44,244
39,729
12,137
7,098
15,910
6,176
12,816
5,984
599
19,742
21,478
5,085
298,822

13. DEFERRED CHARGES
As mentioned in Note 1, on March 5, 2004, Natura Participações S.A. was merged into the Company. Natura Participações S.A. had recorded
goodwill on the investment in Natura Empreendimentos S.A., amounting to R$1,028,041, and a corresponding provision for maintenance of future
dividend payment capacity in the same amount.This goodwill arose from the merger of the shares of Natura Empreendimentos S.A. into Natura
Participações S.A. on December 27, 2000. This merger was approved by the Extraordinary Shareholders’ Meeting held on that date, and the
amounts are supported by a valuation report issued by independent experts.The amounts are as follows:

Goodwill on investments
Provision for maintenance of future dividend payment capacity

2005

758,792
(758,792)
-

Company

2004

905,655
(905,655)
-

The provision for maintenance of future dividend payment capacity, as it is in the full amount, will result in the recognition of the goodwill
amortization tax benefits for all of the Company’s shareholders.The goodwill amount is being amortized over a seven-year period.

14. LOANS AND FINANCING

Company

Consolidated

Type

2005

2004

2005

2004 Maturity

Charges

Guarantees

BNDES - PROGEREN (Support
Program for Enhancing
Employment and Income Capacity)

BNDES (Brazilian Bank for Economic
and Social Development)

FINEP (Financing Agency
for Studies and Projects)

Export credit note (NCE)

BNDES - FINAME (Government
Agency for Machinery
and Equipment Financing)

Loans - Argentina

Loans (onlending - International

Finance Corporation - IFC)

Resolution No. 2,770
and overdraft account

BNDES - POC (***)

Loans - Chile

Loans - France

Total
Current
Long term

69,890

June 2007

Interest of 3.5% p.y. +
TJLP (long-term
interest rate)

Bank guarantee and guarantee
of Indústria e Comércio
de Cosméticos Natura Ltda.

19,342

31,131

34,994

31,131

August 2007
to April 2010

297

32,050

36,545

December 2008

31,641

April 2008

Interest of 4.0% p.y.
and 4.5% p.y.
+ UMBNDES (*)

Interest of 3.0% p.y.
+ TJLP

Interest of 104.7% of
CDI (interbank
deposit rate)

12,115

3,768

January 2006 to
April 2010

Interest of 4.5% p.y.
+ TJLP

6,775

6,706

January 2006

26,654

December 2011
(paid in
June 2005)

27,828

May 2005

297

February 2005

372

July 2005

1,088

May 2006

Interest of 9.5% p.y.
+ exchange variation
(Argentinean pesos)

Interest of 6.1% p.y. +
semiannual LIBOR +
exchange variation
(U.S. dollar)

Interest of 105%
of CDI

Interest of 4.5% p.y.
+ TJLP

Interest of 5.0% p.y.
+ exchange variation
(Chilean pesos)

Interest of + 3.7% p.y.
+ exchange variation
(euro)

Mortgage (**) and guarantee of
Natura Cosméticos S.A.

Guarantee, promissory notes
and receivables of Natura
Cosméticos S.A.

Promissory notes and guarantee
of Natura Cosméticos S.A.

Chattel mortgage and guarantee
of Natura Cosméticos S.A. and
promissory notes

Guarantee of Natura
Cosméticos S.A.

Promissory notes and guarantee
of Natura Cosméticos S.A.

Guarantee, promissory notes
and receivables of
Natura Cosméticos S.A.

Guarantee of Natura
Cosméticos S.A..

Guarantee of Natura
Cosméticos S.A.

89,232

31,428

187,465

134,389

44,942
44,290

11,879
19,549

68,309
119,156

62,407
71,982

(*) UMBNDES - BNDES monetary unit.
(**) Financing in local currency from the BNDES is guaranteed mainly by the Cajamar unit.
(***) POC - Proposal of Credit Operation.

130 Annual Report Natura 2005

2005 Annual Report Natura 131

Maturities of long-term debt are as follows:

The balances of contingencies are as follows:

2006
2007
2008
2009
2010
2011

Consolidated

2005
-
61,895
49,107
6,276
1,878
-
119,156

2004
25,359
21,714
13,470
3,847
3,790
3,802
71,982

15.TAXES PAYABLE

Company

Consolidated

ICMS (state VAT)
IRPJ (corporate
income tax)

CSLL (social

2005
58,163

10,438

contribution tax)

4,118

IRRF (withholding
income tax)

COFINS (tax on revenue)
PIS/COFINS/CSLL

(Law no. 10,833/03)
PIS (tax on revenue)
IPI (federal VAT)
Other

1,570
74

1,093
17
-
63
75,536

2004
48,640

2,873
382

770
84
-
27
52,776

2005
58,184

12,234

4,718

3,048
2,166

1,606
826
-
6,303
89,085

2004
48,650

159

4,084
4,424

1,095
960
431
2,579
62,382

16. RESERVE FOR CONTINGENCIES
The Company and its subsidiaries are parties to certain tax, labor and
civil lawsuits and to tax proceedings at the administrative level. Based
on the opinion and judgments of its internal and external attorneys,
management believes that the reserve for contingencies is sufficient to
cover probable losses.

Tax
Labor
Civil

Company

Consolidated

2005
45,837
3,929
4,077
53,843

2004
36,970
2,198
601
39,769

2005
76,789
5,118
8,692
90,599

2004
53,190
3,244
3,125
59,559

Tax contingencies
Accrued tax contingencies are comprised of the following proceedings:

Company

Consolidated

2005
-

2004
-

2005
15,814

2004
13,604

12,740

11,039

14,267

12,370

5,901

8,057

5,901

8,057

4,926

5,859

5,717

4,851

4,694

4,976

4,814

4,944

4,371

4,944

4,371

IPI - zero rate(a)
PIS (tax on revenue) -

semiannual -
Decree-laws
no. 2,445/88
and no. 2,449/88(b)
Deductibility of CSLL

(social contribution tax)
(Law no. 9316/96)(c)
Late payment fines on
federal taxes paid
in arrears(d)

IPI tax assessment -
attorneys’ fees(e)

Monetary restatement

of federal taxes
(IRPJ/CSLL/ILL)
according to the UFIR
(fiscal reference unit)(f)

Tax assessment - INSS

(social security
contribution)(g)

IPI credit on purchases

of fixed assets
and consumption
material(h)

IPI (federal VAT) - tax
collection lawsuit(i)
Assessment notice -
1990 corporate
income tax(j)

3,773

3,353

4,325

3,773

2,448
8,765
76,789

3,353

-
6,621
53,190

2,448
Attorneys’ fees and other 6,254
45,837

-
5,456
36,970

(a) Refers to IPI tax credits on raw materials and packing materials purchased at a zero tax rate and with tax exemption.The Company filed for a mandate and was granted an injunction

for the right to the credit.

(b) Refers to the offset of PIS paid as per Decree-laws No. 2,445/88 and No. 2,449/88, in the period from 1988 to 1995, against federal taxes due in 2003 and 2004.The appeal filed by
the Company was judged favorably to it on September 12, 2005 by the 1st Panel of the 2nd Board of Tax Appeals that, by a majority of the votes, denied the alleged lapsing of the
offset right and unanimously recognized the unconstitutionality of the Decree-laws determining that the calculation basis should be the billing of the sixth month prior to the
occurrence of the taxable event, without monetary restatement.The Company is waiting publication and notification of the Decision.

(c) Refers to CSLL (social contribution tax) that was addressed by a mandate that questions the constitutionality of Law No. 9,316/96, which prohibited the deduction of CSLL from its

own tax basis and the IRPJ (corporate income tax) basis. A portion of this contingency, in the amount of R$3,787 (R$3,245 as of December 31, 2004), is deposited in escrow.

(d) Refers to the levy of a late payment fine on the payment of federal taxes in arrears, whose expectation of loss, according to the opinion of the attorneys, was changed to probable,

due to a recent decision by the Superior Court of Justice.

(e) Refers to attorneys’ fees for the defense in the tax assessment notice issued in November 2005 by the Federal Revenue Service, relating to the tax basis of the IPI (federal VAT) on

intercompany transactions.The attorneys are of the opinion that the likelihood of loss is remote.

(f) Refers to the monetary restatement of federal taxes (IRPJ/CSLL/ILL) related to 1991 based on the UFIR (fiscal reference unit), discussed in a mandate. An escrow deposit has been

made for the amount involved in this contingency.

(g) Refers to INSS (social security contribution) required by tax assessments issued by the National Institute of Social Security as a result of an inspection.The Company, as a taxpayer having joint
liability for tax payment, is required to pay INSS on services provided by third parties.The amounts are discussed in court through a tax debt annulment action and are deposited in escrow.
is discussing through injunctions the right to the IPI (federal VAT) credit on purchases of fixed assets and

(h) The subsidiary Indústria e Comércio de Cosméticos Natura Ltda.

consumption materials. In view of Federal Regional Courts’ former decisions, the attorneys believe that the risk of loss changed to probable.

(i) Refers to a tax collection lawsuit seeking to collect the IPI (federal VAT) related to July 1989, when wholesale establishments began to be considered equivalent to industrial
establishments under Law No. 7,798/89.The lawsuit is in the Federal Regional Court of 3rd Region (SP) for judgment of the appeal filed by the debtor.The amounts involved in this
tax collection lawsuit are guaranteed by an affiliate’s cash investment in the amount of R$3,968 (R$3,337 as of December 31, 2004).

(j) Refers to a tax assessment notice issued by the Federal Revenue Service requiring the payment of income tax on profit from incentive-based exports made in base year 1989, at the
rate of 18% (Law No. 7,988, of December 29, 1989) and not 3%, as established by article 1 of Decree-law No. 2,413/88, which supported the Company in its tax payments at that time.

Labor contingencies
As of December 31, 2005, the Company and its subsidiaries are parties to 267 labor lawsuits filed by former employees and third parties (163 as of
December 31, 2004), claiming the payment of severance amounts, salary premiums, overtime and other amounts due, as a result of joint liability.

Civil contingencies
Accrued civil contingencies are comprised of the following lawsuits:

Several civil lawsuits(a)
Civil lawsuits and
attorney’s fees
- Flora Medicinal(b)

Company

Consolidated

2005
1,811

2,266
4,077

2004
601

-
601

2005
2,043

6,649
8,692

2004
2,096

1,029
3,125

(a) As of December 31, 2005, the Company and its subsidiaries are parties to 760
lawsuits (571 as of December 31, 2004), at the civil court, special civil court and
PROCON (Consumer Protection Agency), filed by beauty consultants, consumers,
suppliers and former employees, mostly related to indemnity claims.

(b) The Company is a party to civil lawsuits filed by a former shareholder of the indirect
subsidiary Flora Medicinal, which seek the determination of any amounts and the
satisfaction of alleged liabilities due to the former shareholder’s withdrawal. With the
end of the expert investigation phase in four of the five civil lawsuits, it was possible
to determine the amounts involved, although no decision, even by the lower court,
has been issued.

Escrow deposits
Escrow deposits, which represent the Company’s restricted assets, refer
to amounts deposited in court until litigation is resolved.The balance of
these deposits as of December 31, 2005 was R$29,477 (R$24,256 as
of December 31, 2004) - consolidated, and is classified under the
heading “Escrow deposits”, in long-term assets.

Possible losses
The Company and its subsidiaries are parties to tax, civil and labor
for which the risk of loss is considered possible by
lawsuits,
management and its attorneys.These lawsuits, for which the Company
did not record any reserve, are as follows:

Tax:

INSS debt

annulment action(a)

Offset of 1/3

of COFINS -
Law no. 9,718/98(b)

Tax assessment -

transfer pricing on
loan agreements with
foreign related
company(c)

Company

Consolidated

2005

2004

2005

2004

4,750

4,199

4,750

4,199

3,902

1,239

1,707

1,239

1,707

IPI credit on purchases
of fixed assets and
consumption material(d)

Other

Civil
Labor

-
459
10,350
1,542
2,878
14,770

-
2,388
8,294
6,109
7,933
22,336

-
663
10,554
9,489
5,388
25,431

9,245
2,860
18,011
7,799
19,094
44,904

(c) Refers to a tax assessment notice whereby the Federal Revenue Service is
demanding the payment of IRPJ and CSLL on the difference of interest on loan
agreements with a foreign related party. On July 12, 2004, an administrative defense
was filed and is still being judged.

(d) In view of Federal Regional Courts’ former decisions, the attorneys reviewed the initial
estimates and assessed part of this contingency as probable risk.Thus, a provision has
been recorded to cover potential losses (see list of accrued tax contingencies).

17. MANAGEMENT AND EMPLOYEE PROFIT SHARING
The Company and its subsidiaries pay profit sharing to its employees
and managers, tied to the achievement of operational targets and
specific objectives established and approved at the beginning of each
year. As of December 31, 2005, the following amounts were recorded
as profit sharing: R$13,506 (R$14,084 as of December 31, 2004) and
R$35,171 (R$36,626 as of December 31, 2004), Company and
consolidated, respectively, under the heading “Salaries, profit sharing and
related charges” in current liabilities, with contra entry to “Employee
profit sharing” and “Management compensation” in the statements of
income for those years.

18. COMPENSATION OF MANAGAMENT AND EXECUTIVES
a) The total compensation of the Board of Directors and Officers of
the Company and its subsidiaries is as follows:

2005

Compensation

Stock Options Program

Fixed
Board of Directors 3,608
2,592
Officers
6,200
Total

Variable(*)
-
1,267
1,267

Total
3,608
3,859
7,467

Stock Option
Balance (Quantity)(**)

-
37,788
37,788

Average exercise
price (***)
-
31.41

2004

Compensation

Stock Options Program

Stock Option

Average exercise

Fixed
Board of Directors 2,364
3,396
Officers
5,760
Total

Variable(*)
-
1,324
1,324

Total
2,364
4,720
7,084

Balance (Quantity)(**)

-
32,423
32,423

price (***)
-
22.06

b) The compensation of the executives of the Company and its
subsidiaries is as follows:

2005

Compensation

Stock Options Program

Executives

Fixed
12,423

Total
Variável(*)
4,562 16,985

Saldo das opçõesPreço médio de
(Quantity)(**)price (***)
1,044,114

31.43

2004

Compensation

Stock Options Programa

Fixed
7,405

Total
Variável(*)
3,097 10,502

Stock Option
(Quantity)(**)
1,105,329

Average exercise
price (***)
22.42

(a) Lawsuit filed by the Company seeking the annulment of the tax demanded by the INSS
through a tax assessment notice issued for purposes of collecting the social security
contribution on the allowance for vehicle maintenance paid to sales promoters.

Executives

(b) Law No. 9,718/98 increased the COFINS (tax on revenue) rate from 2% to 3%, and
allowed this 1% difference to be offset in 1999 against the social contribution tax paid in
the same year. However, in 1999 the Company and its subsidiaries filed for a mandate and
obtained authorization to suspend the payment of the tax credit (1% rate difference) and
to pay COFINS based on Supplementary Law No. 70/91, prevailing at that time. In
December 2000, considering former unfavorable court decisions, the Company and its
subsidiaries waived the lawsuit and enrolled in the tax debt refinancing program (REFIS),
for payment in installments of the debt related to the COFINS not paid in the period.
With the payment of the tax, the Company and its subsidiaries gained the right to offset
1% of COFINS against social contribution tax, which was made in the first half of 2001.
However, the Federal Revenue Service understands that the period for offset was restricted
to base year 1999.This lawsuit is awaiting ruling at the lower administrative court.

(*) Refers to profit sharing.

(**) Refers to the balance of unexercised vested and unvested options as of the bal-

ance sheet date.

(***) Refers to the weighted average exercise price of the option at the time of the
Stock Option Grant, updated by the inflation calculated based on the IPC-A
(Extended Consumer Price Index) through the balance sheet date. Note 20
presents the pro forma net income as of December 31, 2005 and 2004, should
Company Management opt for recognizing the effects of the plans in the
accounting records, considering the vesting period and using the intrinsic value
method (difference between the market price obtained on December 31, 2005
and the value of the option updated based on the IPC-A).

132 Annual Report Natura 2005

2005 Annual Report Natura 133

19. SHAREHOLDERS’ EQUITY

a) Merger of companies
At the Extraordinary Shareholders’ Meeting held on March 5, 2004,
the Company’s shareholders approved the merger of Natura
Empreendimentos S.A. and Natura Participações S.A.
into the
Company based on an accounting valuation supported by a valuation
report issued by independent experts, as mentioned in Note 1.
The net assets merged into the Company were R$104,951 for
for Natura
Natura Empreendimentos S.A.
Participações S.A. based on the book values of these companies, as
mentioned in Note 1.

and R$75,716

b) Capital
As of December 31, 2003, the Company’s capital was R$56,387,
divided into 25,000 common shares without par value and 10,955
preferred shares without par value.
On March 2, 2004, the shareholders decided at an Extraordinary
Shareholders’ Meeting to: (i) capitalize the credits arising from the
redemption of the subordinated debentures held by them and from the
net yield of debentures through January 31, 2004; and (ii) split the shares
issued by the Company in the proportion of 2,099 new shares for each
existing share. The total amount of the capitalized credits was
R$238,569, and was allocated to a capital reserve in the amount of
R$100,000 and a capital increase in the amount of R$138,569,
representing 3,299 new common shares at an issuance price of R$72,3
thousand per share. These shares were subsequently split in the
proportion of 2,099 new shares for each existing share, resulting in
capital of R$194,956, divided into 59,399,601 common shares and
22,994,545 preferred shares. In the Extraordinary Shareholders’ Meeting
held on March 5, 2004, the shareholders approved, among other matters:
b.1) Merging Natura Participações S.A. and Natura Empreendimentos
S.A. into the Company.
b.2) Canceling the Company’s shares held by the merged parent companies.
b.3) Amending the bylaws to R$196,371,
represented by
83,266,061 shares.
In the first quarter of 2004, the amount of R$7,058 was deducted
from the legal reserve, recognized in prior years, to absorb the net
liabilities arising from the merger of the net assets of Natura
Empreendimentos S.A. and Natura Participações S.A., which exceeded
the reserve for profit retention.
On May 24, 2004, the Board of Directors’ Meeting approved an
increase in the Company’s capital within the limit of authorized
capital, due to the exercise of the right to convert the debentures
issued by the Company and fully subscribed by BNDES Participações
S.A. into common shares of the Company, as allowed by the Private
Indenture of Issuance of Registered Debentures Convertible into
Common Shares, dated February 23, 2001.
Consequently, 2,172,550 registered common shares without par value,
totaling R$34,391, were subscribed, and the Company’s capital was
changed from R$196,371, represented by 83,266,061 common shares,
to R$230,762, represented by 85,438,611 common shares.
As of December 31, 2005 and 2004, the Company’s capital is
R$230,762. The subscribed and paid-up capital is represented by
85,438,611 common shares without par value.The Company is authorized
to increase the capital up to the limit of 4,995,964 common shares
without par value, of which 2,172,550 were subscribed on May 24,
2004 with a remaining balance of 2,823,414 common shares.

c) Receivables from shareholders
In 2004, the amount of R$3,029 was reclassified from the heading
“Receivables from shareholders” to the heading “Treasury shares” until
it is paid up. Details are disclosed in Note 10.e.

d) Interest on capital
At the Board of Directors’ meetings on April 28,
July 27 and
November 23, 2005, the Company’s management proposed the

payment of interest on capital, according to the terms of the bylaws,
CVM Resolution No. 207/96 and Law No. 9,249/95. As of December
31, 2005, the recorded gross amount of interest on capital is R$34,205
(R$29,442 as of December 31, 2004) and was calculated within legal
including as to the mandatory minimum dividend of 30%
limits,
according to article 202 of Law No. 6,404/76 and the bylaws.
Withholding income tax in the amount of R$5,131 (R$4,416 as of
December 31, 2004) was withheld and paid by the Company.

e) Dividend payment policy
The shareholders are entitled to receive every year a mandatory
minimum dividend of 30% of net income, considering principally the
following adjustments:
• Increase in the amounts resulting from the reversal, in the year, of
previously recognized reserves for contingencies.
• Decrease in the amounts intended for the recognition, in the year, of
the legal reserve and reserve for contingencies.
The bylaws allow the Company to prepare semiannual and interim
balance sheets and, based on these balance sheets, authorize the
payment of dividends upon approval by the Board of Directors.
Dividends and interest on capital - gross, relating to income for 2004, in
the amounts of R$186,910 (R$2.204 per share) and R$29,442 (R$0.347
per share), respectively, were approved by Annual Shareholders’Meeting
on March 29, 2005 and corresponded to 72.1% of the 2004 consolidated
net income.
On February 21, 2006, the Board of Directors’ Meetings approved a
proposal, to be submitted to the Annual Shareholders’Meeting to be
held on March 29, 2006, for the payment of dividends and interest on
capital - gross, relating to income for 2005, in the total amounts of
R$285,237 (R$3.357 per share) and R$34,205 (R$0.403 per share),
respectively, corresponding to 80.5% of the 2005 consolidated net
income. Of these amounts, the Company paid, on August 16, 2005,
dividends and interest on capital - gross, related to income for the first
half of 2005, in the amounts of R$90,434 and R$13,383 (R$11,390, net
of withholding income tax), respectively.
Dividends were calculated as follows:

Net income
Profit reserve - legal (h)
Calculation basis for minimum dividends
Mandatory minimum dividends
Annual minimum dividend
Proposed dividends
Interest on capital-net of withholding income tax
Withholding income tax
Total dividends and interest on capital - gross

Amount exceeding the mandatory
minimum dividend

Dividends per share - R$
Interest on capital per share - net - R$
Total dividends and interest on capital,
per share - net - R$

Company

2005
397,357
-
397,357
30%
119,207
285,237
29,074
5,131
319,442

2004
300,411
(15,021)
285,390
30%
85,617
186,910
25,026
4,416
216,352

200,235

130,735

3.357
0.343

2.204
0.296

3.700

2.500

f) Treasury shares
As of December 31, 2005, common shares in treasury, which have
been used in the exercise of options in the Stock Option Programs for
purchase or subscription of shares, totaled 432,015 (651,849 as of
December 31, 2004), at a unit average cost of R$1.7801 (R$1.6970 as
of December 31, 2004).

g) Share premium
Refers to the goodwill generated on the issuance of 3,299 common
shares resulting from the capitalization of debentures in the amount of
R$100,000, as further detailed in item b) above.

h) Profit reserve - legal
Since the balance of the legal reserve plus capital reserves exceeded
30% of the capital, the Company decided, in accordance with article
193 of corporate law, not to recognize a legal reserve on net income
for 2005.

i) Reserve for profit retention
As of December 31, 2005 and 2004, this reserve was recorded
in accordance with article 196 of Law No. 6,404/76 for future
investments, in the amounts of R$77,915 and R$76,024, respectively, to
the Company. The withholding referring to 2005 is based on a capital
budget, which will be submitted for approval in the Annual
Shareholders’ Meeting to be held on March 29, 2006.

20. STOCK OPTION PROGRAM
In 1998, the former Natura Empreendimentos S.A. approved an
incentive policy for certain directors and managers of the Group’s
companies, whereby they could buy and subscribe shares. Subsequently,
this Program was also assumed by the former Natura Participações S.A.,
and the terms of the Program remained unchanged.
On March 5, 2004, the Shareholders’ Meeting of Natura Cosméticos S.A.
approved the merger of Natura Empreendimentos S.A. and Natura
into the Company, at which time the Company
Participações S.A.
assumed the Program.The Company completed an initial public offering
in Brazil and modified the Program to remove the Company’s obligation
to repurchase the shares subject to the plan and change the basis for
determination of the stock option strike price.
Subsequent to the Company’s initial public offering,in a meeting held on April
26,2004,the Company’s management changed these Programs,in which the
Company no longer has the obligation to repurchase shares acquires within
the Program. The Company’s management also modified the criteria for
determining the exercise price of purchase or subscription of shares,
the Company’s
the average market price of
which became
common shares on the São Paulo Stock Exchange (BOVESPA) in the last ten
trading sessions prior to the option grant date. The exercise price will
continue being update based on the IPC-A (Extended Consumer Price Index).
The Board of Directors meets once a year for the purpose of, pursuant to
the terms of the Program, establishing the Plan, indicating the directors and
managers who will receive the options and the total amount to be paid.
The Plan for 2001 had three years for exercising the options, i.e., the
option holder had the right to exercise options at the rate of 1/3 per year.
The Plans for 2002, 2003, 2004 and 2005 have a four-year time span for
exercising the options, and the exercise rights are 50% at the end of the
third year and 50% at the end of the fourth year. The deadline for
exercising options was two years after the end of the fourth year.
The balance of options as of December 31, 2005 is 1,645,210 (1,795,620
as of December 31, 2004) and is composed by plan as follows:

2001
2002
2003
2004
2005

Number of
call options
(in shares)

12,294
407,260
680,899
329,433
215,324
1,645,210

Amount for the year
updated according
to the IPCA through
December 31, 2005

19.56
27.15
15.21
37.43
80.31

As mentioned above, after its initial public offering, the Company is no
longer required to repurchase the shares acquired under the Program
and, since the recording of a provision for the Stock Option Program
as CVM Official Circular No. 01/04 is no longer mandatory and is not
a practice adopted by publicly-traded companies in Brazil, the amount
of R$9,564 related to this provision was reversed as of June 30, 2004
in the amount of
against the “Administrative expenses” account,

R$2,578, and “Retained earnings”,
in the amount of R$6,986.
The amount of R$6,986 in the “Retained earnings” account is due
to the fact that the provision was derived from Natura
Participações S.A. and was received by Natura Cosméticos S.A. as
part of the net assets in the merger process of March 2004, as
disclosed in Note 1, and, therefore, it had no effect on the income
of Natura Cosméticos S.A.
As of December 31, 2005, had the Company’s management opted to
record the effects of the plans based on the intrinsic value of the
options (difference between market price as of December 31, 2005
and the option value updated according to the IPCA) recorded over
their related vesting period, the pro forma consolidated net income
for the year ended December 31, 2005 would have been R$364,152
(R$242,981 as of December 31, 2004), as shown below:

Net income
Effect of programs considering vesting period
Net income - pro forma

Consolidated

2005
396,881
(32,729)
364,152

2004
300,294
(57,313)
242,981

The pro forma net income includes all estimated effects for the
shareholders arising from the probable exercise of the options.
As of December 31, 2005, the market price of the Company’s shares
was R$102.98 (R$77.50 as of December 31, 2004).

21. PENSION PLAN
On August 1, 2004, the Company implemented a supplementary
defined contribution plan for all employees of the Company and its
subsidiaries in Brazil. According to the terms of this plan, the cost is
shared between the employer and the employees, so that the
Company’s share is equivalent to 60% of the employee’s contribution
according to a contribution scale based on salary ranges from 1%
to 5% of the employee’s compensation. The plan is managed by
Brasilprev Seguros e Previdência S.A. and the Company’s
contributions for the year ended December 31, 2005 totaled
R$3,037 (R$1,313 as of December 31, 2004).

22. FINANCIAL INSTRUMENTS

a) General conditions
The Company and its subsidiaries enter into transactions involving
financial instruments, all recorded in balance sheet accounts, to meet
their own needs, and reduce exposure to market, currency, and
interest rate risks. These risks and the respective financial instruments
are managed through the definition of strategies, establishment of
control systems, and determination of exchange exposure limits.
Cash investments are mainly made at negotiated rates of return, since
the Company intends to hold these investments to redemption.These
investments reflect market conditions at the balance sheet dates.
Loans and financing are recorded at the contractual interest rates
of each transaction.

b) Exchange risk
The Company has entered into swap and forward (only for 2004)
transactions to hedge against exchange variation on its liabilities
resulting from financing agreements and operating activities. According
to the Company’s policy, swap transactions must be contracted for all
debts that may expose the Company to exchange risks. These
transactions consist of swaps between two variable rates: foreign
currency and CDI (interbank deposit rate).

134 Annual Report Natura 2005

2005 Annual Report Natura 135

As of December 31, 2005 and 2004, the Company had swap and
forward (only for 2004) transactions with financial institutions in the
amounts of R$7,242 and R$74,007, respectively. These transactions
generated liabilities of R$2,703 and R$6,138, respectively, recorded in
consolidated current liabilities. The exchange exposure is substantially
indexed to the U.S. dollar.
The Company and its subsidiaries do not use derivative financial
instruments for speculation purposes.

c) Interest rate risk
The Company and its subsidiaries are exposed to fluctuations in the
long-term interest rate (TJLP) due to the financing agreements entered
into with the BNDES and FINEP.

d) Fair values

As of December 31, 2005 and 2004, the fair values of cash and banks,
temporary cash investments, and accounts receivable and payable
approximate the carrying amounts due to the short-term maturity of
these financial instruments. The fair values of loans and financing
substantially approximate the carrying amounts since these financial
instruments have variable interest rates.
Regarding the swap and forward (only for 2004) transactions the
carrying and fair values are as follows:

Consolidated

2005

Carrying
value

Fair
value

2004
Carrying
value

Fair
value

2,703

2,775

6,138

6,494

Swap and forward

transactions

At the balance sheet dates the Company consults the financial market
and updates the fair value of financial instruments.

e) Credit risk
The Company’s sales are made to a large number of beauty
consultants. The Company manages the credit risk through a strict
credit granting process.

23. INSURANCE
The Company and its subsidiaries contract insurance based principally
on risk concentration and significance, at amounts considered by man-
agement to be sufficient, taking into consideration the nature of its
activities and the opinion of its insurance advisors. As of December 31,
2005, the insurance coverage was as follows:

Items

Coverage

Industrial
complex/
inventories
Vehicles
Loss of
profits

Any material damages to buildings,
installations and machinery
and equipment
Fire, theft and collision for 954 vehicles
Non-realization of profits arising from
material damages to installations,
buildings and production machinery
and equipment

Insured
amount

434,862

25,171
604,241

24. SUBSEQUENT EVENTS
On February 21, 2006, the Board of Directors approved a proposal to
be approved at the Extraordinary Shareholders’ Meeting, which will be
held on March 29, 2006, for the:
• Issuance of 340,450 common shares (1,702,250 common shares, if
the proposed stock split is approved as described below), without par
value, by the Company, within the limit of authorized capital, to fulfill the
exercise of 50% of the options granted to the Company’s Management
and Employees, as well as to the direct or indirect subsidiaries’
Management and Employees, participants in the “Amendment to the
Stock Option Plan of Purchase or Subscription of Common Shares
Issued by the Company Related to Calendar Year 2003”, approved by
the Company’s Board of Directors on May 17, 2004, excluding the right
of preference for subscription by the Company’s other shareholders
due to the specific purpose described above, pursuant to the last
portion of the third paragraph of article 171 of Law No. 6,404/76.The
price for payment of shares issued and to be subscribed, according to
the conditions described above, established according to said
“Amendment to the Stock Option Plan of Purchase or Subscription of
Common Shares Issued by the Company Related to Calendar Year
2003”, currently corresponds to R$15.30, subject to monetary
restatement based on the IPCA, calculated and disclosed by the
Brazilian Institute of Geography and Statistics, through the effective sub-
scription date, and must be paid in cash, upon subscription.
• Split of common shares, without par value, issued by the Company, in
the proportion of 5 shares after the split for each existing share. The
purpose of this stock split is to adjust the Company’s shares price to
increase individual investor access to the securities market, diversify the
shareholder composition and increase liquidity of the Company’s
shares. Due to this stock split, the number of shares will increase from
85,438,611 to 427,193,055. Likewise, the balance of authorized capital
will increase from 2,823,414 to 14,117,070.
In compliance with CVM Regulatory Instruction No. 358, of January 3,
2002, the Company disclosed on the CVM’s site (in the Periodic
Eventual Information - IPE) significant event notice on February 21,
2006 related to the events described above.

Statements of cash flows
For the years ended december 31, 2005 and 2004
(In thousands of Brazilian reais - R$)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operanting activities:

Depreciation and amortization (Notes 12 and 13)
Monetary and exchange variations, net
Reserve for losses on swap and forward contracts (Notes 22.b and 22.d)
Reserve for contingencies (Note 16)
Allowance for inventory losses (Note 7)
Sundry accruals
Deferred income and social contribution taxes (Note 9.a)
Proceeds from sale and disposal of permanent assets
Equity in subsidiaries (Note 11)
Debentures participation, net of taxes
Minority interest

(INCREASE) DECREASE IN ASSETS
Current assets:

Accounts receivable (Note 6)
Inventories (Note 7)
Other receivables

Long-term assets:

Escrow deposits (Note 16)
Other receivables

Subtotal

INCREASE (DECREASE) IN LIABILITIES
Current liabilities:

Suppliers
Salaries, profit sharing and related charges (Note 17)
Taxes payable, net (Notes 8 and 15)
Other payables
Long-term liabilities:
Other payables
Subtotal

NET CASH PROVIDED BY OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (Note 12)
Investments (Note 11)

NET CASH USED IN INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term loans (Note 14)
Fundings - long-term loans (Note 14)
Payment of dividends (Note 19.e)
Payment of interest on capital (Note 19.e)
Other
Sale of treasury shares by exercise of stock options (Note 19.f)
Payment of receivables from shareholders (Note 19.c)

NET CASH USED IN FINANCING ACTIVITIES
Merger of Natura Empreendimentos S.A. and Natura Participações S.A.

net assets (Notes 1 and 19.a)

NET INCREASE IN CASH AND BANKS

Cash and banks at beginning of year
Cash and banks at end of year

CHANGE IN CASH AND BANKS

SUPPLEMENTARY CASH FLOW DISCLOSURE
Income and social contribution taxes paid (Note 9)
Interest paid on loans and financing (Note 14)
Payments of swap and forward contracts (Notes 22.b and 22.d)

ATTACHMENT I

Company

Consolidaded

2005

2004

2005

2004

397,357

300,411

396,881

300,294

4,989
5,550
1,231
10,598
-
5,726
(9,262)
(204)
6,741
-
-
422,726

(66,235)
800
(7,750)

(888)
(4,252)
(78,325)

42,816
2,574
24,705
9,171

-
79,266

3,809
(1,143)
2,648
16,625
-
1,171
(4,528)
1,333
(2,788)
5,743
-
323,281

(63,193)
(1,280)
26,193

(7,128)
(654)
(46,062)

96,455
5,981
(6,662)
(4,236)

(1,496)
90,042

44,035
3,920
12,064
21,638
1,943
11,794
(12,150)
2,242
-
-
1
482,368

(66,198)
(32,289)
(212)

(2,688)
(1,615)
(103,002)

51,216
7,122
14,068
(5,910)

1,346
67,842

34,340
8,835
4,243
31,570
7,007
1,420
(9,634)
1,828
-
5,743
(1)
385,645

(68,455)
(49,715)
532

(9,073)
115
(126,596)

31,476
24,044
(20,705)
(6,213)

(1,448)
27,154

423,667

367,261

447,208

286,203

(9,991)
(149,425)

(159,416)

(12,907)
65,342
(203,812)
(30,129)
717
4,929
2,288

(7,629)
(34,975)

(42,604)

(76,963)
-
(130,003)
(11,403)
-
630
-

(111,636)
-

(111,636)

(75,104)
120,366
(203,812)
(30,129)
717
4,929
2,288

(76,886)
(6,179)

(83,065)

(47,898)
38,768
(130,003)
(11,403)
-
630
-

(173,572)

(217,739)

(180,745)

(149,906)

90,679

185,287
275,966

90,679

103,859
2,484
3,072

21,086

128,004

57,283
185,287

128,004

69,183
3,991
7,117

154,827

231,612
386,439

154,827

111,605
6,645
15,499

42,269

95,501

136,111
231,612

95,501

84,378
12,061
9,170

136 Annual Report Natura 2005

2005 Annual Report Natura 137

Statements of value added
For the years ended december 31, 2005 and 2004
(In thousands of Brazilian reais - R$)

REVENUES
Sales of goods, products and services
Allowance for doubtful accounts - recognition
Nonoperating

INPUTS PURCHASED FROM THIRD PARTIES
Cost of sales and services
Materials, energy, outside services and other

GROSS VALUE ADDED

RETENTIONS
Depreciation and amortization (Notes 12 and 13)

VALUE ADDED GENERATED BY THE COMPANY

VALUE ADDED RECEIVED IN TRANSFER
Equity in subsidiaries (Note 11)
Financial income

TOTAL VALUE ADDED TO BE DISTRIBUTED

DISTRIBUTION OF VALUE ADDED
Payroll and related charges
Taxes and contributions
Financial expenses and rents - includes exchange variation on

translation of foreign investments (Note 11)

Debenture participation
Dividends (Note 19.e)
Interest on capital (Note 19.e)
Minority interest
Retained earnings (*)

(*) Unrealized profit from subsidiaries is eliminated.

Additional information on the statements of value added:

ATTACHMENT II

Independent Auditors’ Report

Company

Consolidaded

2005

3,088,611
3,119,889
(31,066)
(212)

(1,860,261)
(1,110,075)
(750,186)

1,228,350

(4,989)
(4,989)

1,223,361

24,729
(6,741)
31,470

1,248,090

2004

2,432,140
2,453,708
(22,666)
1,098

(1,485,412)
(921,613)
(563,799)

946,728

(3,809)
(3,809)

942,919

23,913
2,788
21,125

966,832

2005

3,201,561
3,234,980
(32,177)
(1,242)

(1,731,670)
(1,046,472)
(685,198)

1,469,891

(44,035)
(44,035)

1,425,856

54,714
-
54,714

2004

2,509,073
2,533,614
(23,673)
(868)

(1,365,906)
(852,405)
(513,501)

1,143,167

(34,340)
(34,340)

1,108,827

35,414
-
35,414

1,480,570

1,144,241

(1,248,090) 100%
10%
57%

(118,907)
(714,503)

(966,832) 100%
11%
(106,100)
55%
(532,934)

(1,480,570) 100%
21%
49%

(306,416)
(727,181)

(1,144,241) 100%
21%
48%

(247,291)
(547,804)

(17,323)
-
(285,237)
(34,205)
-
(77,915)

1%
0%
23%
3%
0%
6%

(20,209)
(7,178)
(186,910)
(29,442)
-
(84,059)

2%
1%
19%
3%
0%
9%

(50,091)
-
(285,237)
(34,205)
(1)
(77,439)

3%
0%
19%
2%
0%
5%

(41,675)
(7,178)
(186,910)
(29,442)
1
(83,942)

4%
1%
17%
2%
0%
7%

To the Board of Directors and Shareholders of
Natura Cosméticos S.A.
São Paulo - SP

1) We have audited the accompanying individual (Company) and consolidated balance sheets of Natura Cosméticos S.A. and subsidiaries as of
December 31, 2005 and 2004, and the related statements of income, changes in shareholders’ equity (Company), and changes in financial
position for the years then ended, all expressed in Brazilian reais and prepared under the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements.

2) Our audits were conducted in accordance with auditing standards in Brazil and comprised: (a) planning of the work, taking into
consideration the significance of the balances, volume of transactions, and the accounting and internal control systems of the Company and
its subsidiaries, (b) checking, on a test basis, the evidence and records that support the amounts and accounting information disclosed, and
(c) evaluating the significant accounting practices and estimates adopted by management, as well as the presentation of the financial
statements taken as a whole.

3) In our opinion, the financial statements referred to in paragraph 1 present fairly, in all material respects, the individual and consolidated
financial positions of Natura Cosméticos S.A. and subsidiaries as of December 31, 2005 and 2004, and the results of their operations, the
changes in shareholders’ equity (Company), and the changes in their financial position for the years then ended in conformity with Brazilian
accounting practices.

4) The supplementary information contained in Attachments I and II, referring to the statements of cash flows and value added, respectively, is
presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information was audited by
us in accordance with the auditing procedures mentioned in paragraph 2 and, in our opinion, is fairly presented, in all material respects, in
relation to the basic financial statements taken as a whole.

5) The accompanying financial statements have been translated into English for the convenience of readers outside Brazil.

Of the amounts recorded under "Taxes and contributions" in 2005 and 2004, the amounts of R$412,131 and R$296,892, respectively, refer to ICMS (state VAT)
under the taxpayers' substitution regime levied on the estimated profit margin defined by the State Finance Secretariats obtained from sales made by Natura
beauty consultants to final consumers.
In order to analyze this tax impact on the statements of value added, these amounts should be deducted from the amounts recorded under "Sales of goods,
products and services" and "Taxes and contributions", since sales revenue does not include the estimated profit attributable to Natura beauty consultants upon
the sale of products, in the amounts of R$1,311,672 and R$1,059,324 in 2005 and 2004, respectively, considering an estimated profit margin of 30%.

São Paulo, February 21, 2006

DELOITTE TOUCHE TOHMATSU
Auditores Independentes
CRC 2 SP 011609/O-8

Edimar Facco
Contador
CRC 1 SP 138635/O-2

138 Annual Report Natura 2005

2005 Annual Report Natura 139

Index

A
ABC 115
Aberje 48
ABEVD 38, 83, 84, 87, 115
Abia 115
Abihpec 38, 65, 87, 114, 115
ABNT 115
ABPI 115
ABPVS 115
ABQV 114, 115
Abrasca 48, 115
Absence 106
Açaí 109
Acelp 115
Advertising 56, 84
AG Comunicação Ambiental 114
Agenda 21 86
Agenda 21 Cajamar 109, 119
Agenda 21 Permanent Forum in

Cajamar 77, 109

Agenda 21 Potuverá 111
Agricultural stewardship 109
Agrobiodiversity 109
Aiesec 114
Aippi 115
Amerco 115
Animal testing 55, 87
Annual Budgetary Law. See LOA
Anpei 115
Anthropic Medium 91
Anti-signs treatment 46, 54
Anvisa 83, 87
Apimec 68
Argentina 7, 41, 46, 77, 80
Asipi 115
Asociación Civil Peruana de Empresas

Vinculadas al Brasil –
Grupo Brasil 115

Asociación Interamericana de la
Propiedad Industrial. See Asipi

Aspi 115
Assets

Açaí 92
Andiroba 92
Brazil nut 92
Breu-branco 92
Buriti 92
Cacao 92
Chamomile 92
Copaíba 92
Cumaru 92
Cupuaçu 92
Guaraná 92
Lemon grass 92
Jambu 92
Macela 92
Maté tea herb 92
Murumuru 92
Passion fruit 92
Pitanga 92
Priprioca 92
Rosewood 92

Association Internationale pour la

Protection de la Propriété
Intellectuelle. See Aippi
Association of Corporate

Communication of the Mercosur.
See Amerco

Association of the SAP Users in Brazil.

See Asug

Asug 115
Audibra 115
Auditing Committee 66

B
Balance Sheet 120
Banco Nacional de Desenvolvimento
Econômico e Social. See BNDES
Baque Bolado (grupo teatral) 110
Beliefs 41, 43, 56, 72, 81, 85
Biblioteca Municipal de Jordanésia

(SP) 112

Biodiversidade Brasil 119
Biodiversity 7, 39, 43, 46, 54, 90, 93
Biodiversity Conservation 109
Biodiversity National Policy 90
Biological Diversity Convention 90
Biotic Medium 91
BM&F 70
BNDES 74
Board of Directors 7, 66, 68, 70
Bolivia 41
Bovespa 66, 67
Bramex 115, 117
Brand 38, 56
Brand Management System 56
Brazilian Association of Corporate

Communication. See Aberje

Brazilian Association of Direct Selling

Companies. See ABEVD
Brazilian Association of Food

Industries. See Abia

Brazilian Association of Open
Companies. See Abrasca

Brazilian Association of Personal

Hygiene, Perfumery and Cosmetics.
See Abihpec

Brazilian Association of Publicly Traded

Companies. See Apimec

Brazilian Association of Qualifty of

Life. See ABQV

Brazilian Association of R&D of

Innovative Companies. See Anpei
Brazilian Association of Sanitation

Control Professionals. See ABPVS

Brazilian Association of Technical

Standards. See ABNT

Brazilian Banks Federation. See

Febraban 114

Brazilian Biodiversity Fund. See Funbio
Brazilian Confederation of Industries.

See CNI

Brazilian Corporate Law 68
Brazilian Institute of Finance

Executives. See Ibef

Associação Paulista da Propriedade

Intelectual. See Aspi

Brazilian Institute for Corporate

Governance. See IBGC

Brazilian Institute for the Environment
and Renewable Natural Resources.
See Ibama.

Brazilian Institute of Internal Auditors.

See Audibra

Brazilian Institute of Investor

Relations. See Ibri

Brazilian Sustainable Development
Enterprise Council, CEBDS 114

Breu-branco 55, 60
Bribing 85

C
Caieiras’ Department of

Education 110

Cajamar (SP) 86, 90, 109
Cajamar’s Department of Education

and Culture 110

Cajamar’s Department of Social

Services 110

Cámara Argentina de Venta Directa.

See Cavedi

Cámara de Comercio de Lima 115
Cámara de la Industria Cosmética de

Chile. See Cicc

Cámara de Venta Directa de Chile 115
Cámara Peruana de Venta Directa 115
Campaign 6, 46, 98, 112
CAN 83
Cavedi 115
CDI 74
Ceal 115
Cempre 115
CEN 115
Center of Industries of the State of

São Paulo. See Ciesp

Certification 109. See ISO and NBR
Chile 7, 41, 46, 77, 80, 81
Chronos 43, 54, 72
Chronos Spilol 7
Cia. de Dança Borelli 110
Ciesp 115
City Council of Child and Youth

Rights 86

City Fund of Child and Youth 86
Clinic 105
CNI 115
Código de Conduta de Venda Direta

Diante dos Consumidores 84

Código de Conduta de Venda Direta
Diante dos Vendedores Diretos e
entre Empresas 82, 83
Commercial training 107
Communication 6, 72
Communication channels 81, 83,

84, 86

Communication management 84
Congress 86
Conselho Empresarial Nacional para
Prevenção ao HIV/Aids. See CEN

Consolidated gross revenues 40
Consultants 6, 7, 39, 41,46, 57, 71, 72,

75, 83, 98, 111

Consumer 6, 7, 57, 71, 83, 84
Consumer Center 83

Consumer Protection Code 84
Consumer satisfaction 84
Contingency Data Processing

Center 71

Controlling group 7, 66
Cooperative 85
Corporate Commitment to Recycling.

See Cempre

Corporate Governance 7, 66, 70
Corporate Responsibility Management

System 71, 81, 85

Corporative Responsibility 52, 109
Corruption 85
Cosmetics 40, 56, 87
Cupuaçu 109
Current assets 120
Current liabilities 121

D
Debts 70, 74
Dental care plan 105
Dermatologist 83
Direct sales 6, 38, 40
District forums 110
Diversity 51
Dividends 68

E
EBITDA 49, 74
Ecocert Brasil 109
Economic and financial results 74
Economic indicators 80
Education 51
Education and Public Management 110
Education for Social Responsability
and Sustainable Development.
See Uniethos

Education of youths and adults. See

EJA

Effluent Treatment Plant 90, 91
EJA 77
Ekos 43, 54
Elastinol 54
E-mails 83
Energetic Matrix – Natura Group 94
Energetic Matrix 50
Energy 94
Energy consumption 50, 94
Energy Management System 94
E-news Externa 56
Entrepreneurship and women’s

leadership 112
Environment 71, 90
Environmental Commission

of the City of São Paulo Section
of Attorney’s Association 114

Environmental goals 80
Environmental impact 6, 80, 89, 91
Environmental indicators 80
Environmental management 80, 90
Escola de Administração de Empresas
de São Paulo da Fundação Getulio
Vargas, 114

Escola Estadual Professor Elcio José

Hospital

Pereira Cotrim 112

Esthetics Center at Natura Club 105
Ethics 41, 73, 80, 83, 85, 86
Ethos, Institute 48, 85, 115
Ethos Institute of Companies and
Social Responsibility. See Ethos,
Institute

Exchange rate 70
Exchange rate hedging 70

F
Fapesp 55
Fernand Braudel Institute of World

Economy 116

FGV-Eaesp 67
Financial Committee 66
Financial planning 107
Financial Statements 120
Financing 74
Finep 74
Flora Brasiliensis (book) 112
Food and Drug Administration 83
Forced labor 102
Forest Stewardship Council 109
Formação de Agentes Culturais 110
Fórum Permanente Caxambu 114
Fragrances 40, 43, 55
France 6, 41, 46, 73, 80
Free cash generation 68
Frente Agenda 21 Escolar 111
Frente Educação e Capacitação 111
Frente Geração de Trabalho e

Renda 110

Frente Meio Ambiente 110
Frente Relacionamento 110, 111
Funbio 116

Fund raising 112

Fundação de Amparo à Pesquisa do
Estado de São Paulo. See Fapesp

Fundação Getulio Vargas 114
Fundação Nacional da Qualidade 115
Future Market. See BM&F

G
Genetic Patrimony Management

Council 85

Genetic resources 46
Gente Bonita de Verdade na

Comunidade 111

Gincana Fazendo Eco: a Cajamar que

Temos e a Cajamar que
Queremos 110

Global Compact 85, 90
Global Reporting Initiative. See GRI
Goals established in Natura Annual

Report 2004 97, 107, 119

Government 86, 111
Government Relation Management

System 86

Government relations 86
Graduate Scholarships in Business and
Sustainable Development - Fundação
Getulio Vargas. See FGV

Greenhouse Gas Emissions 95
Greenhouse effect 95
GRI 48, 80, 116
Gross debt 74
Gross revenues 6, 40, 46, 74
GVces 115

H
Hay Group 81
Health care plan 105, 107

Araújo Jorge (GO) 111
do Câncer AC Camargo (SP) 111
Escola da Universidade Federal de
Pelotas (RS) 111
Estadual Mário Covas (SP) 111
Fêmina (RS) 111
Ophir Loyola (PA) 111
Universitário de Santa Maria
(RS) 111

Human Resources Committee 66
Human Resources, department 81

I
Ibama 92, 114
IBD 109
Ibef 116
IBGC 116
Ibri 116
Iedi 116
In vitro evaluation 55, 83
Index

Bovespa 6
IBrX100 46, 67
ISE 46
itag 46
MSCI 46, 67
MSCI Brasil 46, 67
MSCI Emerging Markets Latin
America 46, 67

Industrial Development Studies

Institute. See Iedi
Industrial Policy 86
Industrial waste 96
Information Technology 71, 75
Inmetro 83
Innovation index 54
Inpi 46, 56
Instituto Akatu 116
Instituto Biodinâmico. See IBD
Instituto Brasileiro de Controle do

Câncer (SP) 111

Instituto Maranhense de Oncologia

Aldenora Belo (MA) 111

Instituto Nacional da Propriedade

Industrial. See Inpi

Instituto Nacional de Câncer (RJ) 111
Instituto Nacional de Metrologia. See

Inmetro

Inta 116
Interbank Deposit Certificate.

See CDI
Interests 68
International Trademark Association.

See Inta

Internationalization 46, 56, 59, 66
Internet 57, 83
Investiment 6, 39, 51, 52, 54,

62, 75, 107

Investiment in Corporate

Responsability 108

Investment Matrix in Corporative

Responsability 51

Investor 6, 68
Investors Relationship 68
IPO 66
Itapecerica da Serra (SP) 40, 86, 90

J
Jambu 7, 46, 54, 109
Jordanésia (SP) 112

K
Kyoto Protocol 95

L
Labels 84

Labor Code (Consolidação das Leis

do Trabalho) 106

Labor safety 105
Latin America 41
Latin America Businessmen Council

114
LCA 96
Lectures in the Corporate

Responsibility area held in 2005 114

Letter of Relationship Principles 81
Letters of Principles of Ethos Institute

of Companies and Social
Responsibility 85

Life Cycle Analysis (methodology).

See LCA

Life Cycle Management, LCM 114
Line 0800 Talk to Natura 86
LOA 110
Lobbying 85
Logístics 40, 74, 85
Long-term Interest Rate 74
Long-term Assets 120

M
Macela 109
Maison Natura Paris 6, 46, 54
Make-up 40
Mamãe e Bebê 43, 57
Management systems 70, 80
Marketing 75, 84
Mata Atlântica 91
Mata Nativa NGO 109, 110
Materials 95
Matias Barbosa (MG) 41
MBC 116
Merchandising 72
Mexico 6, 41, 46, 73, 80, 81
Millennium Goals 98
Ministério do Meio Ambiente 46, 114
Morgan Stanley Composite Index. See

Índice MSCI

Movimento Brasil Competitivo.

See MBC

Movimento Natura 82, 97, 103
Municipal Government 77

N
National Health Surveillance Agency.

See Anvisa

Natura Cajamar 110
Natura Customer Service 84, 85
Natura Environmental Management

System 71

Natura Itapecerica da Serra 111
Natura Mov (publication) 73
Natura Mov 57
Natura Support Center. See CAN
Natura’s by-laws 68
NBR ISO 14001 71, 77
NBR ISO 9001 46, 77
Neighboring Communities 86, 109
Net amount 68
Net income 6, 50, 68, 122
Notes to the Financial Statements 125
Novo Mercado at São Paulo’s Stock

Exchange 41

Novos Olhares – Oficinas de

Automaquiagem 111

O
Oficina Municipal 114
Ombusman 81
Operating Income 122

Oral hygiene 43
Organisational stakeholder 80
Organizational Satisfaction Survey 47
Outsourcing 71
P
Perfume and Beauty Products Industry
Union in the State of São Paulo. See
Sipatesp

Permanent assets 120
Personnel 6, 41, 47, 53, 66, 72, 81-82,

100, 105, 107

Peru 7, 41, 46, 77, 80, 81
Physical Medium 91
Pinheiro Neto Advogados 114
Pitanga 55
Pluriannual Planning 110
Portuguese Language Corporate
Communication Association.
See Acelp

Postcareer activities 107
Postconsumption waste 96
Priprioca 55
Prizes 56, 117
Aberje 117
Abrasca 117
Annual Report 117
Social Report 117
Good Corporative Citizenship 117
Bramex 117
Modern Customer of Excellency in
Services 117
Eco-Amcham 118
Children-friendly Company 119
Civically Responsible Company 119
Best companies 117
The Most Highly Regarded
Companies in Brazil, 117
Executive of Value 118
FGV Business Excellence Award
118
Business Leaders Forum 117
IR Magazine Brazil Awards 117
Most valuable brands in Brazil 117
Marcas que Mais Respeitam o
Consumidor, As 117
Best Place for Women to Work 81
Best Companies to Work in Latin
America 117
Best Places to Work in
Argentina 117
Best Place to Work 117
Environmental Merit 118
Renato Castelo Branco Social
Responsibility 118
AACD Partnership Company
Seal 119
Transparency Trophy – Anefac-
Fipecafi-Serasa Award 118
Valor 1000 118
Valor Social 118
Product Safety 55, 87
Product Safety Committee 55, 71, 83, 87
Production 6, 40, 47, 75
Production planning 75
Productivity 39
Products Safety Policy 71, 83
Programs

1,000 Women for the Nobel Peace
Prize 98
Agenda 21 Cajamar 98
Support Centers 107
Building the Future 106
Crer para Ver 98, 104
Crer para Ver – Young and Adult
Education Campaign 109
Natural resources certification 109
Sustainable Development of
Supplier Communities 109
Executive Education 106
Trainees 59
Volunteering Promotion 111
Corporate Education 103
Agricultural management 91

140 Annual Report Natura 2005

2005 Annual Report Natura 141

Forest management not based on
wood production 91
Natura Campus 55
Natura Education 109
Natura Matched Savings 107
Quase Acidente 105
TPM2 105

Projects

Agente Jovem 111
Biodiversidade Brasil 73
Caapiá do Rio de Janeiro (RJ) 104
Chapada (BA) 104
Cinema e Vídeo Brasileiro nas
Escolas (SP) 104
Compartilhando Experiências
(SP) 104
Comunidade Ativa 110
Educadores de EJA em Ação
(SP) 104
Em Cada Saber um Jeito de Ser
(BA) 104
Escolas indígenas da floresta
(AC) 104
Janelas Cruzadas (RJ) 104
Juventude do Futuro 111
1,000 Women for the Nobel Peace
Prize 73
Natura Musical 73
Roda Gaúcha (RS) 104
Visita à Natura 110, 111
0800 – Cajamar 111
0800 – Potuverá 111

Public education 87

Q
Quality of life 51, 107
Quality of relations 81

R
Reason for being (document) 81
Reduction, refinement and
replacement. See 3R

Refill 6, 46
Regional Development 86
Relationship programs 72
Reliability 85

Representation in professional

organizations 115
Research 6, 40, 47, 84
Research and Development 38-39, 40,

54, 62, 71, 74, 75

Returns 39
Reused water 50
Risks 70
Risks impact 70
Risks management 70
Risks Management Committee 66, 70
Roadshows 68

S
Sales channel 75
Sales promoters 111
São Paulo Institute Against

Violence 116

São Paulo Stock Exchange. See

Bovespa

Satisfaction research 84
Secondary brand 56
Secretary of Environment of the State

of São Paulo 114
Security Strategy 83
Self make-up 111
Shareholder Structure 68
Shareholders 6, 7, 68
Shareholders' Equity 121
Sipatesp 116
Social and environmental indicators 48
Social and environmental

performance 39

Social capital 68
Social environmental responsible

management 41
Social impact 80, 89
Social indicators 80
Social Responsability 80, 81
Solar protection 40, 43

SOS Mata Atlântica 110, 116
Spilanthes oleracea. See Jambu
Spilol 46, 54
Spring (software) 110
Stakeholder Council 80
Statements of Changes in Financial

Position 124

Statements of Changes in
Shareholders' Equity 123
Statements of Income 122
Stocks 6, 39, 46, 68
Studies and Projects Funding Agency.

See Finep

Superior School of Advertising and

Marketing, ESPM 114
Suppliers 7, 53, 85, 102
Supplier Communities 47, 60, 85, 109
Suppliers satisfaction 85
Support to Cajamar Local

Projects 110

Sustainability 38, 47, 67, 74, 80
Sustainability Committee 98
Sustainable Agriculture Network 109
Sustainable Development 41, 51, 71,

80, 109

T
Technology 7, 46
The Federation of Commercial and

Services Association of the state of
Rio Grande do Sul, Federasul 114

Third line of separation 75
Toll Free Line 83
Total Performance Management 105
Total productivity management 75
Toxicological analysis 71
TPM System 75
Training 99, 107
Transparency 73, 80, 83, 86
Tripartite Working Group 109

U
Uberlândia (MG) 41
Unemployment insurance 107
União e Solidariedade das

Cooperativas e Empreendimentos
de Economia Social do Brasil. See
Unisol Brasil

União Educacional Minas Gerais 114
Uniethos 116
Unisol Brasil 110
Universidade Estadual Paulista de

Sorocaba 114

Universal Declaration of Human

Rights 98

University of São Paulo

Communications and Arts School 114

Upper Tietê Hydrographic Basin 115

V
Valor Sostenible (ma) 114
Values 6, 7, 41, 71, 72, 81, 85
Vegetable raw materials 109
Vertical warehouse 75
Vision 3
Vitrine (magazine) 73

W
Waste 50, 96
Water 93-94
Water consumption 50, 93
Water recycling 93
Working capital 74
Workplace 81
World Federation of Direct Selling

Associations 84, 116

World Wildlife Foundation-Brazil 116

Y
Young Attorney Commission, 114
Youth and Adults Education. See EJA

Global Reporting Initiative Index

As it is fully adopting the guidelines of the Global Reporting Initiative, GRI, Natura is including the index in the 2005
Annual Report, in accordance with the recommendations of that organization.The objective of the index, in addition to
making it easier to reference the information and indicators, is to evaluate the level of adherence of the company to the
GRI guidelines. Further information on the GRI model can be obtained from the www.globalreporting.org website.

Indicator Chapter

EC1
EC2
EC3
EC4
EC5
EC6
EC7
EC8
EC9
EC10
EC12
EC13

EN1
EN2
EN3
EN4
EN5
EN6
EN7
EN8
EN9
EN10
EN11
EN12
EN13
EN14
EN15
EN16
EN17
EN19
EN20
EN21
EN22
EN23
EN24
EN25
EN26
EN27
EN28
EN29
EN30
EN32
EN33
EN34
EN35

Economic indicators
Economic indicators
Economic indicators
Quality of relations
Social indicators
Economic indicators
Economic indicators
Economic indicators
Economic indicators
Economic indicators
Economic indicators
Social indicators

Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Environmental indicators
Quality of relations
Environmental indicators
Economic indicators

Page

89
89
89
86
89, 107
89
89
89
90
90
90
99

95
95
94
94
93
91
91
95
95
95
96
93
96
96
97
90
94
95
93
93
93
91
91
92
92, 93
93
93
91
95
94
85
95
90

Indicator Chapter

LA1
LA2
LA3
LA4
LA5
LA6
LA7
LA8
LA9
LA10
LA11
LA12
LA13
LA15
LA16
LA17

HR1
HR2
HR3
HR4
HR5
HR6
HR7
HR8
HR10
HR11
HR12

SO1
SO2
SO3
SO4
SO6
SO7
SO8

PR1
PR2
PR3
PR4
PR5
PR6
PR7
PR8
PR9
PR10
PR11

Social indicators
Social indicators
Social indicators
Quality of relations
Social indicators
Social indicators
Social indicators
Social indicators
Social indicators
Social indicators
Social indicators
Social indicators
Quality of relations
Social indicators
Social indicators
Social indicators

Social indicators
Social indicators
Social indicators
Social indicators
Quality of relations
Quality of relations
Social indicators
Social indicators
Quality of relations
Social indicators
Social indicators

Quality of relations
Quality of relations
Quality of relations
Main texts
Quality of relations
Quality of relations
Quality of relations

Quality of relations
Quality of relations
Quality of relations
Quality of relations
Quality of relations
Quality of relations
Quality of relations
Quality of relations
Quality of relations
Quality of relations
Quality of relations

Indicators not included in this report: EC11, EN18, EN31, LA14, HR9, HR13, HR14 and SO5

Page

98
98
102
81, 82
105
105
106
102
107
99
100
105
82
106
106
103

105
102
102
99
81, 82, 102
102
102
99, 102
81, 82
102
102

85, 86
86
86
56
87
82
84

83, 87
83
84
84
84
82, 84
84
83, 84
84
84
84

142 Annual Report Natura 2005

2005 Annual Report Natura 143

credits

Editorial Council: Antonio Luiz da Cunha Seabra, Guilherme Peirão Leal, Pedro Luiz Barreiros
Passos, Alessandro Giuseppe Carlucci, José David Vilela Uba and Rodolfo Witzig Guttilla

Edition and Coordination: José David Vilela Uba, Executive Vice-President, Finance
and Information, and Rodolfo Witzig Guttilla, Director, Corporate Affairs and
Government Relations

Editorial Coordination: Carmen Nascimento, Corporate Communication Department

Copy: Ana Augusta Rocha, Antonio Felix, Carmen Nascimento, Célia Cassis,
José Paulo Kupfer, Renato Modernell and Sonia Dias
Survey, Determination of Indicators and Support for the Identification of Content:
Nelmara Arbex, Corporate Responsibility Department

English Version: Eliana Bryant

English Proofreading: Regina Stocklen and Regina Berlim

Art Director and Graphic Design: Wilson Spinardi Júnior, Modernsign Design e Inovação

Image Director: Rafic Farah

Art Assistants: Edna Junko Yokota, José Carlos Gonsalves Correa Júnior, Rogério de Stacchini
Trezza, Modernsign Design e Inovação

Ilustrations: Modernsign Design e Inovação over Joana Lira designs

Printing: Litokromia

Natura’s Team Responsible for the Determination and Provision of Indicators and
Information in this Report: Alan Nascimento, Alejandra Ramos, Alejandro Diaz, Alexandre
Zaparoli, Aline de Oliveira, Ana Luiza Nossar, Andrea Vernacci, André Battaglia, Angel Medeiros,
Antonio Rigolo, Antonio Siqueira, Áureo de Almeida, Camila Fornazari, Camila Souto, Carlos
Witte, Carmen Nascimento, Carolina Pulizzi, Claudia Falcão, Cláudio Souza, Claudio Eschecolla,
Clayton Pedro, Cristiane Samarra, Cristiane Vieira, Cristiane de Moraes, Cristina Liberado,
Damian Puerto, Daniel Gonzaga, David Guzman, David Uba, Denise Asnis, Ednalva Moreira,
Eduardo Costa, Eduardo Luppi, Eduardo Zornoff, Elaine Lemes, Eliane Munford, Eliane Anjos,
Elizabete Vicentini, Felipe Dias, Felipe Maranzato, Fernando Oliveira, Filipe Moura, Flavia Motta,
Frederico Bandini, Georgia Bernardes, Gisela Bartolomé, Gladys Morales, Gloria López, Hélio
Novaes, Hélio Ribeiro, Helmut Bossert, Ira Finkelstein, Isabel Ferreira, Itamar Correa da Silva,
Janice Casara, Jean Gesztesi, Jelena Nadinic, Jorge Casmerides, Karen Cavalcanti, Karina Aguilar,
Karine Boselli, Laura Gambeta, Leandro Machado, Lidia Pinto, Lourdes Rodriguez, Luciana
Magalhães, Luciano Saporito, Lucilene Prado, Luiz Gomes, Maíra Vasconcellos, Marcel Szajubok,
Marcelo Judzik, Marcos Bianchi, Marcos Egydio Martins, Marcos Josmar, Maria Amélia de Moraes,
Mario de Oliveira, Moacir Salzstein Mônica Gregori, Natali Lima, Nelmara Arbex, Nivaldo
Pizzinato, Olívia Ortiz, Patrícia Pessoa, Patrícia Peters, Patrícia Queijo, Paula Noschese, Paulo Lalli,
Plínio Yasbek, Renata Paioli, Regina Rodrigues, Renata Sbardelini, Renzo Higginio Sanchez,
Ricardo Capella, Ricardo Dessen, Ricardo Martello, Roberto Zardo, Rodolfo Guttilla, Rodrigo
Roux, Romy Romero, Rosangela Brandão, Rosimara Lopes, Sandra Matsumoto, Sebastião
Sampaio Alves, Sérgio Delarcina, Simoni Chitarra, Sônia Tuccori, Sophia Ribeiro, Susy Yoshimura,
Wilson Ergonomista

Photography: Cover and Fold:
J. R. Duran; Pages 2 and 3: Arnaldo Pappalardo; Pages 4
and 5: Willy Biondani and Arnaldo Pappalardo; Pages 6 and 7: J. R. Duran; Page 8: J. R. Duran;
Pages 9 and 10: Thelma Vilas Boas; Pages 11 to 15: Rafic Farah and Wilson Spinardi Junior;
Pages 16 and 17: Rafic Farah; Pages 18 and 19: Wilson Spinardi Junior; Page 20: Rafic Farah;
Page 21: Rafic Farah and Wilson Spinardi Junior; Page 22: Rafic Farah; Page 23: J. R. Duran;
Page 24: Rafic Farah; Pages 25 to 32: J. R. Duran; Pages 33 to 35: Wilson Spinardi Junior;
Pages 36 and 37: Rafic Farah; Pages 38 to 40: Wilson Spinardi Junior; Page 41: Danilo Borges;
Page 42: J. R. Duran; Pages 44 to 46: J. R. Duran; Page 47: Rafael Quintino; Page 48: J. R. Duran;
Page 49: Danilo Borges; Page 54: Wilson Spinardi Junior; Page 55: Danilo Borges; Page 58: J. R.
Duran; Page 63: Willy Biondani and Arnaldo Pappalardo; Page 66: Wilson Spinardi Junior;
Page 67: Danilo Borges; Pages 66 and 67 internal: Arnaldo Pappalardo (presidents) and Marcos
Vilas Boas; Page 69: Willy Biondani and Arnaldo Pappalardo; Page 70: a) Thelma Vilas Boas;
b) Wilson Spinardi Junior ; Page 71: Rafael Quintino; Page 72: Thelma Vilas Boas;
Pages 73 and 74: Danilo Borges; Page 75: Willy Biondani and Arnaldo Pappalardo; Page 76: Rafic
Farah; Pages 78 and 79: Arnaldo Pappalardo.

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