Natura &Co Holding S.A. Annual Report 2012

FY2012 Annual Report · Natura &Co Holding S.A.

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natura report 2012

FULL GRI VERSION

natura report 2012

content

OUR ESSENCE

Reason for Being . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Beliefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Culture Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

WHERE WE ARE

Message from Chairmen of the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Message from the Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Natura . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Highlights for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Awards and Recognitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Our market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Progress in Our Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Executive Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Internal Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Senior Management Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Natura Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

WHAT WE AIM FOR

Strategy and Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Sustainability Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Priority Sustainability Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Relationship Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Social Biodiversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Solid Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Sustainable Entrepreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Education. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

WHO WE WORK WITH

Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Quality of relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Ombudsman’s Offi ce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Consultants and NCAs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Supplier communities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Surrounding communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

OUR FOOTPRINT

Natura Value Chain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Creation of Social Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Instituto Natura . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Support and sponsorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Creation of Environmental Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Carbon Neutral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Water and Effl uents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Waste Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Creation of Economic Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

About this Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Global Compact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Assurance Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
GRI Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
Editorial Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

natura report 2012

our essence

international brand,

Because of its corporate behavior,
the quality of its relationships, and
the quality of its products and
services, Natura is bound to become
an
identifi ed
with the community of people who
are committed to building a better
world, based on better relationships
with themselves, with other people,
with the nature they are part of, and
with the whole.

GRI 4.8

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 the individual with himself, with
his own body.
BEING WELL is the empathetic, successful,
and pleasurable relationship of an individual with
other people, with nature, and with the whole

Life is a chain of relationships. Nothing in the universe stands alone. Everything is
interdependent.
Natura believes that valuing relationships is the foundation of the great human revolution
in the search for peace, solidarity, and life in all of its manifestations.
Continuously striving for improvement develops individuals, organizations, and society.
Commitment to the truth is the route to enhance quality of relationships.
The greater the individual diversity, the greater the wealth and vitality of the whole system.
The search for beauty, a genuine aspiration of every human being, should 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 towards the evolution of society and its
sustainable development.

natura report 2012

GRI 4.8

culture
drivers

COMMITMENT TO THE TRUTH
Being authentic and true, honoring our own commitments and commitments to others.

Standing for what we believe in and doing what we say we will.

CARING FOR RELATIONSHIPS
Working together is better. Being generous, open and empathetic with others, creating a climate
of trust based on quality ties.

Recognizing that others are different from us, listening without judging, respecting their opinions
and accepting differences to fi nd the best solution for the whole.

CONTINUOUS IMPROVEMENT
Improving always, evolving in every dimension: material, emotional, intellectual and spiritual.

Continuously seeking self-knowledge, recognizing our talents and limitations.

Creating an environment that promotes learning, continuous improvement and recognition
of high performance.

DOING THINGS WELL.
Insisting on doing everything simply, but with beauty, quality and care about details.

Insisting on doing everything simply, but with beauty, quality and care about the details.

Having Being disciplined to honor what has been agreed upon.

INNOVATION
Being entrepreneurial, taking a lead role, doing what has never been done before and taking
the risks accordingly.

Continuously challenging the ways things are done and fi nding encouragement through the search.

SUSTAINABLE DEVELOPMENT
Consistently delivering superior results and relevant value in the economic, social and
environmental areas.

Managing the short term, with a commitment to build the company’s future.

PLEASURE AND JOY

Facing daily challenges with optimism, lightheartedly and in a good mood.

Celebrating achievements, fueling the enthusiasm and energy that encourage us to grow
and continue to do more and better.

Finding satisfaction at work and affi nity with our own purpose in life, conveying meaning
to everything we do.

natura report 2012

MESSAGE FROM THE CHAIRMEN OF THE BOARD

The future we

dream of

GRI 1.1 e 1.2

Some 72 years ago, the book Brazil, Land of the Future was
released in six languages, depicting a country with great po-
tential to the world. Its author, Austrian writer and journalist
Stefan Zweig, tormented by the Second World War and the
unbounded senselessness of that historical moment, saw
the right geographic and cultural conditions in Brazil for the
development of fairer, happier and more tolerant society.
The book had such a great impact that its title practically
became an epithet. And for many, it was a prophecy.

The highly unusual conditions of this early 21st century
again form a scenario of global crisis, of complex interac-
tion between economic, social and environmental phe-
nomena. In this context, while the economies of the so-
called developed world oscillate between slow recovery
and the agony of recessive policies, we follow the emer-
gence of countries such as China, India, Mexico and even
Brazil. Has the future envisioned by Zweig fi nally left
utopia and become a reality?

We do not believe it has yet. We have made progress,
it’s true. In Brazil, in the past 25 years, from the enact-
ment of the new Constitution, consolidation of demo-
cratic institutions and stabilization of the economy,
new and multiple instruments have allowed advances
in individual and collective rights, access to educa-
tion, jobs and income, and environmental protec-
tion. At the same time, we must care for these
achievements and consolidate them so that other
challenges can be solved and our society continues
to evolve.

We are proud to have reached in
2012 the highest level in our history in
terms of quality of service we provide
to more than 1.5 million Natura’s con-
sultants, with whom we share wealth and
dreams, anticipating in each one of them a
huge entrepreneurial capability, which can
produce innovative solutions for the whole
society. We are excited about the transfor-
mation potential of our relationship network,
which expands into new geographical areas
and that can be boosted and accelerated by
new digital technologies. After all, what drives
this company is the eagerness to transform so-
cial and environmental challenges into innovative
business; to consolidate a corporate culture that
is more supportive and committed to the gen-
eration of shared prosperity; to produce wealth
for individuals and society; to relate to more con-
scientious consumers; to build civic awareness and
enhance quality of life.

We understand that as society we still have a long
way to go until the awareness that we are all inter-
dependent and that our individual and collective deci-
sions have a material impact on our habitat is dissemi-
nated. Such disseminated awareness is, in our opinion,
the key for making it possible to use our creativity,
knowledge and technologies to redesign our way of life.

Therefore, we believe that the qualities cherished by so
many and that gave rise to Zweig’s apology for Brazil de-
serve a new interpretation, a broadened understanding of
what the Fundamentals of a new global society should be.
For this reason, at the moment we thank all who contribut-
ed to the positive results for 2012, we reaffi rm our commit-
ment to work alongside our relationship network to move
forward in the development of this future.

Latin America, the region where our main mar-
kets are located, experiences a period of steady
growth, although heterogeneity, and social in-
equalities persist. Meanwhile, at a global level,
the current crisis may give the company the
opportunity to establish the foundations of
a new capitalism that fosters a sustainable,
fair, and inclusive model of development.
The future, therefore, is under construc-
tion, and this effort is the responsibility of
all citizens, governments, civil society or-
ganizations and companies. The vision of
undertaking a collective project around
common purposes has driven Natura
over time. Our fundamentals, which
are based on the pursuit of quality
relationships, have been shared by a
growing number of people.

Friendly greetings from

ANTONIO LUIZ DA CUNHA SEABRA
GUILHERME PEIRÃO LEAL
PEDRO LUIZ BARREIROS PASSOS
Co-Chairmen of the Board of Directors

natura report 2012

GRI 1.1 e 1.2

MESSAGE FROM THE EXECUTIVE COMMITTEE

The beginning of

a new cycle

In 2012, we experienced, with great enthusiasm, the beginning
of a new cycle for Natura. We achieved the the highest level
in our history in terms of the quality of the service we provide
to our consultants, to such an extent that we cut the average
order delivery time from 6 to 4.5 days in the second half of the
year. This and other initiatives helped increase productivity of
our network by 2.9% in the fourth quarter of the year. Our
International Operations, meanwhile, already represent around
11.6% of Natura’s total revenue and continue to expand at a
brisk pace, accompanied by profi tability gains, which reaffi rms
Latin America’s position as a highly relevant business platform.
At the same time, we confi rmed our belief in the directions
set for the future: We took our fi rst steps towards signifi cantly
improving the buying experience by means of the use of tech-
nology and we added to our portfolio another international
brand, which shares our vision, is present in other geographical
regions and, like us, prizes the quality of relationship.
The acquisition of the control, in December, of Australia’s Ae-
sop brand accrues to a sequence of record investments we
have made in recent years that represent the bases of a new
cycle of growth for Natura. Changes that enabled our future
logistics model, and should now help the company use digi-
tal technology as in novation vectors applied to the quality
of relationships rather than just as a support to our trans-
actions. This volume of resources is the outcome of our
consistent economic results over time. In 2012, Natura’s
consolidated net revenue totaled R$ 6,346 billion, EBITDA
reached R$ 1,511 billion, and net profi t was R$ 861 million.
The positive results refl ect the effi cient conduction of
our strategy to increase consumer’s buying frequency
and the variety of products purchased in Brazil. They
also refl ect successful launches of products that fi lled
in gaps in segment where we were not yet present,
particularly perfumery, revealing the strength of our
innovation process.
We sought inspiration in our history of expansion in
Brazil to mold the strategy of growth in other Latin
American countries, which includes: signifi cant at-
traction and retention of consultants, who already
total 300,000 in the region; increase of consumer
awareness of and preference for our brand; and

progress in local production by means
of suppliers, which allows for greater
fl exibility in distribution and better eco-
nomic, social and environmental results.
And the more we evolve in our social and
environmental practices, the more we no-
tice the opportunities for innovation and
the challenges ahead of us. If, on one side,
we maintain our efforts to reduce our im-
pact, on the other side, we recognize that
there is still much to do, for example, in the
management of our waste, in order to turn
this and other social and environmental is-
sues into value drivers for the business. With
the opening of Núcleo de Inovação Natura
Amazônia (Natura’s Amazon Innovation Cen-
ter) in Manaus, State of Amazonas, we strength-
ened our commitment to acting as one of the
agents that drive the potential future develop-
ment of Pan-Amazonian social biodiversity.
In times when a “like” on the Internet may be
more infl uential than an advertisement, we decid-
ed to strengthen the technological platform in our
business strategy in order to bring our 1.5 million
consultants even closer to the nearly 100 million
consumers, improving the quality of service and the
buying experience. Our commitment to placing the
quality of relationships as a top priority in our way of
doing business remains strong so that it can be reaf-
fi rmed as a distinguishing element of our corporate
behavior. We are a dynamic organization in a net-
work-linked world in continous transformation, and,
for this reason, we must strengthen ties through com-
mon values. In this scenario, we see the opportunity to
be increasingly connected to people’s needs, using our
innovative capability to meet these emerging demands
and, therefore, boosting our future strategy, which fos-
ters the materialization of our Reason for Being, the
well being well, atllowing the expansion of the Natura
relationship network by offering new brands, products,
services and business.

Alessandro Giuseppe Carlucci
Agenor Leão de Almeida Junior
João Paulo Ferreira
José Vicente Marino
Marcelo Cardoso
Roberto Pedote

Enjoy the reading!

NATURA EXECUTIVE COMMITTEE

natura report 2012

GRI 2.1-2.9

natura

Born out of a cosmetics and relationships passion, Natura has built its trajectory committed
to sustainable development, quality of relationships and promotion of the Well Being Well. A
leading player in the segment of personal care products, fragrances and cosmetics in Brazil,
Natura operates through direct sales and currently rallies 1.5 million Natura consultants (NCs).

In order to support its relationship network, Natura employs 6,700 staff in Brazil, spread between
its head offi ce in Cajamar (SP), and four commercial offi ces - Salvador (State of Bahia), Alphaville
(State of São Paulo), Rio de Janeiro (State of Rio de Janeiro) and Porto Alegre (State of Rio
Grande do Sul). The company also has plants, and research and technology centers in Cajamar
and in Benevides (State of Pará), and eight distribution centers spread nationwide that handle
an average volume of 70,000 daily orders, and deliver one order per second to the consultants.

Natura also has a strong presence in Latin America, where it deploys nearly 304,400 con-
sultants. The company’s regional head offi ce located in Buenos Aires, Argentina, coordinates
operations in that country. Regional head offi ces are also located in Chile, Colombia, Mexico,
Peru and France. Each of these countries also has a distribution center. Our products are also
marketed in Bolivia through local distributors.

Natura’s own operation in Paris (France) is in line with the goal to become a global brand and,
in addition to selling products, we carry out research in partnership with local laboratories that
closely follow the trends and progresses in the fi eld of beauty and well-being.

In December 2012, Natura purchased a 65% interest in Aesop, an Australian premium cosmet-
ics manufacturer that operates in Oceania, Asia, Europe and North America. The two compa-
nies will continue to operate independently.

Since 2004, Natura has been a publicly-held company with shares listed on the São Paulo Stock
Exchange (BM&FBovespa).

natura report 2012

HIGHLIGHTS FOR THE YEAR
ECONOMICS

_Natura’s net revenue increased 13.5% totaling 6,346 billion, and net income was R$ 861 million,

3.7% higher than in the previous year;

_Natura’s international operations accounted for a record rate of 11.6% of the company’s net

revenue, with enhanced profi tability;

_We reduced average order delivery time from 6 to 4.5 days in the second half of the year;

_The strategy to increase the productivity of consultants in Brazil interrupted the drop trend and,
at the end of 2012, it was practically unchanged from 2011. Among Natura Consultant Advisers
(NCAs), average earnings soared 21%;

_Natura purchased a 65% interest in Australian Aesop, a global brand that operates in Oceania,

Asia, Europe and North America;

We made signifi cant investments in infrastructure and technology in 2012, totaling R$ 437 million.

ENVIRONMENTAL

_Natura reduced its absolute Greenhouse gas emissions by 7.4% from 2008 to 2012. However,
this reduction was not enough to meet the target of 10%. As to relative emissions, they have
been reduced by 28.4% since 2006;

_The company’s hydric footprint inventory became an international case study at the Planet Under

Pressure conference held by UNESCO;

_Solid waste generation rate grew from 20.01 grams per unit produced to 25.56, but did not meet

the target to increase effi ciency;

_Natura’s innovative research proved the feasibility of producing palm oil in an agroforestry system,
that is, combining the cultivation of palm with other plant species and ensuring a more sustainable
production of palm;

_ Natura Amazon Innovation Center (NINA) was set up with the mission to stimulate the creation
of a scientifi c and technological network in the region. Four research institutions have already
become Natura’s partners in this project.

_Our business volume in the Amazon region grew 88%, totaling R$ 122 million.

SOCIAL

_The company increased the loyalty of NCs and NCAs to 24% and 40%, respectively, which
represented a signifi cant improvement in terms of the quality of our relationship with the consultants.

_There was a 2 basis point increase in Natura’s organizational climate survey after two years of drop,

reaching a 72% favorable response rate.

_The quality of relationships with suppliers and with supplier communities dropped in the year,

reaching 22.6% and 23%, respectively;

_The Programa Crer Para Ver (Believing is Seeing) raised the record amounts of R$ 13 million in
Brazil and R$ 4.5 million in Latin America International Operations. The resources obtained from
the sales of the exclusive Crer para Ver product line are transferred to the Natura Institute in Brazil
and invested in the other countries.

natura report 2012

GRI 2.10

OUR MARKET

In 2012, we were once again able to attest the strength of our market and of the Natura brand.
The Personal Hygiene, Fragrances and Cosmetics market in Brazil showed a strong growth of
17.9% in the fi rst ten months of 2012, according to data published by the Perfumery and Beauty
Products Industry Union of the State of Sâo Paulo (Sipatesp)/Brazilian Association of the Cos-
metics, Fragrances and Toiletries Industry (Abihpec). These data show that this market is less
sensitive to economic oscillations and more related to the available income of consumers. The
Personal Hygiene category showed stronger growth, particularly due to the launching of hair
and deodorant products.

During this period, Natura’s market share in the Personal Hygiene category dropped 90 basis
points while market share in the Cosmetics and Fragrances categories increased. In 2013, the
company’s innovation plan should enable us to increase competitiveness in the Personal Hy-
giene category.

AWARDS AND RECOGNITIONS

Natura’s sustainability initiatives and practices and business improvement actions were recog-
nized through 88 awards and national and international rankings in 2012. The company ranked
for the second consecutive year as the second most sustainable company in the world by the
Canadian organization Corporate Knights and by Bloomberg.

In Brazil, Natura was elected the Company of the Year by the “Anuário Época Negócios 360o”
(360o Época Business Yearbook), in a review that includes fi nancial performance, corporate
governance, social and environmental responsibility, human resources policies, innovation ca-
pacity and vision of the future.

Natura was also included in the ranking of the 50 most valuable Latin brands organized by
Brandz, WPP and Millward Brown; and was considered the second company in the world with
the best social, environmental and corporate governance practices according to the World’s
Most Ethical Companies Award organized by the Ethisphere Institute.

Natura’s innovative capacity was recognized at The Long-Term Capitalism Challenge (The Har-
vard Review / McKinsey M-Prize), where Natura won an award with the case study “Innovation
in Well-Being - the Creation of Sustainable Value at Natura”, which presents the company’s
model of innovation focused on sustainability and social change. We were second at the Prêmio
Finep de inovação (Finep Innovation Award), in the Large Companies category, which is the
most important innovation award in Brazil.

Please see below Natura’s main recognitions in the year 2012.

natura report 2012

GRI 2.10

2012

4th

2nd

2012

AWARDS AND RECOGNITIONS IN 2012
CUSTOMER SERVICE
Recognition

The 25 Best Companies in
Customer Service in Brazil

COMMUNICATION
COMMUNICATION
Recognition
Companies that
Communicate Best with
Journalists

Organization
IBRC (Ibero-Brazilian
Customer Relationship
Institute / Exame
Magazine

Category
Best Companies in the
Customer Service in Brazil

Cosmetics Sector Ranking

Organization

Category

Negócios da
Comunicação Magazine

Hygiene/Cleaning/Cosmetics

Aberje Award

Aberje – Brazilian
Association
of Corporate
Communication

FINANCE
FINANCE
Recognition

Organization

Best of Dinheiro

IstoÉ/Dinheiro Magazine

Digital Media - Natura
Campus Portal – National
winner
Communication and
Marketing Campaign with
the case study “Natura Plant
no Cinema” (“Natura Plant
at the Movie Theater”) –
National winner
Print Media with the 2011
Annual Report – Southeastern
Region Winner

1st

Category
Best Company in the
Pharmaceutical, Hygiene and
Cleaning industry

2012

1st

Annual Report – Best of
the Largest

Commercial Association
of the State of São Paulo

General ranking

Stock Index with Special
Corporate Governance –
New Market (IGC-NM)

BM&FBovespa

General industry
Natura was among the fi rst
10 of the 100 companies
listed at BM&FBovespa to be
included in the New Market
segment

37th

2nd

State Value-Added Tax
(ICMS) Top Taxpayers –
State of Paraná

The 1000 Top Selling
Companies - Argentina

Agência Estado
Companies Ranking

Valor 1000

Commerce Federation
of the State of Paraná
– Fecomércio and
Indústria & Comércio
newspaper

General ranking

89th

Mercado magazine

General ranking

739th

Agência Estado
(Estado Group) and
Economática
Valor Econômico
newspaper

General ranking of the 10
Best Companies listed at
Bovespa
Best Pharmaceutical and
Cosmetics Company
General ranking

5th

2nd

67th

natura report 2012

INSTITUCIONAL
INSTITUCIONAL
Recognition
The 50 Best CEOs
in Latin America

Organization
Harvard Business
Review

Category

General ranking

The 100 Most Innovative
Companies in IT

Information Week Brazil
and IT Mídia

The 100 Most Prestigious
Companies

Época Negócios
magazine

The Most Admired
Companies in Brazil

Carta Capital magazine

Pharmaceutical, Hygiene and
Cosmetics Industry
General ranking
The Most Prestigious
Companies
The Most Prestigious Brand in
the Beauty category
Brazil’s Most Admired
Company in Latin America
Most Admired Company in
Brazil
Most Admired Company in
the Comestics, Fragrances
and Toiletries Industry

Beautycare Brazil Featured
Company

Beautycare Brazil

Internalization

DCI – Companies of the
Year

DCI – Diário do
Comércio newspaper

Most admired company in
the Cosmetics, Hygiene and
Cleaning category

2012

44th

1st

37th

2nd

1st

4th

2nd

1st

DSN Global 100: The Top
Direct Selling Companies
in the World

Direct Selling News

World Ranking of the Largest
Direct Selling Companies

4th

Valuable Executive

Valor Econômico
newspaper

Forum of Corporate
Leaders

Forum of Leaders

Leaders of Brazil

LIDE - Grupo Líderes
Empresariais

Alessandro Carlucci, Chief
Executive Offi cer of Natura,
was elected valuable
executive in the Hygiene and
Cleaning category
Alessandro Carlucci, Chief
Executive Offi cer of Natura,
was recognized as a leading
executive in the Hygiene,
Cleaning and Cosmetics
industry
Beauty and Well-Being
Industry category

1st

natura report 2012

Best Company in the
Consumer Goods sector
Best company in the
Pharmaceutical, Hygiene and
Cosmetics industry
Best and Largest – General
Ranking
100 largest publicly-traded
companies in market value
50 largest companies in sales
volume
Company of the Year
Largest Groups
Largest Groups in Latin
America
Largest Publicly-Traded
Companies in Latin America
Best Reputation in the
Cosmetics, Hygiene and
Personal Care industry
Company with the Best
Reputation appointed by the
NGOs
General Corporate
Reputation Ranking
Most Responsible Companies

5th

66th

26th

33rd

61st

115th

57th

3rd

4th

33th

31st

Best and Largest

Exame magazine

Corporate Reputation
Monitor - Chile

Merco Chile

LIDE Corporate Marketing
Award

LIDE - Grupo Líderes
Empresariais

Internationalization Marketing

1st

Tijera de Plata Award -
Argentina

Cámara Argentina de La
Moda (CAM)

Veronica Mendoza, offi cial
makeup artist from Natura
Argentina, was recognized for
the best makeup in fashion
show

Finep Innovation Award

Image Ranking – Top 100
Best - Argentina

Corporate Reputation
Index (IRCA) - Peru

The 100 Companies with
the Best Reputation in
Argentina

Financial Sponsor of
Studies and Projects
(Finep)

Large Company

Apertura magazine

General ranking

Centrum Pontifi cia
Universidad Católica
del Perú y Arellano
Marketing
iEco de Clarín

Companies with the Best
Reputation in Peru

Elected by NGOs

General ranking

Multilatinas Ranking

Reputation Index

América Economia
magazine
DOM Strategy Partners General ranking

Multilatinas general ranking

1st

2nd

5th

35th

61st

9th

natura report 2012

2012

1st

22nd

1st

2012
1st
1st
2nd
2nd

6th

1st
1st

1st

15th

1st

2º

1st

INSTITUCIONAL
INSTITUCIONAL (CONT.)
(CONT.)
Recognition

The Bizz

World’s Most Ethical
Companies

Organization
World Confederation of
Business

Category

Corporate Excellence

EthiSphere

Health and Beauty

Brazilian Transnational
Companies Ranking

Fundação Dom
Cabral (Dom Cabral
Foundation)

BRAND
BRAND
Recognition

“As Marcas Cariocas” (The
preferred brands by the
people from the city of Rio
de Janeiro)

Organization

Editora O Globo

The Most Valuable Brands

Interbrand

The Most Valuable Brands
in Brazil

BrandAnalytics, Millward
Brown and IstoÉ
Dinheiro magazine

Reliable Brands

Seleções magazine

Brands for Decision
Makers

Jornal do Comércio
newspaper (State of Rio
Grande do Sul)

Raking of the 50 Most
Valuable Latin Brands

Brandz, WPP and
Millward Brown

Ranking by transnationality
index
Distinction for its geographic
dispersion

Category
Cosmetics
Respect for the Environment
Children’s Hygiene
Sunscreen Lotion
The 10 Most Valuable Brands
in Brazil
The Most Valuable Brands

The Strongest Brands

Moisturizers
Social Responsibility
Leading Brand in the Hygiene
and Beauty Industry
Leading Brand in
Environmental Preservation
15th - Natura (Brazil) - US$
3.3 billion

IMPAR Award - Preferred
Brands and Regional
Affi nity Index

IMPAR Award - Preferred
Brands and Regional Affi
nity Index

Impar magazine (State of
Santa Catarina)

Cosmetics – Perfumes/
Cosmetics

Impar magazine (State of
Paraná)

Cosmetic – Perfumes/
Cosmetics

Brazil’s Intangible Assets
Awards -GDP

Padrão Group and
Consumidor Moderno
magazine

Brands & Leaders Award
– Canoas (State of Rio
Grande do Sul)

Brand Recall Award

Chamber of Industry,
Commerce and Services
of Canoas, Diário de
Canoas newspaper
and Ulbra (Lutheran
University of Brazil)
Jornal do Commercio
newspaper (Recife, State
of Pernambuco) – Harrop
Institute of Market
Research

Talent Asset Special Category
The 5 Best Companies in
the Non-Durable Consumer
Goods sector
The 50 Best Companies in
the Management of Intangible
Assets
What Brand Makes You Think
of Environmental Preservation
/ Recycling / Sustainability?

Perfumes/Cosmetics store

2nd

Green Recall Award

1st

natura report 2012

BRAND
BRAND (CONT.)
(CONT.)
Recognition
Ranking of the 100 Most
Valuable Brands in Brazil
Ranking of the Most
Prestigious Brands -
Argentina

Corporate Reputation

Top of Mind

Top of Mind – The Brands
of the State of Rio Grande
do Sul

Organization
The Brander/IAM
magazine

Prensa Económica
magazine

Amanhã magazine and
Grupo Troiano de
Branding
Datafolha and Folha de
São Paulo newspaper

Amanhã magazine

Successful Top of Mind
Brands – State of Minas
Gerais

Mercado Comum
magazine – State of
Minas Gerais

Top Vale

Vale Paraibano
newspaper

MARKETING, PRODUCT AND PACKAGING
MARKETING, PRODUCT AND PACKAGING
Recognition

Organization

Socially Responsible
Packaging - Colombia

Pack Andina

IF Design Award

IF Design

MaxiMídia

RBS Group

ABRE Award of
Brazilian Packaging

ABRE – Brazilian
Packaging Association

Elle Beauty Award -
Mexico

Elle magazine –
Expansión Group

Category

General ranking

Cosmetics Manufacturer
segment

Most Remembered Brand in
the Environment Category
Category: Perfumes
Category: Concern for the
Environment
The Kaiak perfume won in
the categories Top Man, Top
Junior and Filão da Classe C
(Lower Middle Class Favorite)
Leadership Category:
Cosmetics and Beauty
Products
Leadership Category:
Environment

2012

40th

9th

1st

2nd

1st

Social Responsibility

2nd

Category

2012

Packaging: Ekos Máscara
Hidratante and Ekos Creme
para Pentear

Packaging, in the sale
packaging category
“Best Use of the Movie
Theater” with the Plant
advertising campaign
Grand Prix
Perfume Packaging: Colônia
Ekos Mate Verde
Packaging of Product Family:
Vôvó
Graphic Design in Cosmetics:
Humor Refresh
Packaging of Product Family:
Ekos Line Green Tea
Best Product by Price and
Quality: Natura Ekos Nuts
Hands Moisturizer

1st

2nd

3rd

1st

natura report 2012

MARKETING, PRODUTO E EMBALAGEM
MARKETING, PRODUTO E EMBALAGEM (CONT.)
(CONT.)
Organization
Recognition

Nova Beauty Award

Nova magazine

Mercúrio Award

WorldStar Packaging
HUMAN RESOURCES
HUMAN RESOURCES
Recognition

Marketing Association
of Argentina

Organization

50 HRs Most Admired in
Brazil

Gestão e RH

The 150 Best Companies
in People Management
Practices
Company of the Dreams
of Youngsters
Company of the Dreams
of Executives

Gestão e RH

DMRH and Cia de
Talentos
DMRH and Nextview
People

Great Place to Work –
Latin America

Great Place To Work
Institute

Great Place to Work -
Colombia

Supercompanies, the
Places Where Everyone
Wants to Work

Great Place To Work
Institute and Dinero
magazine

Expansión Group

Merca 2.0 Magazine

Merca 2.0

Top of Mind Estadão HR

O Estado de São Paulo
newspaper

Category
Oily Hair: Shampoo and
Conditioner – Ekos Pitanga
Body: Bath Oil – Amó Xodó
Makeup: Nude Lipstick –
UNA line
Category: Large Companies’
Sustainable Marketing
Humor

Category
Company of the Year
Homage to Natura as one
of the 20 Most Admired
Companies by HR
professionals
Homage to Ney Silva, People
Manager Offi cer, as one
of the Most Admired HR
professionals

Featured in the Leadership
category

Company of the dreams of
youngsters

General ranking

General ranking – The Best
Companies to Work for in
Latin America – from 50 to
500 employees

General ranking

Category: less than 500
employees

Lorena Carrasco, Marketing
Offi cer at Natura Mexico,
was recognized as one of
the 50 Marketing leaders in
Mexico
Best Practices in Social
Responsibility

2012

1st

2012
1st

8th

4th

39th

17th

8th

1st

natura report 2012

INVESTOR RELATIONS
INVESTOR RELATIONS
Recognition

IR Magazine Brazil Awards

Transparency Trophy

SUSTAINABILITY
SUSTAINABILITY
Recognition
The 20 Most Reputable
Companies in Argentina
CAF’S First Productive
Transformation Award

Socially Responsible
Company Badge (ESR) -
Mexico

Organization

IR Magazine, PR
Newswire, RI magazine
and IBRI - Brazilian
Institute of Investor
Relations

National Association of
Financial, Administrative
and Accounting
Executives (Anefac),
Accounting, Actuarial
and Financial Research
Institute Foundation
(Fipecafe) and Serasa

Category
Consumer Goods and
Services Sector
Best Social and Environmental
Sustainability
Best Corporate Governance

Natura was recognized as
one of the 5 most transparent
publicly-traded companies
with sales of up to R$ 8
billion

Organization

Clarín newspaper

Category
Ranking of Environmental
Commitment

CAF, Development Bank
Of Latin America

TOP 10 Ranking

Cemefi and Aliarse

Green Companies Época

Época Negócios
magazine

360o Época Negócios
Yearbook

Época Negócios
magazine, Dom
Cabral Foundation,
Brazilian Association
of Corporate
Communication
(Aberje) and
Economática

GreenBest

Greenvana

Global 100 Most
Sustainable Corporations
in the World

Corporate Knights Inc.,
Innovest Strategic Value
Advisors, Asset 4 and
Bloomberg

Exame Sustainability Guide Exame magazine

Natura Mexico was
recognized for its socially
responsible management as
part of the company’s culture
and business strategy
Green Companies Distinction
- Industrial Sector
Natura was recognized as
one of the 20 companies with
Best Environmental Practices
Company of the Year
Hygiene and Beauty Industry
Distinction in the Human
Resources Category

Distinction in the Innovation
Category

The Natura Ekos Açaí Safra
line won in the Beauty and
Personal Care Category
by popular vote and by the
decision of the Greenbest
Committee
10 TOP Personalities of the
Year: Guilherme Leal, Co-
Chairman of Natura, was
among the top 10

100 Most Sustainable
Corporations in the World

One of the 20 benchmark
companies in sustainability

natura report 2012

2012

1st

7th

2012

2nd

1st

1st
1st

1st

2nd

2012

1st

4th

8th

2nd

1st

SUSTENTABILIDAD
SUSTENTABILIDAD (CONT.)
(CONT.)
Recognition
Best Practices in Social
Responsibility - Mexico

Organization
Mexican Center for
Philanthropy

M&E LatinFinance
Sustainability Stars Index
(Brazil)

Management &
Excellence

Corporate Civic
Awareness Award
Amcham -Argentina

Global Top Nine

AmCham - American
Chamber of Commerce
in Argentina
Ökovision Sustainability
Leadership Award

Ranking of the 100 Most
Sustainable Companies
according to the Media

Mídia B and Portal
Imprensa

Category
One of the 20 benchmark
companies in sustainability
Best Practice in Corporate
Social Responsibility in
the Community Relations
category with the program
"Believing is seeing: boosting
Education from the heart of
the company"
The best in effi ciency of social
investments of the most
sustainable companies in the
Ibovespa
Expenditures with social
investments in 2011 in millions
of Brazilian reais
Sustainability-Oriented
Corporate Management

Global Top Nine

General ranking

Fundación Chile Ranking:
The Most Well-Prepared
Companies for Climate
Change
National Ranking of
Corporate Social
Responsibility - The
Socially Responsible
Chilean Companies
The 50 Best case studies
in Corporate Social
Responsibility - Argentina
Redefi ning the Future
of Growth: The New
Sustainability Champions
The Harvard Business
Review/McKinsey
M-Prize for Management
Innovation: Long-Term
Capitalism Challenge
Consumers TOP -
Excellence in Consumer
Relations and Respect for
the Environment – State of
Rio Grande do Sul
Consumers TOP -
Excellence in Consumer
Relations and Respect for
the Environment – State of
Rio Grande do Sul

Fundación Chile y
Capital magazine

Pharmaceutical, Hygiene,
Cosmetics and Cleaning
Industry

Prohumana Foundation
and Qué Pasa magazine

The Most Well-Prepared
Companies for Climate
Change

Apertura magazine

Honors - Socially Responsible
Chilean Companies

13th

World Economic Forum
/ The Boston Consulting
Group

General ranking

Harvard Business
Review and McKinsey
&Group

Case study

National Institute of
education of Consumers
and Citizens (INEC) and
Consumidor Teste

Natura was among the 10
fi nalists with the case study
Innovation in Well-Being - the
Creation of Sustainable Value
at Natura

National Institute of
education of Consumers
and Citizens (INEC) and
Consumidor Teste

General ranking (among
40 companies) – Certifi ed
company as 2012
CONSUMERS TOP

natura report 2012

9th

PROGRESS IN OUR COMMITMENTS
Learn more about Natura’s sustainability commitments and targets that are regularly moni-
tored by our senior management. They are an integral part of the company's Environmental
Budget and guide all activities and relationships throughout the year.

2012 TARGET:

2012 PERFORMANCE

2013 TARGET:

QUALITY OF RELATIONSHIPS

Employees

Achieve a 30% employee loyalty
rate in Brazil.

NOT ACHIEVED
The rate was up 10 basis points to 29%.

Achieve a 31% employee loyalty rate in
Brazil.

Achieve a 74% favorability rate
in the Natura climate survey.

Consultants and NCAs

Achieve a 21% loyalty rate among
consultants in Brazil and 36% in
international operations.

NOT ACHIEVED
The favorability rate was up 20 basis
points to 72%.

Achieve a 73% favorability rate in the
Natura climate survey.

ACHIEVED
The loyalty rate reached 24% among
NCs in Brazil and 38% in international
operations.

Achieve a 25% loyalty rate among
consultants in Brazil and 39,2% in
international operations.

Achieve a 33% loyalty rate among
Natura Consultant Advisors in Brazil.

ACHIEVED
The loyalty rate grew to 40%.

Achieve a 39% loyalty rate among
Natura Consultant Advisors in Brazil
and 49,1% in international operations.

Consumer

Achieve a 54% consumer loyalty
rate in Brazil.

NOT ACHIEVED
The loyalty rate dropped to 51%.

Achieve a 54% consumer loyalty rate
in Brazil.

Suppliers

Achieve a 29% loyalty rate among
suppliers.

NOT ACHIEVED
The loyalty rate achieved was 23%.

Achieve a 28% loyalty rate among
suppliers.

Supplier Communities

Achieve a 30% loyalty rate among
the supplier communities.

Achieve an average score of 3.76 in the
assessment of the BioQlicar community
development program.

CLIMATE CHANGE

NOT ACHIEVED
The loyalty rate reached 23%

ACHIEVED
The score achieved was 3.80.

Achieve a 28% loyalty rate among the
supplier communities.

Achieve an average score of 3.89 in the
assessment of the BioQlicar community
development program.

Reduce relative greenhouse gas (GHG)
emissions by 33% by 2013 in relation
to the 2006 baseline inventory.

UNDERWAY
By 2012, our emissions had been
reduced by 28.4%.

Reduce relative greenhouse gas (GHG)
emissions by 33% by 2013 in relation to
the 2006 baseline inventory.

Reduce scope 1 and 2 emissions under
the GHG Protocol by 10% by 2012 in
relation to the 2008 baseline.

SOCIAL BIODIVERSITY

Amazon

NOT ACHIEVED The reduction rate
achieved was 7.4%.

Reach 5.511 metric tons of CO2e,
reducing absolute emissions by 12.4%

Generate R$ 136 million in business
volume in the Amazon region,
considering Natura and other partners.

NOT ACHIEVED
We generated R$ 121.8 million in the
period.

Generate R$ 190 million in business
volume in the Amazon region,
considering Natura and other partners.

Achieve a 12% share of raw materials
from the Amazon region in Natura’s raw
material purchase volume.

NOT ACHIEVED
The share of raw materials from the
Amazon region was 11.4%.

Achieve a 13.2% share of raw materials
from the Amazon region in Natura’s raw
material purchase volumes.

Supplier Communities

Distribute R$ 12 million in wealth to the
supplier communities.

ACHIEVED
We distributed R$ 12.07 million.

Distribute R$ 13.6 million in resources
to supplier communities.

natura report 2012

2012 TARGET:

WASTE

2012 PERFORMANCE

2013 TARGET:

Maintain the quantity of waste generated
per unit produced in Brazil at 20 grams.

NOT ACHIEVED
We generated 25.56 grams of waste per
unit produced.

Maintain the quantity of waste generated
per unit produced in Brazil at 24.7 grams.

WATER

Maintain water consumption at 0.40
liters per unit produced in Brazil.

EDUCATION

Employees

ACHIEVED
Water consumption remained at the
same level as in the previous year.

Consume 0.39 liters of water per unit
produced in Brazil.

Reach an average of 80 hours of training
per employee in Brazil

ACHIEVED
Natura reached 87.6 hours.

Reach an average of 83.2 hours
of training per employee in Brazil
throughout Natura

Consultants and NCAs

Train 1,005,000 consultants per topic
in Brazil.

LACHIEVED
We trained 1,152,000 NCs.

Train 1.152 consultants per topic
in Brazil.

Revenue of R$ 10.3 million from the
sales of the Crer para Ver product line in
Brazil and R$ 2.5 million in international
operations.

ACHIEVED
Record revenue of R$ 12.8 million
in Brazil and R$ 4.5 million in other
operations.

Revenue of R$ 14 million from the sales
of the Crer para Ver product line in Brazil
and R$ 5.06 million in international
operations.

Maintain 123,000 NCs engaged in the
Natura Movement.

ACHIEVED
We engaged more than 176,000 NCs
engaged in the Natura Movement.

Engage 14% NCs in the Natura
Movement.

Achieve an 11% penetration rate among
consultants in the Programa Crer para Ver
(Believe is Seeing Program) in Brazil and
17.7% in international operations.

ACHIEVED
We reached a penetration rate of 12%
in Brazil and 18.2% in international
operations.

Achieve a 14% penetration rate among
consultants in the Programa Crer para
Ver (Believing is Seeing Program) in Brazil
and 18.9% in international operations.

natura report 2012

corporate
governance

Our ambition is to build an increasingly representative and transparent corporate governance
system that is aligned with the best market practices. A publicly-traded company since 2004,
Natura is listed on the BM&FBovespa’s New Market, a special segment of the Brazilian Stock
Exchange with the most advanced level of corporate governance.

Since 2007, Natura has also been a member of the Company Circle of Latin American Corpo-
rate Governance, a group of Latin American companies selected by the International Finance
Corporation of the World Bank for their governance practices.

In 2012, we gathered a record number of 350 participants in Cajamar (State of São Paulo) at
an event for shareholders that took place concomitantly with the Annual and Extraordinary
Shareholders’ Meeting. Non-controlling shareholders and representatives of major investment
funds were able to watch the broadcast of the meetings that were held at Natura’s offi ce in
Itapecerica da Serra and ask questions and talk to the company’s founding partners and senior
management. We also held a joint public meeting with the Association of Market Analysts and
Professionals of Capital Markets of the State of São Paulo (Apimec-SP) with the presence of
invited guests and market analysts.

In the same event, we confi rmed the increase in the number of the members of the Board of
Directors, which went from six to nine. Raul Gabriel Beer Roth, Roberto Oliveira de Lima and
Plínio Villares Musetti joined the Board. This change strengthens our company’s Board with
professionals of different backgrounds and with varied qualifi cations in the corporate environ-
ment. Accordingly, the Board now has three independent members. The term of offi ce of all
Board members is one year and it may be renewed at the end of the period if it is approved at
a Shareholders’ Meeting.

Throughout the year, we held six Board meetings. As part of the strategy to bring the compa-
ny’s Board members closer to each other, we held two meetings outside Sao Paulo, one being
in Salvador (State of Bahia) and one in Buenos Aires (Argentina). These meetings are important
to promote the integration of teams, enabling Board members to become more familiar with
each operation and keeping our leaders engaged and motivated.

GRI 4.1; 4.2; 4.3;
4.6; 4.7

natura report 2012

GRI 4.1

COMPOSITION OF THE BOARD OF DIRECTORS

ANTONIO LUIZ DA CUNHA SEABRA
Co-Chairman of the Board of Directors and founding partner

GUILHERME PEIRÃO LEAL
Co-Chairmen of the Board of Directors

PEDRO LUIZ BARREIROS PASSOS
Co-Chairmen of the Board of Directors

MARCOS DE BARROS LISBOA - Board Member

JULIO MOURA NETO - Board Member

LUIZ ERNESTO GEMIGNANI - Board Member

RAUL GABRIEL BEER ROTH - Board Member

ROBERTO OLIVEIRA DE LIMA - Board Member

PLÍNIO VILLARES MUSETTI - Board Member

SUPPORTING COMMITTEES

GRI 4.1

The Board is supported by four committees that meet periodically to discuss and analyze
proposals and make recommendations to the Board (see the table below). The increase in
the number of Board members enabled the adoption of another good governance practice,
which is to have the committees exclusively made up of Board members or external partici-
pants. The members of the Executive Committee are no longer offi cially part of the groups
and participate in their meetings only when invited.

The number of meetings of each committee was also increased in 2012. The Audit, Risk Man-
agement and Finance Committee met eight times in the period and the other committees
met tem times each

THE COMMITTEES AND THEIR ROLES

GRI 4.1 e 4.9

Audit, Risk Management and Finance Committee: its mission is to ensure the operation of
the internal and external audit processes and mechanisms and controls related to risk man-
agement, and the consistency of the fi nancial policies with the strategic guidelines and risk
profi le of the business. Our internal audit management also reports to this committee and it
is responsible for recommending the external auditors to be hired. The group is supported by
two external consultants who are specialists in risks and accounting.

Members: Marcos de Barros Lisboa (president), Luiz Ernesto Gemignani and Roberto Oliveira
de Lima

Frequency of meetings: monthly (eight meetings in 2012)

natura report 2012

People and Organizational Development Committee: it is responsible for helping the Board
of Directors make decisions related to Human Resources strategies, policies and rules for
organizational and people development, planning, compensation and benefi ts of executives,
as well as for monitoring and directing questions related to Natura’s Management System.

Members: Luiz Ernesto Gemignani (president), Pedro Luiz Barreiros Passos, Fátima Raimon-
di, Roberto Oliveira de Lima and Raul Gabriel BeerRoth

Frequency of meetings: monthly (ten meetings in 2012)

Strategic Committee: it is also responsible for the dissemination of concepts, values and
beliefs and supporting the perpetuity of the company.

Members: Julio Moura Neto (president), Pedro Luiz Barreiros Passos, Roberto Oliveira da
Lima and Plínio Villares Musetti

Frequency of meetings: monthly (ten meetings in 2012)

Corporate Governance Committee: it is responsible for monitoring the operation of the
entire corporate governance system of the company based on international best practices
and for suggesting adjustments and improvements in Natura’s governance system when-
ever necessary.

Members: Pedro Luiz Barreiros Passos (president), Antonio Luiz da Cunha Seabra, Guil-
herme Peirão Leal and Plínio Villares Musetti

Frequency of meetings: semimonthly (ten meetings in 2012)

SENIOR MANAGEMENT ASSESSMENT AND SELF-ASSESSMENT

GRI 4.10

In order to monitor the quality of our governance, we periodically perform a self assessment.
In 2012, the assessments were made by six of our nine Board members. Since they have
been in the Board for a short period of time, the new members did not participate in this
process, which included topics such as dynamics of meetings, fl ow of information and the
size of the Board.

Some conclusions generated immediate actions, such as increasing the number of meetings
of the Corporate Governance Committee, a need which was expressed by the interviewees.

Our future goal is to expand this assessment process to also include the opinion of execu-
tives. In addition to the self-assessment, the Board members also periodically analyze the
work of the CEO and the Executive Committee.

natura report 2012

GRI 4.1

EXECUTIVE GOVERNANCE

The Executive Committee (Comex) is Natura’s main executive body and is in charge of monitor-
ing the development of the company’s strategic planning and important projects. It is composed
of Natura’s CEO and Senior Vice Presidents and it is responsible for managing the business, as-
sessing results and making decisions based on economic, social and environmental aspects.

Our recent expansion and the new challenges we will face in the future increased the complex-
ity of the operation and motivated us to revise our senior management structure in 2012. In
order to dedicate more time to the work focused on the future and innovation without losing
sight of the operations, we created two new levels of support to Comex: the Executive Vice
President Offi ce and the Operations Committee (Comop). Therefore, Comex takes up a po-
sition that is more focused on more strategic topics and transforming projects, in addition to
topics related to Natura’s Essence, such as brand, culture, sustainability and leadership. And the
new vice president offi ce and Comop – which includes all senior vice presidents and executive
directors from Brazilian and international operations - guarantee the management of the busi-
ness and the proper execution of the strategy.

The need to establish a more robust information technology and digital media structure was
part of this reassessment. We want the technology platforms to enable the evolution of Na-
tura’s current business and future vision. To this end, we created the vice president offi ce of
Information Technology and Digital Media. In March 2013, Gerson Valencia Pinto took offi ce as
the vice president of Innovation, a position that was vacant between 2011 and 2012.

With the redesign of Natura’s processes, we reconfi gured the number of committees that sup-
port Comex and Comop from eight to three: Customers, Ethics and Products.

EXECUTIVE COMMITTEE T (COMEX)

ALESSANDRO GIUSEPPE CARLUCCI
CEO

AGENOR LEÃO DE ALMEIDA JUNIOR
Senior Vice President of Digital Technology

GERSON VALENÇA PINTO*
Senior Vice President of Innovation

JOÃO PAULO FERREIRA
Senior Vice President of Operations and Logistics

JOSÉ VICENTE MARINO
Executive Vice President

MARCELO CARDOSO**
Senior Vice President of Organizational Development and Sustainability

ROBERTO PEDOTE
Senior Vice President of Finance, Investor Relations and Legal Affairs

* He took offi ce in March, 2013.

** He left Natura in February, 2013

natura report 2012

EXECUTIVE BOARD

ALESSANDRO MENDES
Product Development Director

ALEXANDRE CRESCENZI
Commercial Director

ALEXANDRE ALVES LEMOS
Commercial Director

ALEXANDRE SHOZO NAKAMARU
Finance Director

ANA LUIZA MACHADO ALVES
Brand Director

ANGEL MANUEL L ROD DE MEDEIROS
Logistics Director

AXEL PABLO MORICZ DE TECSO
General Manager

ARNO CORREIA DE ARAUJO
International Operations Commercial Director

CECILIA GOYA MEADE
General Manager

DANIEL DE ALMEIDA GUSMAO ALVES SILVEIRA
Commercial Director

DANIEL CAMPOS
Business Unit Director

DANIEL LEVY
Business Unit Director

DANIEL MADUREIRA GONZAGA
General Manager

DANIEL MONTEIRO PAGANO
Strategic Planning Director

DENISE REGINA DE OLIVEIRA ALVES
Sustainability Director

DENISE DA SILVA MOREIRA ASNIS
Human Resources Director

DENISE LYRA DE FIGUEIREDO
Business Unit Director

DIEGO DE LEONE
International Operations Business Unit Director

ELIZABETE FERNANDES VICENTINI
Consumer Safety Director

ERASMO TOLEDO
International Operations General Business Manager

FABIO NOBRE DA COSTA BOUCINHAS
Digital Media Director

FLAVIO PESIGUELO
Human Resources Director

JOAO AUGUSTO PEDREIRA
Business Executive Director - Brazil

JOAO CARLOS MOCELIN
Industrial Director

JORGE LUIS ROSOLINO
Commercial Director

JOSE THOMAZ DEVECZ PENTEADO DE LUCA
Commercial Innovation Director

JOSELENA PERESSINOTO ROMERO
Product Availability Director

LUCILENE SILVA PRADO
Legal Affairs Director

LUIS RENATO COSTA BUENO
Commercial Director

LUIZ CARLOS DE LIMA
Finance Director

MARCEL GOYA
Finance, IT and Legal Affairs Director – International Operations

MARCIA ANDREA DE MATOS LEAL
Management Systems Director

MARCUS OLIVER RISSEL
Commercial Director

MOACIR SALZSTEIN
Corporate Governance Director

MONICA GRANJA GREGORI
Communication and Marketing Director

MURILLO FEITOSA BOCCIA
Customer Relations Director

NESTOR MARIANO FELPI
Order Cycle Director - International Operations

NEY MAURO SIMONE DA SILVA
People Management Director

PEDRO CRUZ VILLARES
Instituto Natura Director

PEDRO ROBERTO GONZALES
General Director - International Operations

RENATO ABRAMOVICH
Business Unit Director

RICARDO LOBATO FAUCON
Customer Service Director

ROBERT CLAUS CHATWIN
Business Development Director

RODRIGO OLIVEIRA BREA
Supply Director

TATIANA DE CARVALHO PICCOLI PIGNATARI
Business Unit Director - International Operations

THIERRY AUBRY LECOMTE
General Manager – Natura France

VICTOR MUNIZ FERNANDES
R&D Director

natura report 2012

GRI 4.1

GRI EC2

SUPPORTING COMMITTEES

CUSTOMERS
Created in January 2011, the committee’s main duties are the monitoring of the quality of the
services Natura provides to end consumers and consultants. It is led by João Paulo Ferreira, Se-
nior Vice President of Operations and Logistics, Agenor Leon, Senior Vice President of Digital
Technology and has the participation of José Vicente Marino, Executive Vice President.

ETHICS
It is in charge of ensuring the application of the Natura Relationship Principles and resolving
upon deviations. It is led by Roberto Pedote, Senior Vice President of Finance, Investor Rela-
tions and Legal Affairs and has the participation of Marcelo Cardoso, Senior Vice President of
Organizational Development and Sustainability.

PRODUCTS
Led by the Executive Vice President, José Vicente Marino, this committee is responsible for
approving stages of the innovation processes of Natura’s products.

RISK MANAGEMENT

Risk management at Natura is an instrument incorporated into the strategic planning cycle
and takes into consideration the economic, social and environmental aspects divided into two
groups: strategic risks, that is, risks that could affect the company‘s ambition and continuity, and
operational risks, under which our internal processes are assessed and checked periodically by
the manager responsible and their team.

The strategic risk map is monitored by the corporate and executive governance supporting
committees.

Even though we do not have shares traded on the Stock Exchange of New York, we have
voluntarily adjusted the company, for the third consecutive year, to the SOx certifi cation stan-
dards, which are based on the U.S. Sarbanes-Oxley Act. This system provides for the strength-
ening of audit and security mechanisms through which we seek to qualify our control processes
and systems for protection against fraud and corruption, providing a more reliable process for
our shareholders.

We understand that, in order to integrate sustainability to Natura’s management, we must
continuously assess the social and environmental risks of the business. Accordingly, our risk
assessment includes the main sustainability and regulatory topics. Even though we do not have
a specifi c analysis of the effects associated with climate change in the risk management pro-
cess, the company has important mitigation projects aimed at the impacts our business may
generate that have become formal sub-processes in the company, such as the Carbon Neutral
Program (learn more on page 33) and our practices of sustainable use of social biodiversity and
associated traditional knowledge (learn more on page 34).

natura report 2012

GRI S04

GRI S02

GRI 4.5

INTERNAL AUDIT

Natura’s internal audit team reports to the Audit, Risk Management and Finance Committee
within a framework that ensures the auditors’ independence to work with no interference
from any other departments of the company.

Natura’s internal audit process includes tests and procedures that assess the control environ-
ment, including measures to prevent fraud and corruption. In 2012, there was an increase in the
number of reports received, a total of fi fteen, compared to three in the previous year. Among
these, eight were confi rmed, resulting in the dismissal of four employees. The reports mainly
addressed issues such as confl ict of interest (four recorded), irregularities in procurement pro-
cesses and payments (four recorded), misuse of resources (fi ve recorded) and other external
frauds (two recorded).

Throughout the year, we also carried out 30 audit exams at Natura, including all countries in
which we operate, one more than in 2011.

In 2012, we concentrated our efforts mainly in meeting and investigating the demands, and we
provided internal controls with prevention tools. Therefore, the integration of our controls
- which was expected to occur in the period – will be implemented in 2013. Our goal is to
integrate our fraud prevention controls with the involvement of the departments of internal
controls, audit and legal and the Ombudsman’s Offi ce. In this period, we will also start to use
the continuous audit tool, a quicker alternative for identifying process failures. This initiative
aims to maintain environments increasingly transparent and ethical, improving our prevention
process. We will also enhance communication about the Ombudsman’s Offi ce, the investiga-
tion process and the roles and responsibilities of the Ethics and Audit Committee.

SENIOR MANAGEMENT COMPENSATION

Our compensation plan for senior management seeks to balance short, medium and long term
gains and foster the entrepreneurship and commitment of our executives to the company’s
growth and value increase.

For a group of executives that includes the CEO, vice presidents, directors and senior managers,
consistent gains are tied to the commitment to our long-term project through the Stock Sub-
scription or Purchase Option Plan. Since 2009, this Subscription Plan requires the granting of the
option to be tied to the executive’s decision to invest at least 50% of the net amount received as
profi t sharing in the acquisition of Natura shares. The shares can only be exercised after a vesting
period of three years for 50% of the shares, and of four years for 100% of the shares.

In both cases, the plan is valid for eight years and the shares may not be sold before the end of the
third year. The model establishes an annual grant limit of 0.75%, and a maximum of 4%.

In December 2012, the volume of options held by the company’s executives corresponded to
around 1.39% of the Natura shares, compared to 1.71% in 2011.The total number of Natura
shares on December 31, 2012 was 431,239,364.

Since 2002, we have granted 20,730,622 options and 22% of these options were cancelled be-
cause the executives left the company.

natura report 2012

Number of Options
PlanPlan

Granted
Granted

2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

Total

3,533,610
3,969,220
1,901,460
1,120,760
981,660
1,269,955
1,800,010
2,419,791
2,112,352
1,621,780
No options
were granted
20.730.622

Maturity and validity of plans

Plan
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

Exercised Mature Balance
Exercised

Non-Mature
Mature Balance Non-Mature
Balance
Balance
0
0
0
0
0
0
0
1,124,897
1,766,059
1,496,752
-

0
0
0
0
0
163,099
454,686
979,937
0
0
-

2,712,645
3,404,495
1,606,063
651,354
604,754
528,594
541,371
72,478
0
0
-

Cancelled
Cancelled

820,965
564,725
295,397
469,406
376,906
578,262
803,953
242,479
346,317
125,028
-

23%
14%
16%
42%
38%
46%
45%
10%
16%
8%
-

10,121,754

1,597,722

4,387,708

4,623,438

22%

50% Mature
April 10, 2005
April 10, 2006
April 10, 2007
March 16, 2008
March 29, 2009
April 25, 2010
April 22, 2011
April 22, 2012
March 19, 2013
March 23, 2014
-

100% Mature
April 10, 2006
April 10, 2007
April 10, 2008
March 16, 2009
March 29, 2010
April 25, 2011
April 22, 2012
April 22, 2013
March 19, 2014
March 23, 2015
-

Validity
April 10, 2008
April 10, 2009
April 10, 2010
March 16, 2011
March 29, 2012
April 25, 2013
April 22, 2014
April 22, 2017
March 19, 2018
March 23, 2019
-

natura report 2012

GRI 4.5

VARIABLE COMPENSATION

Variable Compensation is intended to recognize and reward Natura’s executives for their per-
formance and results over the year. The Profi t Share System for management consists of the
payment of monthly salary multiples in accordance with the executive’s position in the organi-
zational structure and it is tied to the effective achievement of targets and minimum growth
levels established by management for the year. Therefore, payment is contingent on Natura’s
performance reaching the stipulated minimum. The criteria for determining their achievement
takes into consideration performance indicators arising from the Strategic Plan distributed into
the triple bottom line dimensions:

Economic – consolidated EBITDA for Brazil and international operations;

Social – Organizational climate survey for employees in the Brazilian and international op-
erations and loyalty rate for Brazilian consultants;

Environmental – Carbon emissions in Brazil and in the international operations;

Others – Non-Service Rate (NSR), which is the percentage of products unavailable for sale
upon the placement of orders by consultants in Brazil and international operations.

The total annual amount paid under profi t sharing, based on the long-term incentive program,
may not exceed 10% of net income. This limit provides Natura with a consistent and well-
controlled system that prevents distortions between compensation and performance of the
company. The variable component, both short and long-term, is proportionally larger for senior
executives than for other employees.

The table below shows the compensation of the main groups of employees:

2012

Board
Executive
committee
Senior management
and directors
Middle
management
Administrative
Sales force
Operational
Total 2012

Average
number of
employees

Total Salary
(in millions)1

Total variable
(in millions)2

105

441

1,523
848
2,386
5,317

4.33

6.13

33.33

60.26

88.95
52.83
43.63
289.46

2.36

9.38
43.78
11.37
66.89

2013 Stock
Option Plan
(in number
of options)3
-

-
-
-
-

1. Total salary: takes into account annual average base salary over 12 months (without charges) and overtime.
2. Total variable: Profi t sharing and sales bonus (with Remunerated Weekly Rest - DSR) paid in year.
3. Stock options: 2013 plan underway.

natura report 2012

2011

Board
Executive
committee
Senior management
and directors
Middle management
Administrative
Sales force
Operational
Total 2011

Average
number of
employees

Total Salary
(in millions)1

Total variable
(in millions)2

102

405
1,488
875
2,436
5,317

3.13

5.86

36.40

60.63
92.85
49.09
52.21
300.17

1.30

5.49

19.90

20.79
9.20
49.67
12.77
119.11

2012 Stock
Option Plan
(in number
of options)3
-

-
-
-
-
-

1. Total salary: takes into account annual average base salary over 12 months (without charges) and overtime (with Remunerated Weekly
Rest - DSR), and 13th and 14th salaries in millions.
2. Total variable: Bonus, profi t sharing and sales bonus (with DSR) paid in the year. Variable compensation paid in 2011 for base year of 2010.
3. Stock options: 2012 plan not approved yet.

2010

Board
Executive
committee
Senior management
and directors
Middle management
Administrative
Sales force
Operational
Total 2010

Average
number of
employees

Total Salary
(in millions)1

Total variable
(in millions)2

336
1,255
905
2,542
5,135

2,64

5.25

27.04

42.17
63.63
44.60
41.89
227.23

2,08

6.28

17.83

18.14
6.29
43.19
10.33
104.13

2011 Stock
Option Plan
(in number
of options)3
-

346,476

1,258,313

-
-
-
-
1,604,789,00

1. Total salary: takes into account annual average base salary over 12 months (without charges) and overtime (with Remunerated Weekly
Rest – DSR) in millions.
2. Total variable: total salary plus bonuses, profi t sharing and sales bonus (with DSR).
3. Stock options: 2011 plan approved in March 2011.

natura report 2012

natura
management
system

Our Essence and Organizational Culture determine the way we work. Our brand, value of
relationships and sustainable development are the most distinguishing elements of our business
and must always be present in it. The driving force that ensures that this way of work is present
in all of our processes is the Natura Management System (SGN). The system establishes the
requirements that enable us to run the business on a more dynamic basis and supports our
local growth and global expansion, in addition to ensuring the strengthening of our Essence. At
the same time, it must ensure the fl exibility to meet specifi c the demands of each operation.

The Natura Management System gathers the priority elements that differentiate our company
and should be refl ected in all processes, namely: brand, innovation, sustainability, relationships,
leadership, individual, strategy development and execution with excellence and learning. These
drivers were revised in 2012 as part of our mission of continuous evolution for the purpose of
simplifying the system and strengthen our differentiating characteristics to make them more
evident in our operations.

As we evolved in the management by process model in 2012, we worked to enable effi ciency
and productivity gains focused on the implementation of processes that had been revised
based on the new chain. In the International Operations, the challenge is to consolidate global
processes enhancing the synergy and the characteristics of each operation so as to include the
growth plan of these units and their operational and cultural peculiarities.

Despite all advances, we still face the challenge of institutionalizing the Natura Management
System, and it is necessary to consolidate the model and ensure that the system is appropri-
ate and that it is adopted by all employees. The goals established are important to increasingly
strengthen the operation and its processes and become differentiators in our strategic agenda.

natura report 2012

strategy
and prospects

Natura started a new growth cycle in 2012 and the results obtained were a consequence of
the investments made in the past two years. We made a signifi cant progress in the level of our
service: we reduced the delivery time to consultants, doubled the number of orders delivered
within 48 hours and reached the lowest product unavailability rate in the past ten years.

Our logistics infrastructure is prepared to meet the future expansion, which, in Brazil, will be
driven by the initiatives aimed at increasing the productivity of consultants, a network of more
than 1.2 million people who has already reached the homes of nearly 100 million consumers.

We will keep on working to increase the frequency of purchases and the variety of products
purchased. For this reason, we have been investing in the development of our marketing,
making progress in the training of our consultants and in the combined offer of products from
different categories to our consumer (learn more on page 69, Consultants and NCAs).

This change is supported by our innovation process, which generated major launches in 2012:
the fi rst fragrance of the UNA line, a deo parfum created for the premium segment, and the
Natura Tododia sprays, created to establish a habit of after shower body perfuming. With
sales that exceeded expectations, these products show the strength of our brand in different
segments. We will continue to innovate in concepts and products to charm our customers
and take spaces where the Natura brand can offer products that are aligned with our value
proposal and is not present yet (learn more on page 41, Innovation).

Meanwhile, our International Operations reached a level of development and profi tability that
confi rms their position as a relevant business platform. Our strategy for Latin America includes
an accelerated growth of our network of consultants, expansion of production supported
by local partners and increase in brand prestige and institutional recognition. We are already
among the three brands preferred by consumers in Argentina and Peru and we signifi cantly
increased the awareness of our brand in Mexico and Colombia, where our operations started
more recently. We still have room to increase our market share in the region.

In 2012, we also began to explore, in practice, the opportunities that new digital technologies
and social networks offer for the direct sales model. We identifi ed a large potential to bring
our consultants even closer to their customers by understanding their buying habits and fueling
our network of NCs with information that increase their productivity and improve the shop-
ping experience for our customers. This action will be supported by the planned investments
in digital technology.

In this scenario, we see the opportunity of being increasingly connected to people’s needs, al-
lowing the expansion of our relationship network by offering new brands, products, services
and business.

natura report 2012

sustainability
management

Natura’s strategy is to make sustainability one of the main vectors of innovation and genera-
tion of new business by means of solutions that create shared value for all of its relationship
network. Natura seeks an approach that allows us to reach the entire organization with the
introduction of guidelines in all processes. The topic today is a relevant component of the
company’s strategic planning, from the defi nition of indicators and targets, support of educa-
tional activities for employees and other stakeholders, and is also tied to performance reviews
and senior management compensation. This entire process is monitored by senior manage-
ment and communicated regularly.

In a cycle that evolves and is retro fed, Natura’s sustainability strategy is the result of a process of
relationship and engagement of stakeholders, which helps it identify the most relevant social and
environmental topics relating to its business choices (learn more on page 143, About this Report).
The so-called Priority Topics are taken into consideration in Natura’s planning for determining
work projects, programs and initiatives and monitored by their respective indicators and targets
(which the company calls Social and Environmental Budget).

Natura wants to have a broadened view of its impacts on its entire value chain, which includes
suppliers, the logistics network, the work of the NCs and fi nal product disposal. Due to their rel-
evance and Natura’s own experience in these aspects, some of these priority topics, such as social
biodiversity and climate change, are now structured as sub-processes of the company. Meanwhile,
other topics are still structured as projects or programs, such as Water, Waste and Sustainable
Entrepreneurship.

Another important stage of Natura’s sustainability strategy is mobilization and education. The
company believes it is possible, through its efforts, to encourage self-development and broaden
the awareness of its network, which is formed by employees, consultants, customers, suppliers
and supplier communities, shareholders, in addition to the media, civil society organizations and
public agencies.

The cycle is closed with the communication of the company’s practices and economic, social and
environmental results which is periodically carried out through quarterly performance reports
and the annual report, including data audited by independent auditors and in accordance with the
Global Reporting Initiave (GRI) guidelines (learn more on page 143, About this Report).

natura report 2012

GRI 4.15

priority
topics

QUALITY OF RELATIONSHIPS

Driven by the conviction that everything is interdependent, Natura believes it is essential to
truly care for all of its relationships.

To this end, Natura has the challenge of strengthening the care, the connection with and
the trust in these relationships, intensifying ties that are increasingly signifi cant and based on
common purposes. It believes that this change is only possible when listening, dialoguing and
a collective creation become part of the company’s culture in order to generate innovation
and build an environment that enables the development of the individuals and of their actual
relationships.

Therefore, in 2012, the company revised its matrix of stakeholders, prioritizing those to whom
its attention should be enhanced due to their ties with the company. As a result, Natura’s task
today is primarily focused on interactions with consultants (NCs), Natura Consultants Advisors
(NCAs), consumers, employees and suppliers.

However, Natura is aware that there is still much to be done for it to reach the level of excel-
lence it desires in this issue. In 2012, it recorded important developments in the quality of the
relationships with NCs and NCAs (learn more on page 69) and employees (learn more on page
53) and maintained high consumer satisfaction with products and services (learn more on page
82). On the other hand, there is room for improvement in the relationship with suppliers,
whose loyalty rate dropped 40 basis points, and supplier communities, whose rate dropped 50
basis points, both reaching a loyalty rate of 23% in 2012 (learn more on pages 88 and 92).

Natura is reinforcing its practices to increase the coverage and depth of the exchanges with
stakeholders and the company’s strategic goal is to increase the indicators relating to quality of
relationships with these stakeholders by 2014. (Learn more on page 45, Quality of Relationships)

CLIMATE CHANGE

In view of the challenge of climate change, Natura structured a program in 2007 to reduce
carbon emissions that is focused on the search for effi ciency and innovative solutions across the
entire production chain and on education and public awareness of the matter.

Since that year, the Carbon Neutral Program has been promoting actions in many areas of the
company. The program is divided into quantifying (inventory), reducing and offsetting emissions
that cannot be avoided in accordance with an integrated view of the entire value chain.

natura report 2012

Natura has also taken public commitments to reduce greenhouse gases (GHG) in its internal
processes and related emissions in the entire chain (kg of CO2 per product sold). In the fi rst
item, it has reduced absolute emissions by 7.4% since 2008, in the plants in Cajamar (State
of São Paulo) and Benevides (State of Pará) and in the administrative facilities. However, this
reduction was not enough for Natura to achieve the target to reduce 10% of its absolute emis-
sions (scope 1 and 2 of the GHG Protocol). The second target is to reduce relative emissions in
the entire chain by 33% between 2006 and 2013. To date, Natura has reduced them by 28.4%.

The emissions that cannot be avoided are offset by means of the purchase of carbon credits
from reforestation, energy effi ciency and fuel replacement programs. In 2012, the company
contracted projects to offset the emissions generated in the 2011-2012 biennium.

Natura’s Carbon Neutral Program is comprehensive and reaches the entire company. There-
fore, the company is able to identify new opportunities for improvement. One of the latest
conclusions is that the impact of solid waste exerts great synergy with carbon emissions. Thus,
Natura believes that its strategy for solid waste management can leverage a new cycle of re-
duction of greenhouse gas emissions.

Since the beginning of the Carbon Neutral Program in 2007, Natura has established a pillar of
education and engagement of employees and other stakeholders so as to increase awareness
and multiply gains. Today, structured as a sub-process of the company, the Program is a bench-
mark for other Natura projects and inspires its strategies for managing the generation of waste
(learn more on page 38) and water (learn more on page 38). (Learn more about Climate Change
on page 118, Creation of Environmental Value)

SOCIAL BIODIVERSITY

With a focus on the use of resources from Brazilian social biodiversity and recovery of tradi-
tional knowledge of the forest people, the company desires to establish new business models
that generate regional development and positive impact across its value chain.

To this end, in 2011, Natura launched the Amazônia (Amazon) Program, which reinforces its
commitment with the entire Amazon region in Brazil and neighboring countries. Natura wants
to expand its presence and seek new models of sustainable development with the addition of
local value, foster science and technology and strengthen the region institutionally. Accordingly,
the program established three fronts: Science, technology and innovation; sustainable produc-
tion chains; and institutional strengthening.

In 2011, Natura determined the six major topics for investment in the region in a materiality
matrix built with the participation of local institutions and representatives of the Amazon com-
munity: education, entrepreneurship, social justice and civic awareness, public policies, conser-
vation, appreciation and sustainable use of biodiversity, and culture. Its initial investment will
focus on education, entrepreneurship, and social justice and civic awareness.

natura report 2012

In 2012, fi ve priority action territories were established in Brazil and Natura is also considering
operations in a territory in Latin America (see map on next page). The option for a territorial
management is aimed at facilitating the development of local centers for sustainable business de-
velopment and innovation, establishing replicable and scalable models to favor the new economy
that we want to stimulate. The defi nition of these locations took ten months and we considered
more than 30 criteria, such as the offer of social biodiversity and potential for expansion, envi-
ronmental conditions, mapping of institutional partners and government strategies, economic
conditions and current and future infrastructure and logistics, among others. The implementation
of the actions in these priority territories will take place gradually, starting in 2013.

Natura has established bold targets for the development of its business in the Amazon over
the coming years. By 2020, we expect to increase the consumption of raw materials originated
in the region from 11% to 30% (in R$ million), including 10,000 agroextractive families in the
program and use company’s own resources of R$ 1 billion. In 2012, the number of families
involved was 3,500 and the business volume grew 88%, totaling R$ 122 million (learn more on
page 91, Supplier Communities).

PRIORITY TERRITORIES

Juruá River

Acre-Perus

Northeast
Pará

Northern and
Southern
Manaus

Xingu-Tapajós

FRONTS OF THE AMAZÔNIA PROGRAM
_Science, technology and innovation
_Sustainable production chains
_Institutional strengthening

natura report 2012

See below the main action of the Amazônia Program in 2012:

SCIENCE, TECHNOLOGY AND INNOVATION

In August 2012, the Natura Amazon Innovation Center (Nina) was opened in Manaus (State
of Amazonas); this is a knowledge center with the mission of stimulating the formation of a
research network involving local, national and international science and technology institutions.
We also determined the topics of interest of Nina’s actions: Culture and Society; Conservation
and biodiversity, Forests and agriculture, and Product design and processes.

In order to identify, support and conduct research that develop knowledge “in” the Amazon,
“about” the Amazon, and “for” the Amazon, Natura executed letters of intent with the Federal
University of Amazonas (UFAM), Brazilian Company of Agriculture and Cattle Raising (Em-
brapa), the National Research Institute of the Amazon (INPA) and the Amazon Biotechnology
Center (CBA).

By means of the Natura Campus Program – which develops open innovation actions - the com-
pany launched a specifi c invitation to bid for institutions headquartered in the region in order
to stimulate the creation of projects in collaboration with the company. To encourage the par-
ticipation and interest in submitting proposals, we held meetings at many institutions. We also
offered a coaching program on technology-based entrepreneurship for the fi nalists. As a result,
we selected six research projects on the Amazon fauna and fl ora, community agroforests and
population ecology, which are currently being contracted.

SUSTAINABLE PRODUCTION CHAINS.

To help Natura’s signifi cant growth plans in the Amazon region and to become even closer
to the supplier communities, the company created in 2012 the Biodiversity Supply Center.
In addition to planning future demand, the Center will ensure that this growth occurs with
good management practices and production tracking. The Center is in charge of improving the
process chain ensuring the complete mapping of the supply cycle, from the extraction of raw
materials to their processing. The Center will also help prepare communities for the anticipated
increase in supply and to seek new extractive organizations in the region. The Center’s work
will add to that performed by the Community Relations Management (GRC), which supervises
an interdisciplinary team of professionals, including anthropologists, social scientists, psycholo-
gists, economists and agronomists in the management of community relations (learn more on
page 91, Supplier Communities).

In 2012, Natura also began the construction works of Ecoparque in Benevides (State of Pará), an
industrial park expected to be inaugurated in the second half of 2013. Covering an area of 175
hectares, the project was inspired by the concepts of symbiosis and industrial ecology, which
connects companies with the additional needs in one area and which can generate synergy and
greater effi ciency in the use of resources. Therefore, the disposal material of one company can
be the raw material for production of another company or for Natura’s own experience in the
sustainable use of inputs from the Amazon region may become a service to be offered to other
local entrepreneurs.

The fi rst step of the Ecoparque is the construction of Natura’s new plant, where the company
will start to produce all soaps. Currently, the Benevides unit prepares just the soap noodles,
which are sent to Cajamar for the completion of the production process.

natura report 2012

INSTITUTIONAL STRENGTHENING

In 2012, we offi cialized the establishment of the External Advisory Board of the Amazônia Pro-
gram, a group composed of representatives from different segments, experts and institutions
with experience in the region. Their role is to guide the company in its plans, programs and
targets (see complete list in the table below).

Also, in 2012, we determined the focus of this group’s work

a) elementary, middle and high school and technical education adjusted to the reality of
farms and forests;

b) entrepreneurship, including leadership training and community management training,
in addition to fostering local businesses based on social biodiversity and/or businesses
that can meet the demands generated by the Ecoparque; and

c) conservation and appreciation of social biodiversity focused on technical skills of the
agroextractive communities and creating local value, for example, through projects for
effi ciency gains and competitiveness of production chains and offset projects for environ-
mental services that value and benefi t the communities

EXTERNAL ADVISORY BOARD OF THE AMAZÔNIA PROGRAM
Chairman:

Marcelo Cardoso, Senior Vice President of Organizational Development and
Sustainability of Natura*

Members of the Board:

Cláudio Pádua – Vice President of Ipê (Ecological Research Institute)
Bertha Becker - geologist and professor at the Federal University of Rio de Janeiro (UFRJ)
Pedro Leitão – Superintendent of Instituto Arapayu
Adalberto Veríssimo – Senior Researcher at the Institute of Man and the Environment
of the Amazon (Imazon)
Paulo Roberto Moutinho – Director of the Environmental Research Institute of the
Amazon (Ipam)
Carlos Nobre - Secretary of Research and Development Policies and Programs,
Ministry of Science and Technology
Fernando Reinach – Partner at Fundo Pitanga
Adalberto Luis Val – Director of the National Research Institute of the Amazon (Inpa)
Adriana Ramos – Assistant Executive Secretary of the Social and Environmental
Institute (ISA)
Rubens Gomes – Executive Director of the Amazonian Work Group (GTA)
Francisco Costa – Professor and Researcher at the Center of Higher Amazonian
Studies (Naea)

* Mr. Cardoso withdrew from Natura at the end of 2012

natura report 2012

In addition to these priorities, Natura should continue to seek opportunities to infl uence the
major players involved so that Brazil can have a new legal framework that regulates access to
biodiversity and the sharing of benefi ts, fostering an environment that is more favorable to the
development of science and technology, with less bureaucracy and greater legal security. We
expect new legislation to contribute to Brazil’s innovation agenda, allowing for the sharing of
benefi ts in a fair and equitable way with the supplier communities, implementation of actions
with the use of social technologies that promote sustainable development, thus complying with
the principles of the Convention on Biological Diversity (learn more on page 107, Government).

SOLID WASTE

Since 2010, the company has been working on a solid waste management strategy with a view to
lifecycle. The goal is to reduce the generation of solid waste and waste in general in the company’s
value chain and expand the use of recycled material by structuring effi cient and inclusive supply
chains, including cooperatives of recyclable material collectors, establishment of fair price and trace-
ability. It is also part of Natura’s strategy to raise stakeholders’ awareness and engage them in the
proper management of solid waste and challenge internal projects to consider eco-effi ciency in
their conception.

To support this strategy, Natura developed a methodology of an inventory of solid waste genera-
tion in the value chain with a lifecycle approach. However, this study does not address the fi rst
link in this process, which is made of direct and indirect suppliers of raw materials and packaging
materials, due to their complexity and the assumption of shared responsibility described in the
National Solid Waste Policy. In this case, the waste generated is quantifi ed and managed by these
suppliers and reported to Natura since the indicator is part of the supplier development program
(learn more on page 87, Suppliers).

In the industry sphere, Natura supports actions promoted by the Brazilian Association of the
Cosmetics, Fragrances and Toiletries Industry (Abihpec) to encourage compliance with the Na-
tional Solid Waste Policy. The organization develops a model for the collection and recycling of
post-consumer packaging that is already in use in the following states: Paraná, Rio de Janeiro, Santa
Catarina and São Paulo. Abihpec also represents Natura at the Corporate Coalition, which negoti-
ates with the Ministry of the Environment a sector agreement on this waste. (Learn more on page
127, Creation of Environmental Value)

WATER

Although water is a renewable resource, the lack of water supply is still a reality for at least 780 mil-
lion people worldwide according to the report “Progress on drinking water and sanitation 2012”
of the World Health Organization and UNICEF (United Nations Children’s Fund). And, although
the target of the Millennium Development Goals to halve the proportion of people without ac-
cess to drinking water has been achieved, the scenario remains worrisome, especially due to the
challenge of sanitation.

It is therefore even more important for Natura to understand how its business impacts water re-
sources through consumption and potential water pollution. Two years ago, we began to develop
a water management strategy based on the entire lifecycle of the business. The fi rst step was to
calculate the company’s water footprint, a methodology developed by the WaterFootprint Net-
work (WFN). Natura mapped the impact of the supply of raw materials and packaging materials,

natura report 2012

GRI EC8

from the stage of production and distribution of products to their use and disposal by consumers.
Natura was the fi rst cosmetics company in the world to include this fi nal stage of the lifecycle when
calculating the water footprint.

This calculation, made in 2010, showed the stages of disposal of products by consumers (45.9%)
and supply of raw materials and packaging materials (36.9%) as the most relevant in terms of the
impact of Natura’s chain. Meanwhile, the stage of use of the product represented a percentage of
13.8% of the total. The results were presented at the seminar “Solving the Water Crisis: common
action toward a sustainable water footprint”, organized by UNESCO in March 2012 during the
Planet Under Pressure conference.

The survey data is still preliminary but, based on it, the need for additional methodologies that
address all the complexity of the company’s process was identifi ed: expand the study applying
methodologies that include the evaluation of biodegradability and toxicity of products, thus
considering both consumption and potential for water pollution. Additionally, Natura needs a
model that considers the characteristics of Brazil, with unequal distribution of water - the most
populous regions are distant from areas with greater supply of the resource – and incipient basic
sanitation conditions.

Therefore, the company assessed four methodologies in 2012 and one of them was chosen to
be used in a new inventory in 2013 with two product categories. The goal is to test the sensitiv-
ity of the methodologies and assess whether they can be replicated in the different categories
and products of Natura’s brands. (Learn more about water consumption on page 129, Creation of
Environmental Value)

SUSTAINABLE ENTREPRENEURSHIP

We live in an increasingly complex world with fi nancial, social and environmental crises. This sce-
nario imposes new business formats and solutions that promote inclusion, development, quality
of life and preservation of the natural resources available on the planet. We know that entre-
preneurship is one of the new vectors of economic expansion worldwide, including Brazil, and
has the potential to create innovative products and services that meet these emerging demands.

Although sustainable entrepreneurship is little disseminated and studied, it may bring together
the tools of traditional business management, social entrepreneurs’ transformative ideal and con-
cern about environmental impact. This more comprehensive and complete approach has the
potential to multiply opportunities for income generation with social and environmental benefi ts.

Natura identifi ed room for contributing to the search for new forms of business and creation of
value through its network of consultants. With major infl uence, the company sees the invaluable
opportunity to encourage its NCs to take social and environmental entrepreneurial actions in
their communities.

As one of the ways of expanding the company’s knowledge, we decided to sponsor the organiza-
tion of a global network of laboratories that research new business at the base of the pyramid
(the lower classes). The project is led by Professor Stuart Hart, from Cornell University, U.S., one
of the world’s leading experts in this type of entrepreneurial activity.

natura report 2012

A few own initiatives have also made Natura learn about the potential of its network of consul-
tants to create value. We support NCs who participate in social and environmental initiatives
in their communities throughout Brazil by means of the Acolher (Welcome) Program (learn
more on page 79, Consultants and NCAs) and we also developed a business model in Mexico
with a multilevel system, in which the consultants’ level of involvement with Natura increases
as they establish their own network of NCs and promote social and environmental activities
(learn more on page 78, Consultants and NCAs). In another initiative in São Paulo (State of São
Paulo), we promoted training in business, management, fi nance and other topics for NCs who
are beauty professionals, including owners and employees of beauty parlors.

EDUCATION

Natura believes that the continuous search for improvement promotes the development of
individuals, organizations and society. Based on the company’s efforts and on the relationships
nurtured, the company aims to create a learning model that not only generates results for Na-
tura but is also strong enough towards contributing to the transformation of our society.

Internally, Natura sponsors the Cosmos program, a leadership development program that offers
comprehensive training, involving lectures and workshops, time for exchanging experiences and
practical application of knowledge; and the Meu Caminho (My Way) program, which is intended
for the operational employees and includes training and development during and off working
hours, as well as the distribution of certifi cates of knowledge, which give employees the oppor-
tunity to ascend the career ladder.

To increase sustainability awareness, we organized nine workshops with the company’s manag-
ers in 2012. Since this is essential knowledge for Natura, we intend to expand these initiatives
in 2013. Generally, the topic is covered in the Employee Integration Program (CIP) and in the
functional training courses, whether by means of a more comprehensive approach or through
specifi c topics, such as ecodesign. The company’s goal is to make employees consider sustainabil-
ity as part of their everyday life, including it throughout their activities (learn more about corporate
education on page 54, Employee).

As for Natura’s sales force, we want to take advantage of their potential and of the diversity of
this network of 1.5 million NCs in Brazil and in International Operations to expand the value
created by the consultants. For these stakeholders, the company’s intention is to promote educa-
tion as a business leverage, increasing actions of social transformation, sustainable entrepreneur-
ship, technology and leadership platforms (learn more on page 39,Sustainable Entrepreneurship).

In 2012, company also extended the training program to youngsters of the municipality of Caja-
mar, where the main offi ces are located for the purpose of increasing their employability (learn
more on page 100, Surrounding Community).

The Company’s education strategy also includes the activities of the Natura Institute, a nonprofi t
organization created in 2010 to strengthen social initiatives through projects that can positively
impact the quality of education in public schools. In 2012, the Trilhas (Trail) Project, to encourage
reading and writing in early education, became a public policy in a partnership with the Ministry
of Education, and reached 3,300 municipalities and 3 million students (learn more about the Na-
tura Institute on page 133, Creation of Social Value).

natura report 2012

INNOVATION

Innovation is the basis of our creation of value and permeates our entire business. Our under-
standing of innovation goes beyond product development, in a multidisciplinary vision that is
present in the creation of new concepts, our business strategy, search for new business, and
even in our logistics operations.

Our emphases on innovation seek to express this integral approach, with four main strategic
guidelines that, in addition to traditional methods, encompass state of the art science and tech-
nology, concern about the reduction of the social and environmental impact and our desire to
create products that cause a fl ow of Well Being Well experiences for our consumers (see table).

BROADER VIEW
Our research fronts

_ Classical and advanced skin and hair sciences: studies biological and physicoche-

mical mechanisms that affect skin and hair to develop new products and services
with unprecedented benefi ts

_ Sustainable Technologies: develops concepts and technologies to promote the sus-
tainable use of products and services from social biodiversity, including ecological
production systems, packaging materials and social technologies

_ Senses, Design and Experiences: seeks to understand the operation of the physio-
logical mechanisms of the production of sensations, perceptions and emotions to
bring the best experience to consumers

_ Well-Being and Relationship Sciences: integrates different fi elds of science to un-

derstand and create value from the well-being concept and its correlations across
all dimensions (physical, emotional, social, cultural and spiritual)

Based on this understanding, we have, for example, developed a system for the sustainable
production of palm oil (learn more on page 94); organized researchers to bring innovation to
the daily lives of local communities in the Amazon (learn more on page 36); been developing
an experience with our consultants, who are using digital media in their relationships with
customers (learn more on page 69); and created a virtual library of gestures based on body
therapies to inspire people to recover and value human relationships (learn more about Natura
Gestos (Natura Gestures) at http://tinyurl.com/ctgf5fb).

In 2012, we made internal improvements in our processes so as to further integrate all innova-
tion initiatives to accelerate their pace. Among the new measures, we created the Innovation
Center, whose main purpose is to reduce the time between the emergence of an idea and the
creation of a concept of a product or service and facilitate the identifi cation of opportunities
in any area of the company.

To support and foster innovation, we annually invest between 2.5% and 3% of our net revenue
in science, technology and creation of knowledge networks. In 2012, this investment totaled
R$ 154 million, an increase of 5% in relation to the previous year.

natura report 2012

We also received tax incentives for innovation and development by means of partnerships with
institutions such as the Financial Sponsor of Studies and Projects (FINEP), National Bank for
Economic and Social Development (BNDES) and National Council of Scientifi c and Technologi-
cal Development (CNPq). In 2012, R$ 49 million, related to a refundable loan to support the
company’s research and development activities, was released by Finep. Additionally, we signed
an economic subsidy agreement in the amount of R$ 3.3 million to fi nance the research on new
ingredients for anti-aging products.

With CNPq, we signed the protocol of adherence to the Programa Ciência sem Fronteiras (Sci-
ence without Borders Program), a joint effort of the Ministry of Education and Culture and the
Ministry of Science, Technology and Innovation aimed at internationalizing the Brazilian science,
technology and innovation through the grant of scholarships. Until 2014, Natura and CNPq
will work together to enable 100 scholarships to researchers in strategic topics in well-known
institutions of excellence abroad.

Our innovation rate was 67.2% last year, which shows how important product innovation is to
Natura’s commercial performance and to ensure our leadership in the cosmetics, fragrances
and personal hygiene market.

Innovation Indicators
Investment in innovation1
Percentage of net revenue
invested in innovation1
Number of products launched2
Innovation rate (%)2

Unidad
R$ million
%

unit
%

2010
140
2.8

191
65.7

2011
147
2.7

168
64.8

2012
154
2.6

104
67.2

1. The information does not include the development actions in International Operations and only takes into consideration the expenditures
made in Brazil.
2. The number of products launched in 2012 and 2011 has been revised and corrected. This revision also caused changes in the innovation
rate for 2010, which was recalculated.

In order to maintain our level of excellence and continue to play the lead role in innovation
in our fi eld, we have four centers of science, technology and development of products and
processes.

The most recent one was inaugurated in August 2012. It is the Natura Amazon Innovation
Center (Nina), a knowledge center with the mission of stimulating the formation of a research
network involving local, national and international science and technology institutions. In the
fi rst months after its launch, we signed partnership contracts with the Federal University of
Amazonas (UFAM), Brazilian Company of Agriculture and Cattle Raising (Embrapa), National
Research Institute of the Amazon (INPA) and the Amazon Biotechnology Center (CBA). We
also launched an invitation to bid for the Natura Campus Program specifi c for the Amazon
region (learn more on page 36, Social Biodiversity).

Our other research centers are: Cajamar (State of São Paulo), the most complete and ad-
vanced technology research center in cosmetics in South America, and Benevides (State of
Pará), which is focused on innovation based on the sustainable use of social biodiversity. In
France, we reorganized our actions in science and technology, expanding the open innovation
experiences in Paris, and replaced studies conducted in our own laboratory by collaborative
research initiatives in partnership with distinguished laboratories. Our presence in France al-
lows us to keep up with trends and new technologies in the area of beauty and well being.

natura report 2012

OPEN INNOVATION

After identifying the potential of our networks and addition of knowledge, seven years ago we
adopted the open innovation model, which proposes the organization of the scientifi c com-
munity, bringing together many researchers and science and research institutions and business
partners. We believe networking expands our access to new ideas and knowledge and allows
us to interact with the best talented people from the scientifi c community and the industry.
The result is the generation of new and more relevant knowledge, built on a collaborative basis
and shared, which not only adds value to Natura but to society as a whole.

Therefore, in addition to scientists and internal research (more than 250 employees are directly
involved in Research and Development), our business is strongly linked to the partnerships we
have with scientifi c institutions in Brazil and in the world to develop new concepts, methodolo-
gies, products and processes. The relationship with this network is developed mainly through
the Natura Campus Program (www.naturacampus.com.br), a program through which we con-
nect and activate a network of researchers, receive partnership and research proposals, pro-
pose challenges and generate and disseminate knowledge. In addition to information about our
vision of innovation and our research fronts, we keep scientifi c blogs signed by experts who
promote the exchange of ideas, mediate discussions, disclose relevant information and encour-
age interaction among the participants of our network.

In 2012, we joined the research laboratory of digital technologies - Media Lab - of the Massa-
chusetts Institute of Technology (MIT) in Boston, USA, as the Brazilian representative. We also
worked together with the Massachusetts General Hospital, a benchmark in skin studies, which
is also located in Boston. Also, we have resources dedicated to the expansion of our open in-
novation model in the region.

We have kept the partnership with the National Laboratory of Biosciences (LNBio), in the
Biological Assay Lab in Campinas (State of São Paulo), a research center with an automated
system that enables large-scale assays and screening of natural and synthetic compounds with
speed and high performance.

Among other actions, we encouraged the construction of an innovation network with our
partners, including our suppliers, with the launch of IQlicar, a ramifi cation of our supplier de-
velopment program Qlicar (Quality, Logistics, Innovation, Social and Environmental Competi-
tiveness and Relationship), focused on innovation. With this initiative, we want to promote the
interaction between these suppliers and universities, research centers, entities, scientists and
development agencies that collaborate with Natura.

In addition to encouraging the production of knowledge in open innovation, we are also con-
cerned about encouraging research and generation of knowledge within Natura itself. We
re-launched the Carreira Científi ca, a research incentive program designed for our employees
with new selection parameters. In addition to master’s and doctorate degrees, we started to
praise knowledge from experience, and we extended the program to participants from all
areas of the Innovation department. This is an opportunity for our employees to develop a
career as a science specialist or manager in science parallely to their company manager career.

natura report 2012

GRI PR3

WHAT WE INNOVATED

Perfumers Veronica Kato, from Natura and Yves Cassar, from International Flavors and Fra-
grances (IFF), developed the Natura Una deo parfum, a new fragrance from the homonymous
makeup line that was launched last year. The colors of the makeup line have infl uenced the
choice of perfume ingredients, which is composed of notes of Damascus rose, lily of the valley
and magnolia, and fruits like tangerine, plum, Surinam cherry, and cassis and pink pepper. After
two years of work, the perfume, designed for the premium segment, was largely accepted by
consumers, selling 600,000 units in its launch cycle.

Another innovation from perfumery was the Tododia line body spray, which proposes a new,
fresh after-shower perfuming experience. In the lower price range, more than 3.5 million units
of the item were sold in the launch cycle.

With sales that exceeded our expectations, these products show the strength of our brand in
different segments. Our goal is to continue to innovate in concepts and products to charm our
customers and take spaces where the Natura brand can offer products that are in line with our
value proposal and is not yet present.

We are also innovating in terms of level of transparency about the ingredients in our products.
We implemented the traceability of the chain of inputs and established a dialogue with our
stakeholders on environmental and social impact, and health and safety. We are also concerned
about anticipating positions on controversial topics and we are working on the implementation
of a new form of open, collaborative and transparent communication with our stakeholders
(learn more on page 85, Consumer Safety).

OTHER LAUNCHES IN THE YEAR

_In order to make parents’ lives more practical, the packaging of the Mamãe e Bebê
(Mother & Baby) line now has valves that make its application easier at bath time,
in addition to having softer fragrances.

_Jumping ahead Brazilian legislation, which will increase the UVA protection factor,

we adapted all of our products before the publication of the law.

_In France, Natura products will have more complete labeling in 2013, including in-
formation on all raw materials and ingredients. This change is in compliance with a
new European regulation and will also be gradually applied to the brand portfolio
in Brazil and in the rest of Latin America.

_Our innovations also resulted in the launch of two products of the Chronos line: the
ultra light fl uid for face protection - a non greasy and non shinny SPF 60 sunscreen
–, and Chronos Tinted sunscreen with a foundation effect, which ensures sun pro-
tection and complements the daily makeup.

natura report 2012

stakeholders

GRI 4.14;
4.16; 4.17

QUALITY OF RELATIONSHIPS

Relationships are the core of our way of doing business and for this reason one of our priorities is
to continuously improve the quality of the relationships we have with all of our stakeholders. We
learned that the dialogue with our stakeholders and their opinion are important in the search for
solutions to the challenges of our business and, for this reason, we increased their participation in
strategic projects for Natura.

Based on the understanding that the company is part of a network in which many stakeholders
connect, we have already collected examples of this collaborative process. The Programa Amazônia
(Amazon Program), for example, carried out dialogues with the people from the Amazon region
and established an external advisory board, with organizations local experts, to help determine its
priorities and direct investments (learn more on page 34, Social Biodiversity). The strategy of sustain-
able supply chains, which created a methodology for the assessment and management of suppliers’
social and environmental investments as criteria for selecting and maintaining the relationship, was
also developed together with commercial partners (learn more on page 87, Suppliers).

In order to hear the opinion of our stakeholders on topics of interest in our decision-making process,
we organized dialogue panels. In 2012, for example, we carried out an engagement initiative with the
stakeholders from the areas surrounding the new Natura’s unit to be inaugurated in Vila Jaguará, in São
Paulo (State of São Paulo). At the time, we talked to government representatives, companies from the
region, suppliers, employees and representatives of the local community to discuss our impacts and
identify key opportunities in the region (learn more on page 101, Surrounding Community).

We also organized a dialogue panel on conscious consumption in which we brought together ex-
perts, government offi cials, representatives of higher education institutions, civil society members,
Natura consultants and consumers. The dialogue involved a discussion about the values that lead
society to consume and a glance at conscious consumption in the future.

For the purpose of increasing the number of people involved in our engagement initiatives, since
2009, we have been seeking virtual tools to involve our stakeholders in building better relationships
and solutions mainly through the Natura Conecta (Natura Connects) virtual community. In 2012, we
decided to end the activities of this network and focus more on the potentials of the existing digital
networks to work on the engagement of our stakeholders through virtual workshops, webcasts, and
by using other interfaces.

In the 15 face-to-face meetings held in 2012, we gathered more than 400 people, which is less than
the number of participants in 2011, when we had approximately 800 people involved in 23 dialogue
panels. This result refl ects the need to deepen the discussions in smaller groups and focus more on
the topics that have already been addressed (see table on the next page).

We also consider the promotion of the development of individuals essential to the development of
relationships. In this aspect, we gave continuity to the program Você tem fome de quê? (What do you
want?), which is a cycle of lectures and meetings for employees and their partners with the participa-
tion of experts and professionals specialized in the topics of interest for Natura and its stakeholders.
In 2012, we organized six meetings to discuss the results of the United Nations Conference on Sus-

natura report 2012

tainable Development, Rio +20, held in June. The discussions were attended by specialists, such as the
Indian physicist and environmentalist Vandana Shiva, Brazilian businessman and councilman Richard
Young, president of the Instituto Akatu para o Consumo Consciente (Akatu Institute for Conscious
Consumption) Helio Mattar, coordinator of Instituto Vitae Civilis (Vitae Civilis Institute) Aron Belinky,
coordinator of Greenpeace campaigns Sérgio Leitão, among others.

In 2012, we also supported the cycle of conferences called Fronteiras do Pensamento (Thinking
Frontiers), an initiative that gathers today’s major experts and scientists to discuss important matters
for today’s world. In return for our support, some of our stakeholders participated in these events.

2012 Face-to-Face engagement initiatives

Topic

Stakeholders
Involved

Participants

Date and
place

Topics

NASP (Natura São
Paulo) Dialogue

Multistakeholders

Entrepreneurship

Multistakeholders

Action Learning
Ombudsman’s Offi ce

Employees

Action Learning
Ombudsman’s Offi ce
–non-managers

Employees

Action Learning
Ombudsman’s Offi ce
- operational

Employees

Action Learning
Ombudsman’s Offi ce
- managers

Action Learning
Ombudsman’s
Offi ce – Relationship
Managers (GRs)

Employees

Ecosystemic Services

Employees

Feb / Natura
São Paulo
(State of São
Paulo)

Impacts of Natura’s new facility in
Vila Jaguará, in São Paulo (State
of São Paulo), and focus of work
with the surrounding community.

Apr / São
Paulo (State
of São
Paulo)

May /
Natura
Cajamar
(State of São
Paulo)

Natura’s potential to encourage
entrepreneurship in its business.

Relationship of employees with
Natura Ombudsman’s Offi ce and
focuses of improvement of this
dialogue channel’s process.

Jul / Natura
Cajamar
(State of São
Paulo)

Relationship of employees with
Natura Ombudsman’s Offi ce and
focuses of improvement of this
dialogue channel’s process.

Jul / Natura
Cajamar
(State of São
Paulo)

Relationship of employees with
Natura Ombudsman’s Offi ce and
focuses of improvement of this
dialogue channel’s process.

Jul / Natura
Cajamar
(State of São
Paulo)

Relationship of employees with
Natura Ombudsman’s Offi ce and
focuses of improvement of this
dialogue channel’s process.

Jul / Natura
Cajamar
State of São
Paulo

Relationship of employees with
Natura Ombudsman’s Offi ce and
focuses of improvement of this
dialogue channel’s process.

Aug / São
Paulo (State
of São
Paulo)

Dialogue between employees from
different areas who elected, among
the projects developed by Natura,
the one that they will apply, as pilot,
two methodologies of assessment
and valuation of ecosystemic
services: TEEB and ESSP.

natura report 2012

N Ciclos (N Cycles)

Employees

N Ciclos

Employees

N Ciclos

Employees

N Ciclos

Employees

Annual Report

Employees

Conscious
Consumption

Multistakeholders

Aug / Santo
André
(State of São
Paulo)

Impacts of the implementation of
the N Ciclos project for the sales
force – increase in the number of
sales cycles per year.

Aug / Brasília
(Federal
District)

Impacts of the implementation of
the N Ciclos project for the sales
force.

Aug /
Salvador
(State of
Bahia)

Aug / Porto
Alegre
(State of Rio
Grande do
Sul)

Sept /
Natura
Cajamar
(State of São
Paulo)

Impacts of the implementation of
the N Ciclos project for the sales
force.

The process of development of
Natura’s Annual Report.

Oct / Natura
Cajamar
(State of São
Paulo)

Función de la empresa en
la discusión y estrategia de
transformación sistémica en torno
del tema consumo.

The role of the
company in
the discussion
and systemic
transformation
strategy on the
consumption
topic.

Out /
Natura
Cajamar

Construcción de la visión de
futuro del Movimiento Natura.

Natura Movement

Employees

Surrounding
Community –
Cajamar (State of
São Paulo)

Multistakeholders

Feminine Values

Employees

TOTAL

430

Oct / Natura
Cajamar
(State of São
Paulo)

Construction of Natura
Movement’s vision of the future.

Dec /
Cajamar
(State of São
Paulo)

Identifi cation of opportunities of
work in the Cajamar area through
the collection of perceptions of
stakeholders from the region.

Dec /
Natura
Cajamar
(State of São
Paulo)

Bringing back topics relating
to this issue that have already
been addressed by Natura and
discussing the development of the
next steps.

natura report 2012

DIVERSITY

In 2011, we made our understanding of diversity publicly known and we expressed the desire that
our practices go beyond the compliance with regulatory requirements or isolated actions around
issues such as ethnicity, gender, nationality and religion. Based on our strategy and on the character-
istics of our company, we determined three areas on which to focus: social inclusion, women and
multiculturalism.

We are have a strong relationship with women, who represent the majority in our network of
employees, NCs and consumers. Institutionally, we integrated important discussion forums on the
participation and political and economic empowerment of women. Through the Brazilian Associa-
tion of Direct Selling Companies (ABVED), we are part of the Rede Mulheres Brasileiras Líderes pela
Sustentabilidade (Network of Brazilian Women in Leadership Positions for Sustainability), which
was created by the Ministry of the Environment and mobilizes women in leadership positions to
discuss new sustainable solutions. As members of this network, we undertook to encourage dia-
logues about conscious consumption with our NCs. We also participate in the advisory board of
the Mulheres 360 (Women 360) program. The initiative proposes discussions about the presence
of women in the Brazilian corporate environment and stimulates their participation in leadership
positions in companies.

Internally, we have created a space for debates, integrating men and women, for the purpose of
collaboratively building actions to increasingly strengthen feminine values in our environment and
relationships. This initiative is part of our strategy of training people to promote the individual de-
velopment of our stakeholders through lectures, courses and conferences. In 2012, we invited 30
employees to a meeting with the Argentinean therapist Laura Gutman about her book “Maternity,
coming face to face with our own shadow”. We also offered a course on Cultural Biology with the
neurologist Humberto Maturana and Professor Ximena D’Ávila, both from Chile. Ten employees
took part in this course, which addressed the need to recover some values such as love and col-
laboration. Finally, we held a meeting with the spiritual guide Diane Hamilton and 16 employees to
elicit a refl ection on the motives for the lack of discussions about Feminine Values in society and
in Natura’s own corporate environment. This series of activities led us to include the topic in our
dialogue panels. In December 2012, the face-to-face dialogue brought back topics that have already
been addressed by Natura relating to Feminine Values and discussed the next steps for approaching
the theme with our stakeholders.

In 2012, we did not make much progress in the sphere of multiculturalism, which expresses the
need to have people with global experience and regional knowledge in our operations, although
we did implement some actions such as the increase in the participation of employees from Latin
America, Europe and the United States in our MBA program (learn more on page 61, Employees).

Due to the adoption of innovative technologies in our production environment, we identifi ed an
opportunity to promote the inclusion and development of disabled people. In 2012, even though
number the diversity actions was not at the level we would like, we started discussions and actions
that will allow us to take on tangible commitments in relation to the priority topics in the future.
One of these actions is the distribution center in São Paulo (State of São Paulo) to be inaugurated
in 2013 in which we invested in high technology and which will allow us to offer job opportunities
to people with different disabilities, including cognitive. In order to promote a welcoming and inclu-
sive environment, we worked throughout 2012 on the structuring of a number of awareness-raising,
education and development actions (learn more about diversity on page 61, Employees).

natura report 2012

THE OMBUDSMAN’S OFFICE

The Ombudsman’s Offi ce is a channel for dialogue and serves as a change facilitator through
listening, dialoguing and transforming practices and relationships. With care and discretion, it
confi dentially forwards questions, criticisms or compliments to the management areas and
monitors the resolution of cases, assessing the possibility of evolution in our processes, policies
and relationships. All contacts are recorded and reviewed by the Ombudsman’s Offi ce team
together with the parties involved.

The Ombudsman’s Offi ce is available to employees and in-house outsourced workers in Brazil
and to all of our international operations personnel, in addition to suppliers and supplier com-
munities in Brazil. Natura consultants (NCs) and end consumers are served by Natura Call
Centers (CAN) and by Natura Customer Service (SNAC). In the case of these stakeholders,
the Ombudsman’s Offi ce only deals with cases involving the conduct of consultants (behavioral
issues) that are referred by the centers and with consumer issues that are referred by the Press
Relations and Consumer Safety internal departments. In 2012, 2,500 cases regarding consul-
tants and 199 cases of consumers were reviewed.

All contacts involving ethical misconducts are reported to the Ethics Committee composed of the
senior vice presidents of Organizational Development and Sustainability, Finance, Investor Relations
and Legal Affairs, by the People and Organization Director, and by the Ombudsman’s Offi ce. The
CEO is a guest member and, when necessary, the departments of Internal Audit and Legal Affairs
are also involved. In Natura’s history, we have never had a proven discrimination complaint, but
if we do, the proper measures will be taken. In 2012, we received a complaint from an employee
that could not be properly investigated because the perpetrator of the alleged discrimination had
already been terminated at the time of the investigation. Therefore, the case was closed.

Historically, the channel is used by these stakeholders not only to place complaints about behav-
ioral and ethical misconducts but also to seek answers to more technical demands (concerning
processes, policies, procedures and infrastructure). These technical issues did not use to be ad-
dressed by the Ombudsman’s Offi ce, which advised the addresser to refer to the proper man-
aging department. In 2012, we increased the communication about the Ombudsman’s Offi ce,
clarifying the role of the channel, its stakeholders, type of cases it addresses and how they are
handled. As a result, there was a decrease in the number of contacts received and an increase in
the percentage of cases solved. We reached a rate of 93% compared to 68% in 2011. We held
dialogue panels with different addressers for the purpose of bringing this channel closer to the
stakeholders served. We also revised our processes in order to improve the quality of the service.

As a consequence of the actions that were carried out in 2012, the 2012 climate survey record-
ed a 10% increase in this channel’s credibility regarding the confi dence in the Ombudsman’s
Offi ce as an appropriate dialogue channel for criticisms, complaints or suggestions (learn more
on page 61, Employees).

The Ombudsman’s Offi ce is also responsible for addressing issues related to the Natura Rela-
tionship Principles, which are guidelines based on our Beliefs and Essence that inspire and guide
our everyday actions to improve our relationships. The Natura Relationship Principles apply to
all our operations and are under revision. A new edition is expected to be published in 2013.
The release of the new edition was initially expected in 2012 but the revision deadline was
extended so as to involve our stakeholders in the development of the material.

natura report 2012

GRI 4.4

GRI HR4

GRI HR10

HR11. Total number of
contacts received by the
Ombudsman’s Offi ce1
Employees and In-house
outsourced workers - Brazil
Employees and In-house
outsourced workers –
International Operations1
Suppliers – Brazil
Supplying Communities2
Total

2010

1,120

17
8
1,163

1. Desde 2011, los datos incluyen a colaboradores de Francia.
2. Público atendido a partir de junio de 2012.

2011

1,025

4
0
1,036

2012

687

10
0
708

Percentage of requests
addressed compared
to total received (%)
% requests addressed1

% requests forwarded

2010

2011

2012

1. Cases addressed by the Ombudsman’s Offi ce together with the managing department involved.
2. Until May 2011, the addresser was advised to contact the managing department to solve technical issues

EMPLOYEES AND IN-HOUSE OUTSOURCED WORKERS - BRAZIL

We consider the Ombudsman’s Offi ce a consolidated additional dialogue channel for employees
and in-house outsourced workers of the Brazilian operations. In 2012, we identifi ed a change in
the profi le of contacts from these stakeholders. We recorded an increase of 500 basis points in
anonymous contacts - 25% in 2012 compared to 20% in 2011.The contacts related to behavioral
misconducts grew 1100 basis points - totaling 28% in 2012 compared to 17% in 2011.

Profi le of the
contacts – Internal
Stakeholders - Brazil

People management was the most mentioned process, totaling 44% of the contacts. The cases
referred mainly to benefi ts such as restaurant, transportation and medical care.

PR5. Satisfaction with the
Ombudsman’s Offi ce channel1
Internal stakeholders – Brazil

Unit

2010

2011

2012

1. In 2012, the Satisfaction Survey for Employees - Brazil was revised. Until September 2012, positive answers to the question: “Are you
satisfi ed with this dialogue channel?” were considered. From this date onwards, the answers rated 4 and 5 as satisfaction with the channel
were considered.

EMPLOYEES AND IN-HOUSE OUTSOURCED WORKERS – INTERNATIONAL OPERATIONS

In International Operations, the number of contacts with the channel remained stable. However,
we still consider the use of the Ombudsman’s Offi ce by the stakeholders and in-house out-
sourced workers as being low, corresponding to 2% of the contacts. In 2012, 11 contacts were
recorded and most of them were complaints related to misconduct. We still face the challenge of
disseminating this channel among these stakeholders for the purpose of increasing the level of use.

criticisms

compliments

suggestions

complaints/ethi-
cal misconducts

Total contacts: 687

natura report 2012

EMPLOYEES AND IN-HOUSE OUTSOURCED WORKERS
– INTERNATIONAL OPERATIONS

In International Operations, the number of contacts with the channel remained stable. How-
ever, we still consider the use of the Ombudsman’s Offi ce by the stakeholders and in-house
outsourced workers as being low, corresponding to 2% of the contacts. In 2012, 11 contacts
were recorded and most of them were complaints related to misconduct. We still face the
challenge of disseminating this channel among these stakeholders for the purpose of increasing
the level of use.

SUPPLIERS AND SUPPLIER COMMUNITIES IN BRAZIL

The Ombudsman’s Offi ce has been available to the company’s suppliers in Brazil for fi ve years
and, in 2012, the channel was opened to our supplier communities. The channel receives criti-
cisms, compliments, suggestions or questions, information that help us identify opportunities
for improvement and enhance our processes and practices. In 2012, we recorded 10 contacts
from our suppliers and supplying communities. Most of them were related to misconduct and
payment processes. We also face the challenge of disseminating this channel among these
stakeholders for the purpose of increasing the level of use.

natura report 2012

employees

As our organization grows and expands its relationships, the need to train high-potential
leaders and attract professionals with skills that are still lacking in the company also grows.
Therefore, we have been working to accelerate professional development and improve what
we call the company’s entrance gate, which are the areas that attract more people, such as
the trainee and internship programs (learn more on page 40, Education).

In 2012, we took an important step to ensure the implementation of our future strategy. The
cycle of review of the strategic planning included the task of explaining, more clearly, to em-
ployees, the company’s short, medium and long-term goals, which were also disseminated in
a large number of meetings and actions. We wanted to convey to the teams a more realistic
vision of the future of the business to guide the work of the employees.

LA1 - Number of Natura
employees by region/country
Brazil
Argentina
Chile
Mexico1
Peru
Colombia
France
Total

Other employment contracts2
Apprentices3
Interns4
Temporary workers5
In-house outsourced workers6
Total - other employment contracts

Unit

2010

2011

2012

Unit

5,482
395
293
329
293
170
48
7,010

152
68
445
2,048
2,713

5,483
449
293
113
301
191
55
6,885

157
141
255
2,094
2,647

5,354
394
268
119
283
213
52
6,683

164
80
337
2,505
3,086

1. The decrease from 2010 to 2011 is mainly due to the implementation of a new commercial model in Mexico, in which the relationship
managers who were employees became consultants.
2. Include the operations in Brazil, Argentina, Chile, Colombia, Peru, France and Mexico.
3. The 162 youngsters in the group of young apprentices were hired by a third party and, therefore, they are also accounted for in this
category. Only two of the apprentices are included in the number of employees - Brazil.
4. The reduced number of interns is due to the end of the 2010 internship program, which will be replaced in January 2013, totaling 165
interns.
5. Temporary workers are those hired for a pre-determined period of time and registered in accordance with labor legislation by an em-
ployment agency and under subordination.
6. In-house outsourced workers are suppliers who have had work posts (fi xed or not) in the company’s units for more than six months.

natura report 2012

GRI PR5

In 2012, our workforce was practically stable, in line with recent years. The slight decrease in
the number of employees in the Brazilian operations is due to a change in the employment
contract for young apprentices who were previously included in the employee’s database and,
as of last year, they have been hired by a third party. The increase in the number of temporary
and outsourced workers is due to the construction of an administrative and distribution center
in São Paulo (State of São Paulo) and the construction works for the expansion of the plants in
Cajamar (State of São Paulo) and Benevides (State of Pará). We also hired temporary workers
to meet the increased demand for logistics in the Christmas period.

In the International Operations we also experienced changes in our employment contracts. In
Argentina, Chile and Peru we outsourced order picking activities to partner companies and,
in the transition process, we tried to ensure that our former employees were incorporated
into the new companies in charge of that task. In Argentina and Chile, we also expanded the
services provided by Natura Call Centers (CAN), which are carried out by third parties, so as
to better serve our rapidly growing group of consultants.

CLIMATE SURVEY

Our main indicator of the quality of our relationship with employees is the climate survey. After
a two years drop of the indicator, the 2012 survey showed an increase of 200 basis points in the
level of favorability to Natura, reaching 72%. However, it is still below the stipulated 74% target.

The most signifi cant improvements were identifi ed in the communication channels – especially
the Ombudsman’s Offi ce -, stimuli to innovation and performance management. On one hand,
there was an improvement in the perception of the relationship factor, especially regarding the
feeling of recognition and internal cooperation but, on the other hand, the relationship with the
other areas as well as the quality of the decision-making process remain as issues that still need
attention. None of the factors showed a decrease, but issues such as support, resources and
working conditions in general remain critical.

In Brazil, the survey showed progress for all stakeholders, repositioning the company in the third
quartile of the market (MQ3), the highest position in an analysis that ranks the best companies
in terms of organizational climate. As strengths, we can point out employees’ acknowledge-
ment of Natura’s commitment to sustainable development and consumers’ positive perception
of the company’s credibility. The employee loyalty rate (which takes into consideration only the
highest scores for questions about satisfaction, recommendation and intention to stay in the
company), which is only measured in Brazil at this time, also rose from 28% to 29%.

The most signifi cant increase in favorability rates occurred in France, Argentina and Chile. How-
ever, in Mexico, there was a decrease in the organizational climate rate. We believe that this
negative result is related to the instabilities in the technology systems due to the implementa-
tion of a new commercial model, which adversely affected the level of service provided to the
consultants in that country and the results for the period.

We understand that we need to improve the quality of relationships and we reaffi rm this com-
mitment for 2013 by establishing a new target for the favorability rate: of 73%.

natura report 2012

Climate Survey – Favorability 1
Brazil
Argentina2
Peru
Chile
Mexico
France
Colombia
Natura

Unit

2010
72
64
71
69
82
72
84
73

2011
70
72
73
66
85
64
86
70

2012
72
77
73
72
73
73
85
72

1. Equivalent to the percentage of employees who rated 4 and 5 (top 2 box) for the items surveyed on a 1 to 5 scale.
2. The data does not include the International Business offi ce, which is the Buenos Aires offi ce that coordinates the activities of all Interna-
tional Operations

PR5. Employee Loyalty
– Brazilian Operations

Unidad
%

2010
31

2011
28

2012
29

1. Percentage of employees who selected the highest score (top 1 box) on a 1 to 5 scale for three aspects: satisfaction, intention to main-
tain their relationship with Natura and recommendation.

EDUCATION

Natura believes that education is an essential tool to help achieve the company’s vision of fu-
ture and be in line with our Essence. The actions follow, in accordance with Natura education
architecture, a large matrix built year after year that indicates the topics and proposals on which
people should work in that period.

In general, we were more effi cient in using the resources, especially if we consider that the
portion allocated to education and development was reduced in 2012. This was due to the
implementation of the matrix budget in Natura’s planning, which allowed the optimization of
resources throughout the company. In this connection, we sought to optimize training budgets,
class sizes and formats and exceeded our corporate target by 8%, reaching a total of 88 average
training hours per employee.

Operational employees, with the Meu Caminho (My Way) program, were the highlight. This
program includes Professional training during working hours, development courses during non-
working hours and learning certifi cates that give the employee the opportunity to climb the
career ladder. We offered more than 13,000 hours of training to these stakeholders in the
workplace. They also went through 19,000 hours of professional training and 31,000 hours of
training required by the legislation in force.

The company also revised the Natura Educação (Natura Education) program, which provides
grants for undergraduate and graduate technical courses, programs, to encourage our employ-
ees to pursue top ranked programs and institutions according to the Ministry of Education. We
trained a smaller number of employees last year, but we increased by 75% the grants amount.
In addition, the Company included another project to the Natura Educação program called Na-
tura Estudar (Natura Study), whose purpose is to accelerate the development of high-potential
employees who have excellent academic performance by offering scholarships in fi rst-class
institutions.

natura report 2012

GRI HR3 e HR8

GRI S03

In the International Operations, Natura offered a total of 58 hours training per employee,
exceeding by 31% the 44 hours target. We worked with important topics such as sustainability,
brand, product and commercial model, always seeking to strengthen the key aspects of our
Essence and of our values and culture, which are Natura’s differentials.

In 2012, the Human Rights topic was discussed in training courses held during the integration of
new employees, in leadership courses and in open lectures, which, together totaled 9457 hours
(compared to 7,444 hours in 2011). Although there is no specifi c training on issues related to
corruption, all new employees were made aware of Natura’s Relationship Principles, which also
describe the company’s repudiation to activities that may be viewed as corruption and bribery.

LA10. Average training hours per employee,
broken down by employment category,
Brazilian operations1
Production
Administrative
Management
Executives
Average training hours2
Average training hours per employee
International Operations
Natura3

Unit

2010

2011

2012

93
86
90
78
90
2010
NA
NA

97
86
88
60
90
2011
66
85

128
68
71
34
95
2012
58
88

hours

1. This indicator includes the training of the sales force (sales managers and relationship managers).
2. This includes total hours for all levels divided by total employees and interns for the respective year.
3. Consolidated average for all Natura operations, in Brazil and in International Operations.

LA10. Training hours per gender – Brazil1
Male
Female

Unit
%

2010
NA
NA

2011
55
45

2012
52
48

1. This indicator started to be monitored in 2011.

Unit

LA11. Investment in employee’s education and training1
Operation
Brazil²
Argentina
Chile
Mexico
Peru
Colombia
France
Total

R$
thousand

2010
25,744
96
131
584
216
41
103
26,915

2011
26,415
115
260
245
241
214
380
27,869

2012
19,634
138
215
395
121
339
166
21,008

1. In order to allow a better comparison, investments were translated into Brazilian reais at the exchange rate for the year.
2. Investments in Brazil also include the sales force training (sales managers and relationship managers).

natura report 2012

LA11. Brazilian Operations – Natura
Educação Program¹
Scholarships granted
Scholarships granted/number of applications
Amount invested in the Natura Educação
program

Unit

2010

2011

2012

Unit
%
R$
thousand

546
43
863

510
69
1,014

376
46
1,218

1. All employees enrolled and awarded with the scholarships in the year are considered to have been served by the program.

LA11. Courses attended by employees or
their family members that were fully or par-
tially sponsored by Natura (Brazil)
Technical/vocational
Languages
Preparatory course for the College Entrance
Examination (Vestibular)
Undergraduate programs
MBA and other graduate programs
Total

Unit

2010

2011

2012

Unit

47
134
5

259
101
546

57
43
1

277
132
510

44
6
0

247
79
376

LEADERSHIP AND DEVELOPMENT

As part of our goals for 2013, we will continue to invest strongly in the strengthening of our
leadership. To this end, we are focusing on accelerating the completion of our leaders’ succes-
sion pipeline, intensifying the programs of talented professionals attraction for training future
leaders, creating conditions for our employees to learn new skills and expanding internal educa-
tion actions.

Launched in 2011, the Cosmos leadership development program completed its fi rst cycle in
March 2012.Between 2011 and 2012, 386 leaders participated in the activities and the expecta-
tion is that, in three years, the entire leadership team - composed of 600 managers - will have
gone through all the training stages.

The program comprises four dimensions. The fi rst of them is the “school” and consists of face-
to-face classes taught by well known Brazilian and international leadership professionals about
topics such as management, organizational dynamics and sustainability and relationships. In
one of the activities carried out last year, for example, we started a discussion with leaders to
understand how we could expand the analyses of our customers’ purchasing patterns and turn
this learning experience into actions for increasing sales.

In the “brotherhoods”, another dimension of the Cosmos, we have meetings to exchange in-
formation and promote discussions related to work, for interactions that facilitate the sharing
of experiences and lessons learned and mobilization for the construction of a better future.
The meetings are open to all managers, regardless of whether or not they are formally en-
rolled in the program. In 2012, there were four of these meetings with lecturers such as the
Indian physicist Vandana Shiva, who spoke about sustainability and social justice; Mozambican
biologist and writer Mia Couto, who discussed the issue of cultural differences and similarities;
historian Dante Marcello Claramonte Gallian, who presented his concept of humanity, and the
specialist in occupational psychology Sigmar Malvezi, who spoke about how cinema can help
in people management.

natura report 2012

The “communities of interest” dimension is aimed at expanding the learning environment
through social networks. The networks operate as instruments that allow the dissemination
- through texts, videos, stories and conversations – of the intellectual output generated in
other environments of the Cosmos and, consequently, strengthen the interaction of leaders
and the discussion of matters of general interest. At the end of 2012, 14 communities were
already in place.

Finally, the “workshops”, scheduled to be launched in 2013, are the practical application of what
has been learned. They give leaders the opportunity to develop projects of personal interest
that are somehow related to Natura’s business. Working in teams divided by business units,
processes and related areas, the idea is to involve everyone in the pursuit of innovation and
collective learning.

The Cosmos, as well as the attraction and engagement activities contribute to the occupation
of vacant posts in the succession plans. Today, 54% of our strategic leadership positions already
have short, medium and long-term identifi ed successors.

ATTRACTION AND ENGAGEMENT

For the purpose of attracting new employees who are in line with our values and have the
skills we are looking for, we reactivated the Leadership Offi ce. The initiative, which was car-
ried out between 2009 and 2011 for the development of the leadership training program,
provides for the development of new leaders and trainees, attraction of students from re-
nowned international courses and search, in the market, for people who have new skills and
high potential for Natura.

In the International Operations, where the rapid growth of our business increases the demand
for leaders with global experience and regional knowledge, we launched the Inspirando Camin-
hos (Inspiring Paths) program. The purpose of this program is to attract and train people in the
region so that they can be in line with our value proposal and strategy. For nine months, these
new employees will job shadow other leaders and follow the development of strategic projects
and, at the end of that period, they will take leadership positions in our international operations.
Three people were in the program in 2012 – all from Latin American countries, except Brazil.
Although small, this program will provide the Company with signifi cant lessons and it is in line
with the idea of promoting multiculturalism, one of the company’s diversity pillars (learn more
about diversity on page 61).

Natura’s trainee program has also a global approach, with 35 members from Brazil and other Latin
American countries, and a plan that provides for exchange opportunities among these countries.

As a result of this training and talent development effort, the company maintained a high inter-
nal promotion rate, which reached 71% in Brazil and 48% in International Operations. Taking
into consideration the leadership aspect only, the internal promotion rate was 71% compared
to 68% in the previous year, including all operations. In the International Operations, the pres-
ence of local professionals in management positions increased 32%.

The company’s strategy for managers is to focus on internal promotions, giving opportunities of
growth to current employees and not restricting or privileging those who live in the communi-
ties surrounding these operations. In general, we use external recruitment when there is the
need to search for a candidate with specifi c skills and, in these cases, we do not make restric-
tions regarding the candidate’s place of origin.

natura report 2012

GRI EC7

GRI LA12

Internal promotions for positions offered
to/taken by employees
Brazil
International Operations
Total Natura

Unit

2010

2011

2012

36
33
N/A

70
42
64

71
48
67

EC7. Senior management members
from local community 1 2
Total number of senior management members
Cajamar
Itapecerica da Serra
Benevides

Unit

2010

2011

2012

Unit

NA
NA
NA
NA

168
3,6
4,2
0,6

179
6,1
4,5
0,6

1. Senior management members are those in positions from Senior Manager up.
2. Surrounding communities of Cajamar: Cajamar, Campo Limpo, Santana de Parnaíba and Várzea Paulista; Surrounding communities of
Benevides: Benevides, Barcarena, Belém, Ananindeua and Marituba; surrounding communities of Itapecerica da Serra: Itapecerica da Serra,
Embu and Cotia.

EC7. Senior management members
from local community1 2
Argentina
Chile
Colombia
France
Mexico
Peru
Total

Unit

2010

2011

2012

NA
NA
NA
NA
NA
NA
NA

86
87
71
91
88
81
82

62
0
33
100
67
20
53

1. Senior management members are those in positions from Senior Manager up. Locals are considered those members from the country
in question. The data for previous years was not disclosed because the indicator was reformulated in 2011 and started to consider the
percentage of local members in the company. Before, the indicator only took into account those employees hired during the year, which did
not refl ect the real presence of local members.
2. The variations in the percentages from one year to another are not signifi cant. Since these are smaller units, any internal change, even if
small, affects the percentage.

PERFORMANCE AND COMPENSATION

A challenge to any company, the performance assessment processes and bonus compensation
for achieving performance targets and executives’ goals are quite complex. Natura has been
reviewing this process so that the performance program and variable compensation serve as
an encouragement for the performance of the company’s strategy and not just as an employee
reward system for achieving targets.

Today, the organization has different performance assessment instruments in place. An exam-
ple is the all-round assessment, which includes employees’ self-assessment and the perception
of the work of multiple stakeholders (managers, company’s departments, partners and sub-
ordinates (if any)). The purpose of this analysis is to assess employees’ adherence to Natura’s
Essence and Culture. In addition to this behavioral assessment, the company also assesses
performance by monitoring the achievement of individual targets set every year. Natura’s as-
sessments rely on objective (numerical) and subjective (performance agreement) variables.

natura report 2012

GRI LA12

It is also important to note that the Performance Management Program (PGD) covers all
stakeholders and operations. The PGD ensures all eligible professionals, regardless of gender,
the effective management of their performance through structured feedback and individual
development plans.

With respect to compensation, Natura considers its average salary appropriate to the mar-
ket. Salaries are determined based on comparative surveys in the general market, in Brazilian
national or multinational companies and in listed companies or companies that implement
Human Resources practices that are similar to Natura’s. The comparison considers the scope
and the complexity of the functions.

In 2012, collective bargaining agreements granted 8% salary increase for employees in the
operational and administrative areas. Meanwhile, managers received a fi xed increase in their
base salary.

Salary variations between male and female employees are exclusively due to the distribution
of wages within Natura’s structure. When we compare each salary group, we do not identify
signifi cant differences between the salaries of men and women, which is in accordance with
Natura’s Compensation Policy: when men and women have the same position, they receive
the same salary. What we see is that, today, we have more men than women in positions
within the highest salary groups.

EC5. Proportion of the lowest salary in
relation to the local minimum wage, per
Operation1
Brazil
Argentina
Chile
Peru
Mexico
Colombia
France

2010

2011

2012

1.4
1.7
1.3
1.0
4.6
1.1
1.1

1.6
1.3
1.2
1.4
4.5
1.0
1.0

1,4
1.4
1.2
1.3
4.4
1.0
1.1

1. Calculation based on the lowest salary in the operation divided by the minimum wage in each country.

LA14.Proportion of women’s salary
in relation to men’s salary
(per Professional category)
Operational
Administrative
Management
Executive

Unit

2010

2011

2012

-16
30
-4
-19

-21
34
-7
-17

-22
16
-7
-14

natura report 2012

LA14.Salary profi le – average monthly salary
in Brazilian Operations 1 2
Women - total
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions

Men – total
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions

Over 45 years of age
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions

Up to 45 years of age
Average monthly salary in production positions
Average monthly salary in administrative positions
Average monthly salary in management positions
Average monthly salary in executive positions

Unit

2010

2011

2012

4,944
1,202
6,190
13,351
37,196

3,852
1,428
4,746
13,972
45,919

8,089
1,770
9,166
18,344
44,090

4,095
1,293
5,305
13,144
43,638

5,553
1,336
6,894
13,405
37,049

4,342
1,700
5,146
14,415
44,592

8,638
1,967
9,885
18,356
43,296

4,609
1,498
5,856
13,291
42,609

5,610
1,506
6,350
13,703
38,965

4,831
1,921
5,494
14,780
45,114

8,128
2,142
8,407
17,553
48,212

4,893
1,699
5,728
13,738
40,928

1. The calculation does not take into consideration the payment of the short-term incentive (Profi t Sharing).
2. For the purpose of the calculation of this indicator, the bonuses paid to sales managers and relationship managers were taken into
account. When the sales force employees are placed in their categories, this improves the average women’s salaries due to the bonuses,
excluding production jobs.

Natura offers pension plans to which the employees can determine what percentage of their
salary they wish to contribute with (0% to 12%). Natura contributes with 60% of this amount,
up to 5% of the employee’s salary. The plan is offered in the Brazilian operations and it is limited
to the ceiling of R$ 13,129.00. In 2012, Natura paid around R$ 4.8 million into the plan (com-
pared to 4.3 million in 2011).

EC3.. NATURA’S
CONTRIBUTIONS TO
THE EMPLOYEES’
PENSION PLAN IN
BRAZIL (R$ MILLION)

2,528

4,300 4,849

Natura does not have a formal program to prepare employees for retirement. However, since
2011, the Construindo o Futuro (Building the Future) project has been proposing a number of
refl ections on the emotional, physical and material aspects inherent to this career transition
period. The program is offered to our sales force, composed of relationship and sales managers
and, in 2012, 28 people were enrolled.

0
1
0
2

1
1
0
2

2
1
0
2

natura report 2012

GRI LA4 e LA5

GRI HR5

Collective bargaining is coordinated by the Human Resources department and it covers all
employees and follows the standards and limits set by local legislation. Natura promotes formal
meetings with unions in connection to its business to discuss agreed upon topics with union
representatives. Whenever these meetings take place, we notify about collective bargaining
agreements preferably in advance in order to allow for an open discussion about the topics.
Natura does not have formal processes in place to identify operations in which the right to
exercise freedom of association and collective bargaining may be at risk.

DIVERSITY

Caring for our relationships is part of our culture and mission as a company. In 2012, Natura
introduced some actions to enhance opportunities for diversity and create a more welcoming
environment and evolve in the three aspects that it considers priorities: social inclusion, women
and multiculturalism. In 2012, however, our diversity indicators were adversely affected by an
increase in Natura’s overall turnover.

The opening of the company’s new distribution center in São Paulo (State of São Paulo) will
provide an opportunity for the inclusion of people with disabilities, especially cognitive disabili-
ties, in our order picking lines. Since the operation is expected to start in 2013, we have already
started to hire the fi rst employees with the support of a specialized consulting company. The
development of the company’s managers so that they can act as sponsors and role models
for these employees at Natura is part of the project. We believe this work may also positively
refl ect on our indicator of contracting disabled people, which, in 2012, dropped from 4.7% to
4.1% in relation to the total number of people contracted.

We also need to make progress with respect to the participation of women within our current
staff. If, on one hand, we have a smaller participation of women in the senior managers group,
on the other hand, when we analyze the succession pipeline, the gender of the leaders is pri-
marily female, which means a vision of the future that is more in line with our diversity strategy.

With a staff composed primarily of women (64%), we have worked to establish a suitable envi-
ronment that supports, particularly, the employees who have just given birth. Natura provides
a nursery for infants up to two years and 11 months old, has created fl exible work hours for
nursing mothers, and has made available a program through which doctors and social work-
ers assist new mothers during their maternity leave (since 2010, Natura has been offering a
six-month maternity leave). In 2012, the percentage of female employees who returned from
maternity leave showed a slight decrease when compared to 2011, but the rate is still high.

The multiculturalism indicator is part of a broader strategy for the future and refl ects the grow-
ing interest of the company in having people with different experience, but always in line with
our values and Essence. In 2012, Natura promoted some actions that favor multiculturalism
within the company such as expanding the participation of Latin American employees in the
MBA program, but the topic has not evolved at the desired speed and there was a 9% decrease
in the indicator (learn more about diversity on page 48, Quality of Relationships).

natura report 2012

LA1.Natura employees by gender1
Male
Female

1. This indicator started to be monitored in 2011.

LA13. Diversity1
Total employees in Brazil
Women
As a percentage of total employees
In management positions as a percentage
of total management positions
In executive positions as a percentage of total
executive positions

Over 45 years of age
As a percentage of total employees
In management positions as a percentage of
total management positions
In executive positions as a percentage of total
executive positions

Multiculturalism
Total number of foreign leaders or leaders
with international experience2
Percentage of foreign leaders or leaders
with international experience in relation to
total leaders3

Disabled employees
Number of disabled employees
As a percentage of total employees
Number of disabled people trained in the
Basic Professional Skills program

Unit
%

Unit
Unit
%

Unit

Unit
%
Unit

2010
NA
NA

2011
36
64

2012
36
64

2010
5,482

2011
5,483

2012
5,354

61
55

11
9

61
57

12
11

60
59

13
11

249
4.5
217

258
4.7
258

219
4.1
244

1. We do not report a classifi cation by minorities due to a different understanding of diversity, which involves broader concepts of
social inclusion.
2. This considers global leaders and those managing processes and business.
3. Natura considers current or past international experience with Natura but in operations in markets that are different from those
of the employee’s nationality and for a minimum period of two years.

LA1.Employees by professional level1
Operational
Administrative
Management
Executive
Total

1. This indicator started to be monitored in 2012

Unit
Unit

2010
NA
NA
NA
NA
NA

2011
NA
NA
NA
NA
NA

2012
2.476
3.474
679
54
6.683

natura report 2012

LA15. Number of maternity leave granted
and return rate1
Number of employees on maternity leave
during the period
Percentage of employees who returned from
maternity leave and stayed with the company
for at least 12 months after their return

Unit

2010

2011

2012

Unit

155

156

158

1. Due to the new method for calculating the indicator, the fi gures for 2010 and 2011 have been changed.

TURNOVER

In 2012, the Company recorded an increase in turnover rates for management, administrative and
operational employees and, consequently, the overall turnover rate increased from 8% to 9%.

GRI LA2

Among the employees who left the company, 71% were terminated by Natura due to lower-than-
expected performance for the job. This result is related to the improvements in the performance
management process, which pays closer attention to low-performance employees, who have a
six-month development plan to recover performance and, if they do not, they are terminated.
Additionally, the absenteeism management program and greater proximity of leadership resulted
in more effective management, with a consequent increase in the number of terminations by the
company.

As for resignations, they were mostly due to the expansion of the job market, particularly in the
administrative area and in more technical areas such as engineering. In order to reduce these cases,
since the second half of 2012, we have been enhancing training, career and development initiatives
for these stakeholders.

In the International Operations, we noted the opposite trend, with a reduction in the turnover rate
to 8% compared to 12% in the previous year. This result is related to the consolidation of the teams
in these units after intense turnover at the beginning of operations.

LA2. Total employees hired1
Brazil
Argentina
Chile
Mexico
Peru
France
Colombia
Total

Unit

2010
1.328
NA
NA
NA
NA
NA
NA
1.328

2011
758
NA
NA
NA
NA
NA
NA
758

2012
708
21
16
20
16
3
20
804

1. The indicator of International Operations started to be monitored in 2012.

natura report 2012

LA2.Total employees’ lay-offs
Brazil
Argentina
Chile
Mexico
Peru
France
Colombia
Total

LA2.Turnover by gender
Male
Female

LA2.Turnover by age group - Brazil
Under 18 years of age
Between 18 and 25 years of age
Between 26 and 30 years of age
Between 31 and 40 years of age
Between 41 and 50 years of age
Over 50 years of age

Unit

unid

Unit
%

2010
641
40
49
38
75
5
37
885

2010
12
6

2010
0
15
12
7
2
4

2011
751
35
89
258
50
7
43
1.233

2011
10
7

2011
0
10
9
9
6
5

2012
832
103
53
18
60
17
29
1.112

2012
12
8

2012
4
12
11
9,5
6
7

1. Turnover defi nition: the number of terminations by the company (with or without cause) or resignation by the employee and subsequent
fi lling of the position. Calculation method: dismissals of employees who have been replaced / effective headcount of the company.

natura report 2012

GRI LA3

BENEFITS

Benefi ts and allowances to all employees in the Brazilian Operations:

_Ergonomics program: seeks a comfortable and productive adjustment of workers to their

work place and working conditions making the necessary adjustments.

_Social Work: a service to help employees discuss, understand and resolve their social issues.

_Saúde Tamanho Família (Family Size Health) Program

_Workplace exercise program.

_Chronic Disease Management Program: for employees and family members with chronic

illnesses.

_40% discount on the purchase of up to fi ve Natura products per month.

_ Cuidando de Quem Cuida (Taking Care of Those Who Take Care) Program: postnatal

meeting and courses for pregnant women.

_Daycare allowance and special allowance: for fi nancing expenses with the education of

disabled children.

_Life insurance.

_Vehicles for senior management level employees

_Medication allowance.

_Chartered transportation.

_Pension plan.

-Runners project: jogging and walking activities with specialized supervision.

_Restaurant or meal vouchers.

_Sale of school materials with discounts.

_Fitness services, swimming pool, dance classes, soccer tournaments and multipurpose

sports court at Clube Natura (Natura Sports Club) and Espaço Bem Estar (Well Being
Space) (Cajamar and Itapecerica da Serra).

_Services: seamstress, laundry, shoe repair, eyewear shop, insurance, post offi ce and book

and movie rental (Cajamar and Itapecerica da Serra).

_Natura Education: scholarships for employees and family members.

_Construindo o Futuro (Building the Future) program (preparation for retirement for

sales management, including subsidized savings account).

_Nursery for children up to 2 years and 11 months of age.

_Support in child adoption processes.

_Health care plan.

_Dental care plan.

_Check-up for management or higher level employees.

_Partial reimbursement of expenses with medications for cardiovascular conditions,
diabetes, renal failure, oncology, liver diseases, neurological disorders, occupational
musculoskeletal disorders, and psychiatric disorders.

_Telemedicine: electrocardiogram (EKG) via telephone in emergency cases.

_Saúde em Movimento (Health in Movement) Program: incentive to physical exercise.

Medical, nutritional and physical check-up before starting activities.

_Gym allowance for relationship and sales managers.

_Five free products available for management-level employees and executives.

natura report 2012

GRI LA8

_Christmas gift basket.

_Clinic: emergency medical care, physiotherapy, GPR, gynecology and obstetrics,

acupuncture, orthopedics, nutrition and psychology.

_Quero Estar Bem (I Want to Be Well) Program: integration of all specialties and

professionals of the Clinic, holistically addressing the four dimensions of the human being:
physical, emotional, spiritual and social.

Brazilian Operations:

_Course for pregnant women.

_Clinic: medical emergency.

_Runners Project.

_Restaurant.

_Workplace exercises.

_Toys.

_Christmas gift basket.

_Chartered transportation.

_Fitness services, swimming pool, dance classes and multipurpose sports court at Clube

Natura and Espaço Bem Estar (Cajamar and Itapecerica da Serra).

_Services: seamstress, laundry, shoe repair, eyewear shop, insurance, post offi ce and book

and video rental (Cajamar and Itapecerica da Serra).

_Presents on Mother’s Day and Father’s Day.

HEALTH AND SAFETY

Natura has a number of programs to promote a healthier lifestyle for its employees and their
families. In relation to the previous year, the Company increased the number of preventive medi-
cal tests for its employees and their dependents, such as breast, cervical and prostate cancer
tests, as well as diagnostic studies for the control of diabetes and cardiovascular diseases. In 2012,
health investments amounted to R$ 942 per employee, an amount similar to last year’s.

Under the umbrella of the Quero Estar Bem Program, Natura developed activities focused on
health prevention, encouraging exercise and promoting quality of life. In 2013, the company
should organize the 2nd Health Week - the fi rst one took place in 2010 - with health risk assess-
ments and specifi c actions aimed at the most frequently diagnosed diseases, such as cardiovas-
cular diseases, high blood pressure and high cholesterol and/or blood sugar. The company also
offers vaccines that are not available in public healthcare centers.

Natura offers in-house workout three times a week to administrative employees and daily to
operational employees. There are also fi tness and sports themed events (running and soccer, for
example), in addition to the gym allowance. The Cuidando de Quem Cuida Program includes
actions to support activities related to the health of employees, especially women, with prenatal
and postnatal courses for pregnant women, nursery, daycare allowance, special education allow-
ance for disabled children and maternity leave extension. Natura also provides access to medica-
tion, funeral allowance and life insurance, and support in medical and dental care plans.

natura report 2012

In order to promote a safe environment, the company invested the equivalent to R$ 582 per
employee in accident prevention activities in 2012. The volume was lower than in the previous
year, when the company invested R$ 794 per employee, mainly due to engineering works that
involved higher costs.

Additionally, Natura reassessed its safety practices and structure of all Natura’s facilities to deter-
mine how the company could improve what was being done. The results showed that it should
be closer to the workers and respond faster and, in view of such answers, the company reallo-
cated teams so as to serve more signifi cant areas and processes, where there are more risks or
demands for safety management. Natura wants safety to be a crosscutting issue because in order
for it to be able to change behaviors, it needs to keep the matter present in the company’s daily
routine, so that employees understand its value and importance to the business.

Last year, Natura promoted specifi c and general training programs for its in-house outsourced
employees, which reduced the number of accidents among these stakeholders by 16%. On
the other hand, the number of accidents among Natura employees remained stable (see table
below). It is worth noting, however, that all incidents reported were mild and included a be-
havioral component, which reinforces the need to work with safety and prevention conduct
among employees.

The employees from Cajamar and Benevides units are represented in health and safety formal
committees by means of the Internal Accident Prevention Commission (Cipa), which is open
to all employees (from these units) and is composed of different hierarchical levels. They are
structured as follows: 50% of the representatives are indicated by Natura and the other 50% by
employees by means of elections. The existence of Cipa is provided for in formal agreements
between Natura and the Unions and they also include work protection measures such as the
use of individual protection equipment; machinery and equipment accident prevention practices
and communication of occupational accidents.

GRI LA6

GRI LA9

natura report 2012

Unit

2010

2011

2012

7
10
0,004

10
4
0,003

8
6
0,003

LA7. Typical occupational injuries
and lost days and absenteeism rate
(including outsourced employees)
in Brazilian operations1
Employees – number of accidents with leave
Employees - number of accidents without leave
Number of occupational accidents per
employee
Outsourced employees – number of accidents
with leave2
Outsourced employees - number of accidents
without leave2

Total working hours planned3
Workdays lost3
Rate of lost days (TDP)4

Frequency rate of accidents with leave5

Investment in the prevention of illnesses
per employee (R$)6

Investment in the prevention of accidents
per employee (R$)7
Investment in the prevention of illnesses
per employee (R$)

Frequency rate of occupational diseases

Number of cases reported to the National
Institute of Social Security on occupational
illnesses – Cajamar
Absenteeism rate8 (%)

Unit

Hrs/year
unit
%

2.010
64
6,3

0,7

1,7

882

736

0,9

unit

2.011
51
4,7

0,9

1,2

794

940

0,2

2.016
73
6,70

0,8

1,3

582

942

0,3

3,9

6,5

5,8

1. The data is in accordance with the National Institute of Social Security regulations, collective bargaining agreements with Unions, and
Directive No. 3,214 of the Ministry of Labor and Employment. This considers accidents recorded at the Cajamar, Itapecerica da Serra, and
Barueri, São Paulo units, distribution centers and Benevides, excluding small injuries.
2. Accidents with leave are those in which employees do not return to work after the incident. Accidents without leave are those in which
the employee returns to work on the same day of the accident or on the fi rst working day after the incident. There were no work-related
fatalities in the period covered by the report.
3. For Natura employees, the total number of working hours planned include 8 hours/day times planned working days.
4. Rate of lost days: the factor 1 million was considered for calculation in accordance with NBR No. 14280 of the Brazilian Association of
Technical Standards (ABNT), which is the standard used by Natura. Lost days are counted from the day after the accident.
5. Equivalent to the number of accidents with leave divided by a million man-hours worked.
6. Equivalent to the number of accidents or injured employees with/without leave divided by a million man-hours worked.
7. Includes the whole budget of the Work Safety Department, expenses and the investments made by the Engineering and Manufacturing
area to ensure and/or improve work safety conditions. Expenditures with training are not included.
8. In 2012, we identifi ed opportunities for improvement in the computer hour record system, which started to consider different workloads
for different days of the week and shifts. For this reason, we revised the rate for 2011.

LA7.Percentage of accidents by gender
(with and without leave) - Brazil
Male
Female

Unit

2010

2011

2012

76
24

71
29

natura report 2012

consultants
and CNOs

Natura is a direct selling company and its main link with consumers is the Natura Consultants
(NCs). Natura’s network comprises more than 1.5 million NCs who deliver much more than just
products and services to the company’s stakeholders, they also take our values and our Beliefs in
seven Latin American countries and France.

This structure is composed of two other groups: Natura Consultant Advisors (NCAs) and Rela-
tionship Managers. Whereas the NCAs, besides working as consultants themselves, work on the
expansion of the network and on the relationship with other consultants, the Relationship Manag-
ers are Natura’s employees who work closely with the NCs and NCAs in order to understand
their needs and expand the value of their entrepreneurial activity.

The year 2012 was very positive for this network. The delivery of products within 48 hours already
benefi ts 25% of the NCs in Brazil, compared with 5% in 2011. When considering just the large state
capitals, this rate reaches 60%. The average delivery time dropped from 6.8 days to 5.1 days in the
period. The company makes faster and more precise deliveries, since, in 2012, it also recorded the
lowest backorder rate in the past seven years.

Over the past years, Natura has made large investments in the review and expansion of its logistics
network in Brazil and in the development of technologies and systems for the receipt of orders.
These are progresses that refl ect in the satisfaction of Natura’s network today. NCs and NCAs
loyalty showed a signifi cant growth last year, reaching the highest level since the beginning of loy-
alty monitoring in 2010. The rate, which only takes into consideration the highest score given to
the items satisfaction, recommendation and intention to continue their relationship with Natura,
reached 24% among consultants, higher than the 18.6% score in the previous year and even higher
than the target of 21% for the period. Among NCAs, the growth was even more expressive, going
from 24% to 40%.

In International Operations, the loyalty rates remained high, in line with the previous years’ re-
sponses. Natura recorded a decrease only in Mexico, where systems instability in a specifi c period
of the year adversely affected the quality of the service

In order to continue adding excellence to direct sales, the company invested in surveys on the ex-
perience in digital media and identifi ed a large potential to bring consultants closer to their custom-
ers. The purpose of this move is to try to understand customers’ buying habits and provide the NCs
network with information that can increase their productivity and improve their service. A group
of NCs already uses mobile technology and the web to relate with their customers, an experience
that is helping the company learn more about the potential of such mechanisms in direct sales.

natura report 2012

Natura also intends to create a CRM (Customer Relationship Management) system, which should
help manage information on consumers and NCs and will also provide consultants with informa-
tion on consumption profi le that will be useful to increase their sales and rate the relationship with
their customers (learn more on page 31, Strategy and Prospects).

PR5.Quality of Relationship with NCs
– Brazilian Operations
Satisfaction1
Loyalty2

Unit

2010

2011

2012

90
21

87
19

90
24

1. NCs satisfi ed and completely satisfi ed – Top 2 boxes.
2. Percentage of NCs who attributed the highest score (top 1 box) on a scale of 1 to 5 for three aspects: satisfaction, intention to maintain
their relationship with Natura and recommendation.

PR5.Quality of relationships with NCs -
International Operations – Loyalty Rate (%)1
Argentina
Chile
Colombia
Mexico
Peru
Total International Operations
PR5.Quality of relationships with NCs -
International Operations – Satisfaction Rate (%)2 3
Argentina
Chile
Colombia
Mexico
Peru

Unit

2010

2011

2012

Unit

35
35
44
51
30
na
2010

93.3
91.3
93.8
93.8
92.7

38
36
37
40
23
na
2011

94.0
95.5
95.5
91.5
92.5

45.4
39.0
42.8
38.4
25.9
38
2012

96.5
94.0
95.3
90.0
91.0

1. Percentage of NCs who attributed the highest score (top 1 box) on a scale of 1 to 5 for three aspects: satisfaction, intention to main-
tain their relationship with Natura and recommendation.
2. This indicator started to be monitored in 2012. 2. The data is presented by country since they may vary depending on the size of the
network in each place.
3. NCs satisfi ed and completely satisfi ed – Top 2 boxes.

PR5.Quality of relationships with NCAs
– Brazilian Operations2
Satisfaction1
Loyalty2

Unidad

2010

2011

2012

94
33

87
24

96
40

1. NCAs satisfi ed and completely satisfi ed – Top 2 boxes.
2. Percentage of NCAs who attributed the highest score (top 1 box) on a 1 to 5 scale for three aspects: satisfaction, intention to maintain
their relationship with Natura and recommendation.

natura report 2012

PR5. Quality of relationship with NCAs
– International Operations – Loyalty 1 2
Argentina
Chile
Colombia
Mexico
Peru
PR5. Quality of relationships with NCAs
– International Operations – Satisfaction 2 3
Argentina
Chile
Colombia
Mexico
Peru

Unit

2012

na
46
58
52
50
2012

na
95,8
99,0
93,1
97,0

1. Percentage of NCAs who attributed the highest score (top 1 box) on a scale of 1 to 5 for three aspects: satisfaction, intention to
maintain their relationship with Natura and recommendation.
2. This indicator started to be monitored in 2012. The data is presented by country because the size and weight of each country may
be changed since this is a new model. Argentina does not have an NCA model yet.
3. NCAs satisfi ed and completely satisfi ed – Top 2 boxes.

THE SIZE OF NATURA’S NETWORK

In 2012, the total number of consultants exceeded 1.5 million, an increase of 10.7% over the
previous year. In Brazil, the network grew 8%, totaling 1.2 million consultants. Among the
NCAs, there was a slight decrease in the total number in Brazil due to adjustments made to
the model: the company optimized geographical operations and increased the number of NCs
served by each NCA, focusing on actions to increase the individual compensation of these
stakeholders.

The International Operations, which is in a different stage of implementation, and with the es-
tablishment of the NCA model in Chile, Colombia and Peru, and of the differentiated commer-
cial model in Mexico, the network grew more than 25% in relation to 2011 and reached 304,000
NCs. The exception is France, where the network was slightly reduced, which prompted us to
review new measures to increase the attractiveness of the model in that country.

Number of consultants available 1 2
Brazil
Argentina
Chile
Mexico
Peru
Colombia
France
Total

Unit

thousands

2010
1,028.7
53.2
31.0
41.2
45.5
19.0
2.5
1,221.1

2011
1,175.5
63.7
37.9
58.5
54.9
27.1
3.1
1,420.7

2012
1,268.5
74.9
52.1
74.3
63.6
37.0
2.6
1,572.9

1. In Brazil, this refers to the number of consultants available at the end of the year.
2. In International Operations, these refer to the closing position of cycle 17.

natura report 2012

Number of Natura Consultant
Advisers in Brazil1

1. Number of NCAs at the end of the year.

Number of NCAs available
in International Operations1
Chile
Mexico
Peru
Colombia
France
Total International Operations

Unit

2010

2011

2012

Unit

11,276

13,230

12,125

Unidad

Mil

2012

728
na
760
388
na
1876

1. Number of NCAs at the end of the year. First year that this indicator is monitored.

MORE PRODUCTIVITY, MORE INCOME

The smaller growth of the network in Brazil is in line with the company’s strategy to focus on
increasing NCs and NCAs’ productivity. After years of expansion in the number of consultants, Na-
tura realized the need to intensify training actions and tools to help Natura’s network improve its
sales performance, and increase consumers’ purchase frequency and variety of products purchased.

CONSULTANTS
(NCS)1 (R$)

4,128

3,904

3,912

Accordingly, the initiatives implemented last year allowed the average productivity of NCs to grow
in the second half of the year (1.4% in the third quarter and 2.9% in the fourth quarter). The pro-
ductivity of the NCs for the year was almost equal to the previous year, interrupting the downward
trend. In the case of the NCAs, the result was more consistent and productivity increased 21%.

Among the actions, the company launched the Mais Natura (More Natura) program, which casts
a new view on the business, and revised the relationship strategy and compensation rules for NCs
and NCAs.

Natura also invested in marketing development and in the combined offer of different categories of
products (cross category strategy) according to consumers’ profi les. Another initiative that helped
increase productivity was the change in the presentation of promotions on Natura Magazine in
2011. Before, promotions were packed at the end of the magazine, and now they are distributed
across the publication as an incentive for the end user to browse along the entire portfolio.

TRAINING

The strategy to increase productivity is also associated with the increase in the effectiveness
of the company’s training courses. In 2012, Natura invested primarily in the use of the Internet
as a tool for publicizing content that improves the network operation. The Company recorded
1.1 million NCs who participated in training courses in Brazil, exceeding last year’s target of
1,005,000 participants.

0
1
0
2

1
1
0
2

2
1
0
2

1. This takes into ac-
count a NC’s profi t of
30% over the price of
the products shown in
the magazine.

NATURA CONSUL-
TANT ADVISERS
(NCAS)2 (R$)

9,802

9,521

11,515

0
1
0
2

1
1
0
2

2
1
0
2

2. The NCAs receive a
commission according to
their performance based
on the number of consul-
tants who place orders
and volume of orders.

natura report 2012

On the Internet, the Portal do Conhecimento (Knowledge Portal) - a website linked to the In-
ternet’s ordering platform and which provides information and training courses to consultants
- had over 360,000 accesses in 2012. Out of these, 180,000 consultants completed at least one
virtual training course, which represents an optimal performance for the platform, because
it is a recent initiative. To encourage the use of this new resource, the company carried out
campaigns through key communication channels such as the magazine and the Consultoria
(Consulting) blog, and the Natura Meetings at every sales cycle.

In order to promote learning and enchant through concepts of and experiences with its prod-
ucts, Natura invested in new training actions, among which are the Vivências de Maquiagem e
Perfumaria (Makeup and Fragrances Experiences) that took place in many cities in Brazil and
that were conducted by specialists. Natura also developed and sent to the NCs a magazine
with sales information and tips about the main product categories.

Natura has also been investing in face-to-face training courses and the initial training course was
attended by 343,000 NCs. To those who lived in distant cities from the training locations, Natura
sent 121,000 kits with tips and guidelines, resulting in 92% of the beginner consultants trained.

Training actions – Brazilian Operations1 2
Total number of NCs trained in training actions

Unit
thou-
sands

2010
-

2011
-

2012
1,152

1. This takes into account the participation of the same NC in a training action, either through Relationship Managers, Virtual Training
Courses and/or other corporate initiatives.
2. This indicator started to be monitored in 2012.

NCs Training – Brazilian Operation
Beginner NCs
Initial training

Unit

thou-
sands

2010
458
361

2011
505
358

2012
506
343

Also in 2012, the company discontinued the activities of the Natura Houses in Brazil, hitherto
used to host the Natura Meetings, which were regular meetings with the consultants for the
presentation of the sales cycles, information on launches and other strategies. Although the
Houses enjoyed a good approval rate among NCs, the company noticed that they were not
fulfi lling the task of increasing the participation of consultants in the meetings at each cycle nor
bringing them any closer to Natura.

In the International Operations, the training courses expanded at the same fast pace of the
growth in the number of Natura consultants. In some cases, such as in Chile and Argentina, the
participation of the NCs more than doubled in relation to the previous year. Natura has been
renewing the offer of trainning courses that meet the needs of each country, offering a seg-
mented strategy to each consultant, which not only allows them to obtain technical knowledge
about the products, but it also gives them tools for their business, promoting entrepreneurship.

natura report 2012

NCs Training – International Operations1 2
Argentina
Chile
Colombia
France
Peru
Total

Unit

2010
3,501
1,671
2,160
500
3,261
11,093

2011
7,243
3,802
3,656
859
5,847
21,407

2012
10.973
7.450
5.161
648
10.383
34,615

1.Number of NCs trained mainly in the Boas-Vindas (Welcome), product line and business courses.
2. This indicator is no longer monitored in Mexico due to the implementation of the new commercial model.

A PERFECT SERVICE

In the search for continuous improvement, the company reduced the average delivery time to
5.1 days in the year, and to 4.5 days when considering only the second half of 2012. After es-
tablishing a proper basis for the entire network, Natura believes that it is necessary to improve
its understanding of the service to its different stakeholders, particularly the NCs, NCAs and
consumers.

Established in 2011, the Comitê de Clientes (Customers’’ Committee) is the Center of this
strategy to search for quality and serves as a forum, bringing together the areas that affect the
service level. This is the case, for example, of the information technology, commercial, logistics
and distribution areas, in addition to the relationship managers, who work daily with the NCs
and can bring an additional perspective from the end of the chain to ensure the effi ciency of
Natura’s service.

At each sales cycle, Natura monitors in an integrated manner around 70 indicators that af-
fect the quality of service and speed up the identifi cation of points for improvement directly
with those who are responsible for the processes. The Committee reviews all steps, from the
registration of the NC, through the receipt of the order and availability of the product to the
delivery at the consultant’s home. This basket of indicators makes up the so-called Perfect
Service, whose purpose is to ensure the delivery of orders within the shortest possible time
and with quality.

The results of this investment are shown in the fi gures: in 2012, between 60% and 70% of the
indicators showed an improvement of approximately 50% in the level of excellence, whereas
in 2011, only 40% of the indicators followed this pattern. The company’s target is to be able to
offer the Perfect Service to 90% of the NCs in Brazil.

In 2012, Natura also started conducting the satisfaction survey with the NCs at each sales
cycle to measure, more frequently, their opinion about the company’s services and processes,
improving quality control. In the past, satisfaction was assessed once a year.

For the time being, the operation of the Customers’ Committee is restricted to Brazil. How-
ever, some experiences have already been made in Chile, with a pilot project in 2012, and the
company anticipates expanding the strategy of all operations. In Natura’s regional units in Brazil,
a regional Customer Service made up of managers supported by a sales team, was created to
identify opportunities for development in each region.

natura report 2012

RELATIONSHIP WITH NCS AND NCAS

To improve the quality of the relationships with the sales force, the company created a new
relationship policy for these stakeholders based on fi ve principles: connecting; caring; generat-
ing learning; promoting opportunities and creating shared value (see table below).

Based on these guidelines, Natura wants to transform the purchasing experience of our consul-
tants and consumers, reinforcing the central role of the relationship as a business differentiator,
in addition to strengthening the loyalty of Natura’s stakeholders, particularly the NCs and NCAs.

The new relationship policy should infl uence all contacts with Natura’s network and, to this
end, Natura is reviewing all of its procedures in the search for opportunities for improvement in
the service channels (learn more in Communication Channels), in the policies for the incentive
and recognition of consultants (learn more in Recognition and Incentives) and in the training
programs offered (learn more in Training). Among the actions that have already been carried
out is the creation of a center focused on attraction and initial development of new NCs and
on the reduction of turnover by monitoring these stakeholders to understand their needs and
diffi culties so as to make their stay at Natura viable.

The company continues to hold dialogue panels to hear consultants and identify collaborative
solutions for sales, customer relationship and customer service challenges, and other issues that
may have direct consequences for the NCs. Natura believes it is necessary to look at others,
valuing the opinion of all its stakeholders.

Principles
Connecting

Caring

Generating learning

Promoting
opportunities

Creating shared value

Meaning
The relationships are established among individuals and their
multiple roles in an ecosystem where they identify themselves with
one another and connect around common purposes.
Caring is the central element of any and all interaction. Simplicity,
serving with love and empathy express this caring and build
relationships based on trust and loyalty.
A dynamic ecosystem of relationships that acts, interacts and
collaborates, learns together, reconnects, rebuilds itself and evolves.
Entrepreneurial actions are praised, without imposition. The
opportunities are accessible to all and allow the potential of each
individual to show up.
The search for continuous improvement leads to the creation of
shared value for the entire ecosystem.

COMMUNICATION CHANNELS

There are several communication channels to support the work of Natura’s consultants and
the company is improving online tools in particular so as to make their services more agile and
improve them. Currently, almost all of the orders from the NCs have already placed through
the website Consultoria (Consulting) - 94% in Brazil and 80% in International Operations - and
the company wants to encourage the use of this channel also in communication.

natura report 2012

Consultants can contact the Natura Call Centers (CAN) through the online chat, e-mail or
telephone. Additionally, last year, the company started to monitor social networks to ensure
that all consultants’ contacts made via Natura’s pages on Facebook, Twitter and on its blogs
are addressed.

Last year, the contacts with CAN totaled 0.39 contacts per order billed compared to 0.85 in
2011. This decrease is the result of the improvement in the company’s processes, particularly
in the availability of products, credit and collection systems and order delivery. Overall, CAN
received 20 million requests, compared to 30 million in the previous year, considering all Na-
tura operations. To ensure a prompt service, specifi c channels were established to serve the
more experienced NCs and those who were more productive in 2012.

In order to gain effi ciency and make processes in the International Operations consistent, the
company is centralizing the contacts of the Center in Peru and Colombia, instead of having
separate centers in each country. In addition to bringing effi ciency gains, this change should
also help monitor and maintain the quality of the service provided.

Natura is working to unify its online communication channels and, consequently, make it easier
for both consumers and consultants to surf on the websites and profi les of the Natura brand
and its products on social networks, which are virtual addresses that are accessed by a large
number of stakeholders. At the end of 2012, the company launched the new format of Na-
tura Digital Magazine (www.revistanatura.com.br), which now has a more interactive website,
identifying the profi les of consumers and consultants, allowing for a better experience with
Natura’s portfolio. Among the new features, there is a search system that facilitates the search
by type of product and sub-brand and visitors can also see the presentation of the portfolio
according to their profi le and use a virtual makeup artist tool. The company’s purpose is to
create a culture of consultation to Natura’s portfolio on the digital magazine and develop a
relationship tool on the Internet, where the number of users is increasingly higher. In 2012,
Natura Digital Magazine had an average 500,000 accesses per cycle.

Natura also issues the Consultoria blog (blogconsultoria.natura.net), which teaches about the con-
cepts and features of Natura’s products and discloses information on topics such as entrepreneur-
ship and sustainability. In 2012, the blog reached an average of 300,000 single accesses per cycle.

However, the major communication channels are still the company’s printed magazines - Na-
tura Magazine, Consultoria Magazine and other brochures. The average print run of Natura
Magazine was 3.5 million copies per cycle, and the average print run of Consultoria Magazine
(which is also edited every cycle and provides information to the consultant on the activity,
special promotions and relationship actions) was 1.5 million. In 2013, the company expects to
launch the Consultoria Magazine in a more effi cient format so that it can work as a training
tool for consultants.

In 2012, the production process of these materials was redesigned to adjust the focus of each
publication to its target audience. The increase in the number of pages or print run is also
closely monitored, which is consistent with our environmental impact control efforts. In this
connection, the company wishes to increasingly encourage the use of the online Natura Maga-
zine and of other channels on the web.

natura report 2012

Number of orders placed on the
Consultoria website1
Brazilian Operations
International Operations

Unit

2010

2011

2012

thou-
sands

12,901
611

15,961
2,111

17,616
2,801

1.Orders placed by consultants via the Internet that were billed in the relevant years.

Natura Call Center - CAN1
Average number of daily calls answered

Unit
thou-
sands

2010
24

2011
30

2012
20

1. Calls related to the Brazilian Operations via telephone, online chat and e-mail.

RECOGNITION

Natura values the important role of the NCs and NCAs by means of many actions that ac-
knowledge their performance in the sales channel, in the dissemination of our beliefs and values
and in the development of sustainable initiatives aimed at the construction of a better world.

Every year, the company honors the most productive consultants, the ones who sell more
products in refi ll packages and products of the Crer para Ver (Believing is Seeing) line – which
revenue is donated to the Natura Institute. Natura also honors its consultants for the length of
service with the their company seniority, who have been in the activity for after 10, 20, 30 and
40 years of activity , and the NCAs, for their progress and performance.

NCs Recognition - Brazil
NCs recognized for length of service1
Events of recognition for length of service
NCs recognized for their performance2
Number of awards distributed to NCs
recognized for their performance
Events of recognition for performance

Unit

2010
73,286
56
9,137
473

2011
13,753
44
9,340
451

2012
28,277
91
9,510
457

1.Annual regional recognition of NCs who have been in activity for 10, 20, 30 and 40 years.
2.Recognition of NCs for their performance in the categories of sales volume, sales of refi lls and products of the Crer para Ver line.

NCAs Recognition - Brazil
NCAs recognized for their growth1
NCAs recognized for their performance2

Unit
Unit

2010
2,248
3,018

2011
2,443
2,931

2012
2,730
2,931

1. Recognition for their growth in the activity.
2. Performance recognition: growth in the number of NCs in the group, frequency of orders and retention of NCs in their network.

natura report 2012

ENTREPRENEURIAL MODEL IN MEXICO

Approximately two years ago, Natura implemented the Sustainable Relationship Network, a
multi-level direct sales model that encourages entrepreneurship among the company’s con-
sultants in Mexico. Under this model, the consultants evolve in their relationship with Natura
as they add more NCs to their group and develop leaders in their networks. They must also
participate in education modules on topics related to sustainable entrepreneurship, direct sales
business skills and personal fi nance.

The consultant’s career under this model comprises many steps that they climb as they increase
their level of relationship with Natura and become leaders of their business, managing their
own consulting network on an entrepreneurial basis. There are many examples of leaders who
have their own network of more than 3,000 consultants, transforming their operation into a
relevant entrepreneurial business.

In 2012, the Módulo de Aprendizagem Essencial (Essential Learning Module) - MAE, which re-
corded almost 15,000 participants, offered to consultants courses on personal fi nances, how
to improve customer relationship, business ethics, makeup, fragrances, web business, among
other subjects that help improve professional performance of the NCs. A total of 575 NCs
participated in the Vivência de Desenvolvimento Sustentável (Sustainable Development Experi-
ence) - VDS, which cover topics that guide and encourage the network to develop social and
environmental initiatives. Natura also provided business guidance in the Módulo de Orientação
ao Momento (Moment Guidance), which had almost 11,000 participants. The fi gures show that
the model has contributed to the establishment of social capital and economic inclusion in
Mexico. The education modules are offered in face-to-face classes or via e-learning.

In 2012, the network grew 35% in Mexico, reaching a total of 74,275 consultants. The company
is experiencing a time of learning and development of the model that has so far proved to be
differentiated and attractive. This is a unique system even within Natura, different from the
standards the company adopts in the other regions and, as part of the growing process, the
infrastructure and processes were adapted. The period of adjustments to the operating sys-
tems adversely affected the quality of the service, with an increase in the local non-service rate.
Natura is working to adapt systems and processes to reach the level of quality that has already
been achieved in other Natura operations.

As an inclusive business, in 2012, the Rede de Relações Sustentáveis (Sustainable Relations
Network) became part of the network of Business Call to Action, an international organiza-
tion supported by the UN, which promotes actions to accelerate the achievement of the eight
Millennium Development Goals. The organization works with companies with innovative and
inclusive business vision that offer the opportunity to combine commercial success with the
generation of positive impact for local development. The model Natura developed in Mexico
contributes to the achievement of two of the Millennium Development Goals: eradicate ex-
treme poverty and hunger, and promote gender equality and empower women. The partner-
ship with Natura was consolidated during the Rio+20 conference (learn more about Natura’s
participation at Rio+20 on page 107, Government).

natura report 2012

NATURA MOVEMENT

Natura Movement was created eight years ago with the purpose of encouraging the mobiliza-
tion and engagement of the sales force, NCs and NCAs in social and environmental initiatives
undertaken and supported by Natura. Over the years, the company realized that this move-
ment would become more legitimate if it embraced and recognized actions that had already
been undertaken by the consultants to transform their own local conditions, promoting the
entrepreneurial potential of the network. And this is how the Acolher (Welcome) Program
was created in 2010. Last year, the Acolher Program received 680 stories of initiatives taken by
NCs from all over Brazil.

All NCs who share their stories in the Acolher Program receive feedback about their actions
after their project is reviewed by an experts’ committee. The nine consultants who were recog-
nized by the program have access to technical support, which comprises guidelines sessions with
specialists who monitor their development as well as the development of their initiatives for a
period of up to 12 months. In order to foster the development of the NCs at different levels
of social participation, acknowledgement is divided into two categories: Semente (Seed) – for
incipient projects - and Crescente (Growth) - for more well-established actions. Each category
receives fi nancial support in the amount of R$ 5,000 and R$ 15,000, respectively.

More than just offering technical and fi nancial support, the purpose of the Acolher Program is
to encourage the creation of a network of consultants who develop sustainable entrepreneur-
ship actions in all regions of Brazil. Natura intends to increase the opportunities for interaction
among these stakeholders and help make these actions even more transforming and accessible
to the entire network. In September 2012, Natura connected 26 NCs who participated in the
program in a three-day event in Sao Paulo. Its purpose was to encourage the exchange of expe-
riences and knowledge within the group through lectures and workshops on entrepreneurship.

In order to motivate other consultants to get involved and disseminate the topic, Natura in-
vested in giving visibility to the actions it supports. Stories on social and environmental entre-
preneurship developed by the NCs are presented in the short TV show Aqui Tem Natura
(Natura is Here), which is broadcasted on Record television channel in the commercial breaks
of the Hoje em Dia show (learn more on page 81, Consumers). Until November 2012, these sto-
ries were broadcasted in the Mulheres que Inspiram (Inspiring Women) segment of the same
program of this TV channel, which was created for the purpose of disseminating the initiatives.
NCs recognized in the Acolher Program also run for the Claudia Award, organized by Claudia
Magazine, in the category Consultora Natura Inspiradora (Natura Inspiring Consultant).

In June 2012, ten consultants were given the opportunity to closely watch the dialogues and
activities of the Rio +20 conference, held in Rio de Janeiro. Participants were selected based
on the work they carry out in their communities and that are related to the topics discussed at
the conference. The consultants attended the Forum on Social Entrepreneurship in the New
Economy, the UN’s Sustainable Development Dialogues and visited the Greenpeace vessel.
Additionally, they visited the Espaço Natura (Natura Unit) in Complexo do Alemão district –
where the company has expanded the network of consultants and carried out our work with
the help of the Peacekeeping Police Units (UPPs)- and exchanged experiences on the work in
their communities (learn more about Natura’s participation in Rio+20 on page 107, Government).

natura report 2012

Also last year, the Natura Movement encouraged the channel to think about the development
of cities. Urged to express their opinion about the future they dream of, the NCs expressed
their ideas about how to improve living conditions in urban centers on the initiative’s hot site.
The action was carried out in partnership with the Cidades Sustentáveis (Sustainable Cities)
program, a platform of civil society organizations, in view of the 2012 municipal elections, took
the opportunity to instigate the candidates to consider sustainability in their proposals. At the
end of the campaign, the program prepared materials that can support mayors: a set of indica-
tors, guidelines and benchmark examples for sustainable development in cities.

These initiatives increased by 43% the number of NCs involved in the Natura Movement last
year, totaling more than 176,000 people. This result is also much larger than the target set for
the period, which was to maintain the same percentage of 2011 (123,000).

NCs engaged in the Natura Movement1

Unit
Unit

2010
113,118

2011
122,953

2012
176,331

Equivalent to the sum of the average number of active NCs in the sale of products of the Crer para Ver line per cycle with the NCs who are
participating in other initiatives of the Natura Movement, such as the Acolher Program.

natura report 2012

CONSUMERS

Natura faces the constant challenge of promoting Well-Being Well experiences and infusing
the company’s Essence into each new product or contact it establishes with its consum-
ers. These guidelines are present in everything Natura does and they become even more
challenging in a time when relationships are intensely changing due to, above all, the social
networks.

Understanding the needs of these new times and delivering to consumers a valuable experi-
ence is the company’s primary mission. Natura intends to use the new information and mobil-
ity technologies to bring all stakeholders closer, particularly end consumers and consultants
and, consequently, Natura itself.

Within this sense of proximity, in 2012, Natura created the Espaço Conceito (Concept
Space), in São Paulo (State of São Paulo). The place was specially designed to help consumers
strengthen their relationship with Natura’s brand, integrating conceptual, sensory and com-
mercial perceptions so as to offer a multiple sense experience.

During the whole year, the space was open to the public at Rua Oscar Freire, which is an iconic
address for Natura because it was there that Luiz Seabra, one of the Company’s founders,
opened the fi rst store of the brand in 1970.The success of the experience, which ended in early
2013, encouraged the company to replicate the initiative in other parts of Brazil in 2013.

At Espaço Conceito, visitors had at their disposal hair, skin and makeup consultants, as well as
perfumers and, at the end of the “immersion”, they could also purchase the products. It was
not just a shop, but a brand communication and relationship space that gave us important
lessons. The strategy was important for Natura to understand how cohesive and attractive
the brand is to different stakeholders. In 2012, 72,000 people visited the place, each one pur-
chasing, on average, R$ 82.00 in products. Some 10% of the visitors were foreigners, which
is a positive response to the dissemination of the brand abroad.

For the purpose of broadening the experience of the end consumer with the Natura brand,
the company has itinerant spaces in 15 Brazilian capital cities. These spaces are kiosks where
the company’s fragrances portfolio is exhibited and they were visited by some 100,000
people in 2012.

In 2012, Natura also launched the weekly TV show Aqui tem Natura (Natura is Here),
broadcasted on Record TV channel, in which the company directly speaks to consumers and
consultants. The program works as a content channel about well-being, health, beauty, sus-
tainability and social entrepreneurship in which Natura has the opportunity to tell inspiring
stories that add value to its products and services. This is an innovative strategy for commu-
nicating the company’s value proposition that reaches all Natura’s stakeholders.

At the tv.natura.net web portal, the company makes available the videos of the show, with
talks with specialists on odd and important topics, makeup tips by Marcos Costa - Natura’s
offi cial makeup artist -, information on products and sustainable entrepreneurship actions
developed by our consultants. The Aqui tem Natura show is broadcasted during the Hoje em
Dia show on Wednesdays.

Natura understands that the digital media provides relevant tools that help continuing to
add excellence to the relationship with its customers. In 2012, Natura launched a Facebook
application also called Aqui tem Natura, which allows people who are registered Facebook
users to fi nd Natura consultants among the contacts of their friends.

natura report 2012

Natura’s offi cial Facebook page has 1.7 million fans that access information on products,
social and environmental actions undertaken by consultants and also on the company’s fi eld
work with supplier communities. The page for Latin America also has over 1 million fans.

In 2012, Natura started using the Internet as a means for the NCs to relate with their cus-
tomers, which is serving to generate lessons and help the company understand the potential
of the digital media for direct sales. This experience includes the creation of a CRM (Cus-
tomer Relationship Management) system, which will help manage information on consumers
and NCs and better know and serve the people who use Natura’s brand (learn more on
pages 32 and 69, Consultants and NCAs).

QUALITY OF RELATIONSHIPS

The Natura brand continues to be positively evaluated by consumers. According to the
Brand Essence image survey conducted by the consulting company Ipsos, the percentage
of consumers who attributed the highest score to Natura grew from 73% to 79% in 2012.

Natura also maintained its position as the preferred brand in the Cosmetics, Fragrances and
Toiletries market, with 46.5%, 50 basis points lower than in the previous year. The consumer
loyalty indicator also decreased, from 66% to 51% in the period, a result that confi rms the
harshening of competition in the industry. Signifi cant investments in advertising in the cosmet-
ics industry in recent years have been positively refl ecting in the evaluation of brands in general.

Overall evaluation of the brand image
survey in Brazil12

Unit

2010

2011

2012

1. Source: Brand Essence / Ipsos Institute.
2. The overall top box measure evaluation considers the respondents who attributed the highest score to the Natura brand on a scale of 1 to 5.

PR5. Quality of relationships with
Consumers in Brazil123
Loyalty4
Preference

Unit

2010

2011

2012

53
49

66
47

51
46.5

1. Source: Brand Essence / Ipsos Institute.
2. Survey based on a quantitative sample of 2,900 personal interviews and home visits in fi ve cities.
3. Percentage of consumers who attributed the highest score (top 1 box) on a scale of 1 to 5 for three aspects: satisfaction, intention to
maintain a relationship with Natura and recommendation.
4. The data for previous years was changed due to the new calculation methodology.

2. Penetration in Brazilian homes123

Unit
%

2010
55

2011
62

2012
60

1. Source: Kantor World Panel.
2.Penetration is the percentage of homes represented in the survey that bought the brand in the specifi ed period.
3. The survey represents 81% of the domiciled population and 90% of the potential consumption in Brazil (according to the Target Index).
Due to updates in the population profi le, the information from Natura was adjusted and the numbers for the previous years were revised.

natura report 2012

Spontaneous knowledge of the brand image
survey in International Operations1
Argentina
Chile
Colombia
Mexico
Peru
Overall evaluation – Latin America

1. Source: Brand Essence / Ipsos Institute.

Unit

2010

2011

2012

17
9
1
11
32
16.8

24
16
9
5
43
20.8

32.8
25.6
5.8
7.0
27.0
20.7

With the expansion of the company’s operations in Latin America, the investments in advertis-
ing in the countries in which Natura operates were also increased. Focused on the main con-
cepts of the Natura brand and more relevant sub-brands, communication has been refl ecting
in image gain. The awareness of the Natura brand increased in Argentina, Chile and Mexico
last year. The recognitions that the company received also show that the brand is growing in
Latin America. In 2012, Natura was selected as the fourth most reputable company by non-
governmental organizations in Chile, and was also included in the ranking of the most presti-
gious brands in Argentina, and of cosmetics in Mexico and Peru (see the complete list of awards
on page 9, Profi le).

COMMUNICATION AND MARKETING

Natura’s commercials and advertising and marketing campaigns publicize more than just the
products and their features. The company follows the basic guideline of using these commercial
spaces to convey its vision of the world and help increase the awareness of the end consumer
on topics such as the quality of relationships, well-being and sustainability. The spontaneous
spreading of special actions that we carry out in social media is evidence that people are
touched by the concepts of the Natura brand.

Natura Amó, which is a line that celebrates love between couples, promoted one of the most
widely-known actions on social networks last year. In June, the Saint Valentine’s month in Brazil,
Natura prepared a surprise for couples who have to live distant from each other. In partnership
with the airline company Gol Linhas Aéreas, the company promoted a contest on its Facebook
page. To participate, people only needed to record a love declaration to run for a free airline
ticket. The love messages were played during the fl ight of the winners and their reactions were
recorded on video.

In another initiative, the company invited people who were waiting for their fl ights at the air-
port in Guarulhos (State of São Paulo) to use the break to exercise. The bicycles that were
installed in that area reproduced musical instruments when they were used and, when all were
in use at the same time, they played a song. The action promoted the perfume Kaiak for men,
which has a concept aimed at men who enjoy physical activities and contact with nature.

There was also an action to publicize the fall/winter collection of the Natura UNA makeup
line that consisted of a virtual makeup mirror displayed in the restroom of a restaurant in São
Paulo (State of São Paulo). The makeup simulator worked as an interactive mirror and had a
sensory application mechanism with a differentiated level of reality. The action was an invitation
for women to take care of themselves and recognize their own beauty, regardless of the time
of the day.

natura report 2012

GRI PR6 e PR7

All the initiatives can be seen on YouTube (www.youtube.com/user/naturabemestarbem) on
the Natura Bem Estar Bem (Natura Well-Being Well) channel. The Um Voo Inesquecível (An
Unforgettable Flight) (Amó) video reached around 2.5 million views in two weeks. Another
one million views were recorded for the Espera Surpreendente (Surprising Waiting) (Kaiak)
video in the fi rst ten days it was online. Meanwhile, the Espelho Virtual (Virtual Mirror) (UNA)
(Kaiak) was viewed a million times in two weeks and 125,000 people became fans of the brand
on Facebook in that period.

Natura continues to invest in merchandising initiatives, focusing on the best explanation of
the concepts of its brand and telling inspirational stories. In 2013, in Salve Jorge, a soap opera
of the Rede Globo TV channel, there will be actions showing the work of our NCs and
NCAs in the communities of Rio de Janeiro, particularly in Complexo do Alemão, a district
of the city of Rio de Janeiro, focusing on initiatives that Natura has been developing there for
many years.

It is worth noting that all our communication initiatives follow the Natura Ethical Communica-
tion Guidelines. The document is intended for all employees and suppliers involved in these
processes and determines the main assumptions that support campaigns and communication
actions, such as the environmental impact of products, conscious consumption, respect for
children and valuing diversity.

Natura also works in accordance with the rules of the Advertising Self-Regulation Council (CO-
NAR), and the codes of conduct of the Brazilian Association of Advertisers, Brazilian Associa-
tion of Consumer Protection, and Brazilian Association of Direct Selling Companies (ABEVD).
In 2012, the company did not receive any notices for breaches of regulations, laws and voluntary
codes related to marketing communication, including advertising, promotion and sponsorship.

CUSTOMER SERVICE

Natura Customer Service (SNAC) is toll-free and received 667,000 calls in 2012, compared to
783 in 2011, a reduction of 15%.

Natura signifi cantly reduced the number of requests for the exchange of products in the past
three years and gave more speed to the replacement process. This result refl ects the revision
of the company’s return policy, which improved the process of fraud prevention. The system
now cross-references the data and uses specifi c fi lters, identifying the level of risk for a more
careful analysis, and releasing the other cases so that the replacement can occur automatically.

Another improvement that increased the service speed was the simultaneous exchange service.
Upon delivery of the new product, the unwanted item is collected. Before, the consumer had to
send the faulty product to Natura in advance for an analysis. Only 5% to 10% of the replacements
are still made by mail in regions where Natura does not yet perform reverse logistics.

Natura Customer Service (SNAC)1
Answered
Unanswered
Total

Unit
Calls
thousands

2010
987
42
1,029

2011
770
13
783

2012
654
13
667

1. Calls related to the Brazilian Operations via telephone, online chat and e-mail.

natura report 2012

Natura continues to encourage the use of its virtual service channels and set an analysis service
on its pages and profi les on Facebook, Twitter and blogs. The company replies to all questions
and complaints received via these channels.

The experience of one year of specialized service for the Chronos line brought important re-
sults. Natura maintained the consulting services by specialists for the line to consumers, answer-
ing questions and monitoring cases of adverse reactions. Currently, the company is working on
a development project of this model of service.

In respect to consumers’ privacy and confi dentiality of information, all consumers who contact
the company via the Internet or through SNAC are protected by policies and systems that
ensure data security. In 2012, we did not record any legal or administrative cases related to
violation of privacy or loss of data of our consumers.

The improvements in the company’s processes resulted in a reduction of complaints fi led with
the Consumer Protection and Advisory Program (Procon). There were 413 complaints in 2012,
compared to 697 in 2011, a decrease of almost 60%.

The company’s investment in the quality of the service provided to consumers is recognized
by the Instituto Brasileiro de Hospitalidade (Brazilian Institute of Hospitality) - IBHE, which chose
Natura as the second company in hospitality because it meets the expectations of consumers
due to its approach to customers, the respect in its relationships and the good service it pro-
vides. The Reclame Aqui (Complain Here) web portal recognized Natura as the company that
best addresses complaints and the most agile in responding to them. The company was also
acknowledged as the fourth company in Brazil with the best service by the Instituto Brasileiro de
Relacionamento com o Cliente (Brazilian Institute of Customer Relations).

CONSUMER SAFETY

Natura has a permanent commitment to the health and safety of its consumers. It maintains
strict internal processes, from the conceptual development of products to their manufactur-
ing and monitoring of their use in the market. These processes include tests and evaluation of
products and raw materials safety and effi ciency, stability tests, microbiology and quality con-
trol, thus ensuring the approval and compliance with the requirements of the health authorities
and a differentiated stand aimed at the commitment to the truth, ethics and transparency.

Natura’s cosmetovigilance process monitors products on the market and evaluates the profi le
of complaints about possible adverse reactions. The purpose is to identify any risk to consum-
ers associated with the use of Natura’s products and to generate guidelines for the improve-
ment of its internal processes.

To ensure alignment with the rigorous standards that the company adopts in Brazil, a technical
and scientifi c management was established for the International Operations, which is respon-
sible for the regulatory, cosmetovigilance and quality processes and integrated with the Offi ce
of Consumer Safety in Innovation in Brazil.

The company’s work has as one of its assumptions the precautionary principle. Natura follows
the evolution of science worldwide and develops a robust process of monitoring trends in
controversial issues and ingredients, working on replacements whenever necessary. The com-
pany’s actions have already resulted, for example, in the elimination of a few substances from
its products, such as paraben, in 2011, and phthalate, in 2008.

natura report 2012

GRI PR8

GRI PR1

GRI 4.11

In 2012, Natura improved the international monitoring methodology, defi ning more clearly the
concept of controversial ingredients, also taking into consideration the consumer’s perception
about the risk and the international scientifi c, technical and digital media mapping on the issue.

The company does not test products on animals and has matured its alternative processes and
methodologies to deliver increasingly safe products. It also participates in discussions on safe
cosmetics in the relevant reference centers.

Since Natura uses a signifi cant amount of raw materials of plant origin, knowledge of safety and
monitoring predictive methods and their natural modifi cations has been developed that ensure
that these changes do not affect the safety and effi ciency standards of Natura’s products.

In order to be increasingly transparent about the source of the ingredients, Natura has been
publishing for seven years the environmental table in all of its products, informing the origin of
raw materials that compose them. After the issue of the new European regulation, the infor-
mation about the ingredients that make up these raw materials will be described as clearly as
possible. First, the portfolio of Natura France will be adapted to meet the legal requirement
for new products launched in that country as of June 2013. Additionally, in order to evaluate
cosmetovigilance data, the company follows the guidelines of Colipa (Colipa Guidelines on the
Management and Reporting of Undesirable Event Reports, 2008) for establishing the causality
and severity of adverse events.

In addition, the company meets all legal requirements for the supply of information about the
ingredients used, warnings, use directions, claimed benefi ts and outsourced production. The
labels on all products are in accordance with the legislation in effect and respect all resolutions
related to cosmetics determined by the Brazilian Health Surveillance Agency (ANVISA) and
health agencies in the other countries where Natura operates, as well as metrological bodies.

The main relationship channels of the company, such as Natura Customer Service (SNAC), are
prepared to obtain all required details in case of reports on adverse events. The company has
a specialized service cell for the Chronos line, which has been providing opportunities for the
obtainment of important knowledge regarding the use of the product by consumers.

GRI PR3

In 2012, no sanctions or administrative penalties were imposed to Natura by the Brazilian
Health Surveillance Agency (Anvisa) nor were any signifi cant fi nes imposed in connection with
product labeling.

GRI PR2, PR9
e PR4

natura report 2012

suppliers

Natura focuses its relationship on the creation of partnerships to build a chain with higher
added value. Based on its operations and relationships, Natura knows that it can infl uence
its commercial partners and it has been working to make this infl uence increasingly positive.

In 2012, the company expanded its Sustainable Supply Chain strategy, which uses a methodol-
ogy for the assessment of the social and environmental aspects, converting them into mon-
etary values, as a basis for selecting and developing its suppliers. In 2011, Natura revised 80%
of its production inputs supplier base and, last year, it expanded the program to 87% of its
suppliers. Through the methodology developed with the help of international specialists and
with the participation of suppliers, the company determined the potential impacts of its supply
chain and set up development plans in which partners establish the management of key social
and environmental indicators and undertake to continue to invest in employees’ education,
occupational safety and private social investment.

In order to reinforce the company’s principles and to qualify partners to evolve in their social
and environmental management, Natura promoted qualifi cation and specifi c training actions.
In 2012, there were two training initiatives on Natura’s relationship strategy with suppliers and
two workshops to enhance the knowledge of the methodology.

Additionally, Natura monitors eight quarterly performance indicators of these partners: CO2
emissions, water consumption, waste generation, investment in education, training of employ-
ees, number of occupational accidents, social inclusion and private social investment.

Natura believes that the commitment of suppliers to these social and environmental factors
will make a difference in the future. Natura’s target is to generate R$ 16 million in social and
environmental gains in fi ve years through the investments from the company’s entire chain.
In 2011, the fi rst year of the program, benefi ts of around R$ 1 million were generated and, in
2012, more R$ 1.8 million was obtained.

The data from the fi rst two years of the program helped identify developments, improve-
ments and consolidate the methodology for monitoring indicators and it is already possible to
observe points of improvement in the suppliers operations and, therefore, generate a more
sustainable, effi cient and productive value chain.

natura report 2012

RELATIONSHIP

Natura relates with different groups of suppliers. The company has 190 suppliers of fi nished
products (third parties) and production inputs (supplying ingredients from biodiversity, raw
materials and packaging materials), and these groups represent 50% of the company’s purchase
volume. The other suppliers of materials and of indirect services add up to more than 4,700.

Natura pays close attention to the quality of the relationship it establishes with its suppliers and
implements improvements. This work is assessed by means of satisfaction and loyalty indicators,
which are annually monitored.

In 2012, supplier loyalty dropped 400 basis points (from 26.5% to 22.6% in 2012), mainly infl u-
enced by the SAIN stakeholders (active and indirect service suppliers). A combination of factors
explains the scenario of complexity in the relationship with these partners, including problems
caused by the instability in the operation in 2011 and commercial negotiations (including costs
and payment terms) infl uenced by exchange rate volatility and increase of infl ation. The loyalty
of the suppliers is an essential part of the company’s strategy of sustainable supplies. In 2013,
the causes for this drop will be analyzed in detail so that corrective actions can be developed
together with these partners.

PR5. Quality of relationships with suppliers
Satisfaction1
Loyalty²

Unit

2010
81
28

2011
81
27

2012
79
23

1. Percentage of satisfi ed and totally satisfi ed suppliers (top 2 boxes).
2. Percentage of suppliers who attributed the highest score (top 1 box) on a scale of 1 to 5 for three aspects: satisfaction, intention to
maintain the relationship with Natura and recommendation.

QLICAR PROGRAM

Qlicar (acronym for Quality, Logistics, Innovation, Competitiveness, Service, and Relationship in
Portuguese) is a supplier development program that assesses critical indicators of service level,
in addition to social and environmental issues, as part of the sustainable supply chain strategy.
Accordingly, suppliers are assessed based on their investments and long-term social and envi-
ronmental impact, in addition to more traditional criteria such as quality and price.

In 2012, 95 suppliers of inputs, fi nished products, brand-related services, logistics and service
to NCs participated in the program, representing almost the same number of suppliers as in
the previous year.

The program also recognizes the evolution of commercial partners through the annual Qlicar
Award. In 2012, this award recognized 12 suppliers in the categories of Packaging, Fragrance,
Raw Material, Third Parties - Brazil and Latin America, Natura Magazine, Customer Service,
Logistics Operator, Carrier, Social and Environmental Evolution and Supplier Communities -
the last two were included for the fi rst time. Due to the development of its sustainable supply
strategy, Natura recognized, for the fi rst time, the supplier with the best social and environ-
mental evolution, a category in which the winner was Box Print, from Campo Bom (State of
Rio Grande do Sul), which produces packaging cartons for Natura. This company developed
a new packaging for the Ekos Mate-Verde perfumes with 40% of post-consumption recycled

natura report 2012

GRI HR1; HR2;
HR6 e HR7

GRI S04

cardboard. The packaging was also innovative for adopting a new format in which the corru-
gated cardboard eliminates the need to use a cradle to protect the product, which also gener-
ated a positive impact by reducing the generation of waste. In addition to the Qlicar Award,
the company was also awarded by the Associação Brasileira de Embalagens (Brazilian Packaging
Association) - Abre.

Among the supplier communities, partners that are increasingly relevant in Natura’s value chain,
two were awarded: Camta (Mixed Agricultural Cooperative of Tomé-Açu - State of Pará), sup-
plier of cupuaçu butter, açaí berry pulp, cacao seed and passion fruit oil, with which Natura de-
veloped research on sustainable production of palm oil; and Camtauá (Mixed Agroextractive
Cooperative of Santo Antônio do Tauá - State of Pará), which supplies andiroba and murumuru
palm seeds (learn more on pages 94 and 95, Supplier Communities).

It is worth noting that 100% of the contracts signed with suppliers have clauses related to hu-
man rights, such as risks involving child labor and forced labor or similar. Signifi cant investment
contracts that include clauses related to human rights are those involving amounts equal to or
higher than R$ 5 million. Last year, 240 suppliers (productive and unproductive) underwent
monitoring audit processes and approximately 80% of the eligible productive suppliers were
subject to regular audits, which can be annual, biennial or triennial, depending on the level of
risk and profi le of each company and market. The audits assessed quality, environment and so-
cial responsibility issues, including human rights aspects. In 2012, there were no cases in which
contracts with business partners were terminated due to violations related to corruption.

HR2 – Investment and procurement
practices – Brazilian Operations
Audited productive suppliers1
Audited Qlicar suppliers1

Unit

2010

2011

2012

%
%

53
100

82
100

80
81

1. The percentages refer to productive suppliers (suppliers of inputs that make up Natura’s products) and third parties (companies that
manufacture Natura’s fi nished products).

INTERNATIONAL OPERATIONS

The bonds established with suppliers are particularly relevant for Natura’s expansion plans for
Latin America in the coming years. Natura’s goal is to have, in three years, 30% of the products
sold abroad in this region (except Brazil) produced locally by third party suppliers (manufactur-
ers of fi nished products on behalf of Natura).

Currently, the company already produces in Argentina (perfumes, moisturizers and makeup),
Mexico (shampoo and perfumes) and Colombia (perfumes, soaps and moisturizers). In 2012,
Natura had more than three million units produced in the three countries and distributed to
other operations in the region.

natura report 2012

It was thanks to a close and aligned relationship with local suppliers that the company was able
to quickly reverse an adverse scenario in Argentina. Due to changes in import rules, many of
the Natura’s products were retained at customs and were unavailable for Argentinean consum-
ers in the fi rst half of 2012.To resolve the situation, Natura accelerated the production expan-
sion plan in that country, and was able to manufacture 30% of total products marketed locally
at the end of the year. The successful experience was a result of the agility and partnership with
suppliers in the region. It taught new lessons to the company and proved the success of the
manufacturing strategy.

To keep up with the progress of International Operations, Natura also adjusted the governance
structure, organizing the Operations and Logistics area in the countries, allocating procurement
managers to each one of them. The company also implemented a loyalty survey for suppliers
in Latin America, which should be of help, as is the case in Brazil, to measure and improve the
quality of the relationship. The fi rst results should be available in 2013.

natura report 2012

GRI S01,
SO9 e SO10

supplier
communities

Natura works with inputs from Brazilian social biodiversity as ingredients in the formulation
of its products. The company encourages the extraction of these inputs through sustainable
stewardship by cooperatives of family farmers with whom it establishes more than just a
commercial relationship. Natura seeks to foster a relationship based on fair price and on the
sharing of the benefi ts received from the use of the genetic heritage and associated tradition-
al knowledge, thus helping create conditions for these communities to structure themselves,
diversify their business and promote sustainable development in their region.

Last year, Natura maintained a relationship with 36 communities in different regions in Brazil,
involving 3,500 families. The transfer of funds rose 20% in relation to the previous year, totaling
R$ 12.1 million thus reaching the company’s business expansion target and the social benefi t
generated therefrom. Most of the supplier communities are located in the Amazon region.

A large portion of this increase was in the sharing of benefi ts from traditional knowledge,
training in the communities, and funds and support. Funds from supply were lower because
there was a reduction in demand for some inputs due to the sales planning for these prod-
ucts. But the creation of value will continue to increase in the years to come according to
the business expansion strategy under the Amazônia (Amazon) Program. Natura intends to
increase the purchases of inputs from the region from the current 11% to 30% of all raw ma-
terials used in its products and that should involve more than 10,000 families by 2020 (learn
more on page 34, in Social Biodiversity).

EC9. Supplier Communities
Communities with which Natura relates1

Benefi ted families from the supplier
communities

Unit

2010
27

2011
35

2012
36

2.301

3.235

3.571

1. The number of communities was revised in 2011 and the data was adjusted.

natura report 2012

GRI SO9 e
SO10

EC8. Funds Allocated
Supply1
Sharing of benefi ts from the access to genetic
heritage or associated traditional knowledge2
Funds and support3
Use of Image4
Training5
Certifi cation and stewardship6
Studies and advisory services7
TOTAL

Unit

R$
thousands

2010
4.374

1.480

1.552
77
185
212
828
8.706

2011
6.749

1.597

1.002
22
133
21
512
10.037

2012
6.303

3.099

1.524
69
301
29
749
12.074

1. Amount paid by processors or by the Benevides plant for raw materials used in Natura’s products.
2. Amounts paid to communities as benefi t sharing from the access to genetic heritage and/or associated traditional knowledge associ-
ated to a species from Brazilian biodiversity.
3. Natura’s voluntary sustainable development funds and agreements, which can be used in projects or sponsorship for improving
infrastructure.
4. Amounts paid for the use of images of community members in institutional or marketing materials.
5. Workshops and courses paid by the company to improve sustainable production techniques.
6. Amounts invested in certifi cation and stewardship plans for areas under cultivation.
7. These include studies conducted by anthropologists, lawyers, economists, NGOs and other professionals contracted by Natura to work
in the supplier communities. They also include studies for structuring production chains.

EC8 and EC9. Funds allocated per family,
per year
Direct funds1
Supply2

Unit

2010

2011

2012

R$
thousands

3,2
2,0

2,9
2,2

3,1
1,8

1. These include funds actually received by the communities: supply of inputs, sharing of benefi ts, use of image, funds and support.
2. Subitem of direct funds, itemizing funds received per supply.

IMPROVING THE PRODUCTION PROCESS

In 2012, the satisfaction survey showed a loyalty rate of 23% among supplier communities, com-
pared to 28% in the previous year, showing that this matter is still a challenge to be overcome.
Since the supplier communities are essential stakeholders for the company’s social biodiversity
strategy, Natura is attentive to the needs and opportunities for improving this relationship.
Natura concluded that this result was mainly the consequence of the commercial relationship
with the communities as well as of the readjustments of prices. As an action plan, the Núcleo de
Abastecimento da Biodiversidade (Biodiversity Provision Center), which has been recently cre-
ated within the strategy of the Amazônia Program, should focus on these issues in 2013 (learn
more on page 34).

PR5. Loyalty – Supplier Communities1 2
Loyalty

Unit
%

2010
43

2011
28

2012
23

1. The loyalty rate is the percentage of interviewees who attributed the highest score for three aspects: satisfaction, intention to maintain
their relationship with Natura and recommendation. In 2012, interviews were conducted on the fi eld by anthropologists - 17 communities
and 352 people were interviewed.
2. Due to the difference in methodology, the 2010 data is not comparable with the other data.

natura report 2012

The Community Relations area promotes development actions in supplier communities, pre-
serving the cultural identity of each one of them, and helps create opportunities to keep the
population in their traditional locations. Among training courses and meetings, since 2009,
Natura has been carrying out continuous leadership training, strengthening of interpersonal
relationships, skills development and improvement of the management practices of the groups.

To improve the production process, the company promoted in 2012 the 8th Natura Supplier
Community Exchange Program. The company brought together eight communities from the
states of Amazonas, Pará and Rondônia to improve practices for the processing of raw materi-
als from social biodiversity used in Natura’s products. It was a rich exchange of knowledge that
contributed to the strengthening of these social organizations.

Another area deeply involved in social biodiversity at Natura is the Management of Sustainable
Technologies. This team has the specifi c skills to establish, together with rural supplier partners,
good technical alternatives for determining the models and methods of production (extrac-
tion and cultivation) of raw materials from biodiversity that will be used in Natura’s products.
Promoting synergy between academic knowledge and local knowledge is one of the main
challenges of this group.

As part of the relationship with the rural supplier partners, technical training courses on topics
such as organic farming, seed collection, forest seedling production, permaculture and forest
inventory methods are organized. The team also creates and disseminates educational materi-
als of technical content, such as the rural crop calendar of social biodiversity raw materials, and
promotes exchanges between partners in order to multiply knowledge and allow the exchange
of experiences with the best practices.

Another example of partnership work was the implementation of an agroindustry at Cofruta
(Cooperative of Fruit Farmers of Abaetetuba – State of Pará), a supplier of murumuru palm
and açaí berry seeds. The implementation took place in 2011 and has evolved ever since by
adding more value to the productive process and diversifi ed the business of the cooperative.
With this system, the cooperative currently extracts oil from nuts and seeds, which were
previously supplied in their unprocessed state only, and sells them for a higher price. Using as
example the partnership with Cofruta, Natura should promote actions in 2013 to increase the
effi ciency of the supply chains of its six cooperatives that supply organic cacao in the Trans-
Amazonian Highway region and support the installation of an agroindustry for oil extraction.

For all these actions, Natura has the support of consulting companies and governmental and
non-governmental organizations that collaborate in the projects developed with the com-
munities. Natura develops projects in partnership with Criar, a consulting company on human
development that supports the training of community leaders; Fase (Federation of Bodies for
Social and Educational Welfare), an NGO that has been working in Brazil for 50 years, organiz-
ing and strengthening social initiatives; GIZ, a German agency for international cooperation for
development, and CNS (National Council of Extractive Populations), a national organization
that represents agroextractive workers.

natura report 2012

INNOVATIVE RESEARCH FOR THE PRODUCTION OF PALM OIL

Traditionally associated with the deforestation of tropical forests for being a monoculture,
the palm oil - or dendê as it is known in Brazil - is one of the most consumed oils, accoun-
ting for one third of the sale of oils in the world. In addition to deforestation, particularly in
Asian countries, its production is also associated with impacts such as loss of biodiversity and
emission of greenhouse gases.

The sustainable production of palm oil, which is the subject of an unprecedented research
in the world, and which has been conducted since 2006 by Natura’s science and technology
investigations, is showing its fi rst results. In the search for a form of sustainable cultivation of
the species in the Amazon, Natura’s bioagriculture researchers have been developing resear-
ch on the cultivation of African oil palm (Elaeis guineensis) in agroforestry systems (AFSs) in
family farms, totaling 18 hectares distributed over three rural properties.

The agroforestry systems are characterized by the presence of different plant species in a
single production unit. In the study, the palm oil was produced together with the açaí berry,
cacao, cassava, pepper, passion fruit, different wood species and plants for composting, among
others, seeking high functional diversity. The research also had the partnership of institutions
such as the Brazilian Company of Agriculture and Cattle Raising (Embrapa) - Western Ama-
zon (CPAA) and Embrapa - Eastern Amazon (CPATU) and technical consultants.

In order to broaden the experience, Natura has been working on the adoption of this sys-
tem since 2007 with farmers from Camta (Mixed Agricultural Cooperative of Tomé-Açu).
The farmers are mixing palm oil and other plant species and, in four years, the production
of palm oil equaled that of a conventional plantation system, harvesting between 5 to 10
metric tons a year.

In addition to producing the raw material for the production of palm oil, the research has
shown that this production system contributes to the diversifi cation of farmers’ income and
minimizes phytosanitary risks (pests and diseases) for the cultivated species. In addition to a
low-impact production, the system developed by researchers and local farmers contributed
to the generation of ecosystem services, including, biodiversity conservation, improvements
in food safety and adoption of biological control, important benefi ts for the ecological ba-
lance, since they help in the regulation of natural resources such as water, soil and mitigation
of greenhouse gas emissions.

There is no previous mention of the production of palm in agroforestry systems in the world
and this makes Natura a pioneer in this research that can signifi cantly contribute to the
global discussion on sustainable production systems. Natura also believes that its research
positively contributes to the Amazon’s production models because it associates production
to the environmental and social aspects of the region, an association which is essential for
the maintenance of the biome.

This project was also chosen to apply, since last year, two innovative methodologies related
to the ecosystem services: one of them is the Business Program for Ecosystem Services
(PESE) in partnership with the World Resources Institute (WRI); the Center for Sustainability
Studies (GVCES), of the Getulio Vargas Foundation; and the Brazilian Business Council for
Sustainable Development (CEBDS), which aims at evaluating the impacts and consequences
of ecosystem services. The other is the TEEB Brazil (The Economy of Ecosystems and Biodi-
versity), coordinated by Conservation International - Brazil, which aims at recognizing social
and environmental external aspects. Both methodologies are complementary and Natura is
the only company that is applying both in an integrated way.

natura report 2012

GRI SO9
e SO10

GRI HR2

HOW WE RELATE

The company’s conduct of relationship with communities is expressed in Natura’s Policy
of Sustainable Use of Social Biodiversity and Traditional Knowledge. This policy comprises
guidelines inspired by the assumptions of the Convention on Biological Diversity of the Unit-
ed Nations, the fi rst global agreement that recognizes the conservation of biological diversity
as an integral part of sustainable development.

To supplement Natura’s Policy, the company is also supported by the Principles of Relationship
with Supplier Communities. They guide the company’s conducts of respect for the communi-
ties’ culture and understanding of their way of life and social organization. For the purpose of
understanding more and more the life and specifi cities of these families, Natura promotes par-
ticipatory, inclusive and transparent dialogues. The company’s program also includes maintain-
ing its own multidisciplinary team that is responsible for practicing these principles.

BIOQLICAR PROGRAM

The BioQlicar is part of the supplier community training and development program and
monitors two groups of indicators: the Bio, which cover the resources on which the local
society counts to foster its development, such as human, social, environmental, physical and
economic resources; and those aimed at the productive performance, the Qlicar (Quality,
Logistics, Innovation, Competitiveness, Service, and Relationship). By monitoring develop-
ment and performance actions, the BioQlicar helps prepare the communities for their rela-
tionship with the market in general.

The program is annually assessed by the processing companies and supplier communities
and, in 2012, it was attributed a score of 3.80 (on a scale of 1 to 5), a result similar to that of
the previous year, when it was attributed the average score of 3.77. Since the beginning of
the program, in 2009, the score increased 16%. The indicators that increased the most were
relationship, contracts and costs. On the other hand, issues such as employment relation-
ships, productive modules and technical specifi cations were down in the perception of the
respondents.

In recognition of the growing importance of the supplier communities in our business, Natura
included them in the Qlicar award as a new category, program for the development of Na-
tura’s suppliers in general. For the fi rst time, the communities participated in the award and
two of them were recognized based on the work they develop:

Camta (Mixed Agricultural Cooperative of Tomé-Açu - State of Pará), supplier of cu-
puaçu butter, açaí berry pulp, cacao seed and passion fruit oil, received the community
award as the best performance in the year.

Camtauá (Mixed Agroextractive Cooperative of Santo Antônio do Tauá - State of
Pará) was the community with the best performance in 2012 in the items assessed
(quality, logistics, innovation, competitiveness and service). A Natura supplier of muru-
muru palm and andiroba seeds since 2007, the organization participated in a number
of workshops and courses on cooperativism that contributed to improve the structure
of the community which, in 2009, stopped being an association to adopt the coopera-
tive system. Since then, Camtauá has multiplied its production and its business with
Natura and other companies in the region.

natura report 2012

GRI HR1; HR6;
HR7 e HR9

GRI SO9 e
SO10

Natura also works with the communities to encourage high human rights standards. The
company encourages suppliers with whom it has a direct commercial relationship to use fair
working conditions and it demands, through contracts, the same practice with the upstream
supply chain.

In 2012, Natura surveyed all supplier communities in order to identify the broad practice of
fair work, as well as regular and alternate audits, and it should continue with such practice
in 2013. These diagnoses also assess any potential involvement of children and adolescents
in the production chains. Natura works to ensure that any involvement of children or ado-
lescents in the production chain – which traditionally occurs for cultural reasons in some
communities – does not impair their formal education and leisure and does not pose risks to
health and safety, and that the child or adolescent can develop by means of family activities
for educational/cultural purposes and not economic so that these traditional ways of family
organization are recognized by the entire society.

It is worth noting that all of Natura’s 44 contracts for the sharing of benefi ts and supply in-
clude a requirement of respect to human rights, particularly regarding the involvement of chil-
dren and adolescents, forced work or work in degrading conditions. In 2012, the company did
not record any critical incident related to any involvement of children and adolescents in the
places where it operates. It did not record any incident involving indigenous peoples either.

SHARING OF BENEFITS AND GENETIC HERITAGE

The benefi ts are shared in accordance with the guidelines of Natura’s Biodiversity Policy.
Natura uses the genetic heritage of native species of the Brazilian biomes and the associ-
ated traditional knowledge in the company’s products, generating monetary benefi ts. The
company shares these benefi ts with the communities to promote their development, the
preservation and sustainable use of biodiversity, recognition of the genetic heritage and as-
sociated traditional knowledge.

In 2012, Natura recorded two new accesses to traditional knowledge: the capitiu plant, pro-
duced by the Association of Family Farmers of the São Jerônimo Community, in the region of
the Baixada Cuiabana (Cuiabá’s lowland), State of Mato Grosso, and the ucuuba plant, culti-
vated by the Movement of Women of the Belém Islands, in the island of Cotijuba, State of Pará.
Early in 2013, the company also completed the access to the buriti palm through the Grande
Sertão Cooperative of Family Farmers and Agroextractivists, in the State of Minas Gerais.

A signifi cant portion of the benefi ts shared was allocated to the communities of RECA (Asso-
ciation of Small Agroforestry Farmers of the Syndicated and Compacted Economic Refores-
tation Project – State of Roraima), where Natura works with 374 families. The funds will be
invested in the readaptation and expansion of the local industrial complex. Natura also sup-
ports the Escola Família Agrícola (Agricultural Family School), an educational institution that
provides services to the families of the association of alternating education, a methodology
that combines formal education and entrepreneurship, encouraging initiatives and stimulating
the ideas of students to promote the sustainable development of the region.

natura report 2012

GRI EC9 SO1

DEVELOPMENT OF THE SUPPLIER COMMUNITIES

In order to encourage the development of supplier communities and of their surround-
ing areas, Natura allocated its own fi nancial resources for investments in projects of social
strengthening of the groups and making viable environmental preservation, cultural recogni-
tion, creation of alternative sources of income, food safety, intersector actions and training
of leaders.

In the scope of this purpose, Natura created the Middle Juruá River Fund in partnership with
the National Council of Extractive People and with the support of the Chico Mendes Insti-
tute of Preservation of Biodiversity (ICMBio) and the State center of Preservation Units of
the State of Amazonas. We selected projects of organization from the State of Amazonas,
region of the Middle Juruá river, in four action fronts: Strengthening of Civic Awareness, Edu-
cation and Health; Food Safety and Generation of Income; Environmental Conservation and
Preservation; and Strengthening of Associativism and Diversifi cation of Markets.

Natura wants to enable organizations to raise alternative sources of income for their work-
ers and obtain fi nancing for their actions. The company improved the monitoring process of
projects after it was transferred from the Executive Department of the Middle Juruá River
Fund to the National Council of the Extractive People. This reorganization will allow the
Council to search for funds from new partners, benefi ting the region from a collaborative
investment.

In 2012, six local organizations benefi ted from the R$ 200,000 allocated to this year’s bidding
process, which was the second of the program.

natura report 2012

NATURA’S SUPPLIER AND RELATIONSHIP COMMUNITIES

seeds of murumuru
palm and andiroba

piri piri roots and
leaves of the
balsam-of-Peru tree

cupuaçu butter and pulp,
cumaru seeds, açaí berry
pulp and Brazil nut oil

J
,

C
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/
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9

2
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3

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/

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/
/

4
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palo santo leaves

/
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A //3
ALVAS //6
DES

//50

CHIC

EXTRACTIVE RESERVE

O MEN

cocoa seeds

Brazil nut
oil and white
pitch resin oil

murumuru
palm seeds

piri piri roots

Cupuaçu butter, açaí
berry pulp, cacao seeds
and passion fruit oil

RI //8

A
U

0
2

O JA
8
A //2
Ã
5
Ç
T //1
CIA
V //2
MTA //1
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VER AS ERVAS //101
O PAESP //6 8

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Babassu
mesocarp
flour

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R I T I C

/ 5 4
O N Ç A
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CABRUCA //140

cocoa seeds

GRAN

DE SERTÃO //176

buriti palm oil

(

C
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)

dry leaves of passion flower

0
4

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0
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/

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/
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3
6
4

brazil nut oil

dry chamomile flowers, lemon balm, macela,
sage and rosemary, fresh and dry leaves of
lemon grass, peppermint and carqueja

passion fruit seeds

natura report 2012

GRI SO1 e SO9

surrounding
communities

Natura’s challenge is to contribute in an innovative and signifi cant way to the local communities
where it operates. With the expansion of the company’s business, its responsibility for establish-
ing quality relationships with these stakeholders also grows.

In 2012, Natura reviewed its work strategy in the surrounding communities and prepared a plan
to strengthen its contribution to the local development in three municipalities: Cajamar (State
of São Paulo), São Paulo (State of São Paulo) and Benevides (State of Pará) (see table below).
Natura’s main operations are located in those municipalities and, consequently, these are the
regions where the company generates impact and where it is are able to provide direct and
indirect benefi ts.

Local development actions are supported by:

_The creation of bonds of trust
_The identifi cation and recognition of leaderships
_The establishment of a positive agenda with public authorities
_The identifi cation and strengthening of platforms for democratic social participation

and the collective development of actions

_In the development of the identity of every individual with this action

At the same time, Natura implements actions focused on the other municipalities where it is
present. The company’s relationship in these cases is via the Municipal Councils for the Rights
of Children and Adolescents (CMDCA), with the allocation of 1% of the income tax payable
and the monitoring of the investment of these funds. Natura’s intention is to strengthen the
activity of these councils as they are a legitimate representation space of the community that
includes public managers from different areas and representatives of civil society. The munici-
palities that receive these funds in addition to Cajamar, São Paulo and Benevides are: Jaboatão
dos Guararapes (State of Pernambuco), Castanhal (State of Pará); Jundiaí (State of São Paulo);
Matias Barbosa (State of Minas Gerais); and Cotia (State of São Paulo).

Natura’s activities with the surrounding communities do not include, for the time being, inter-
national operations.

Unit

EC8. Investment in infrastructure
and services for public benefi t
Investments in the communities surrounding
Natura’s units – Funds from Natura1
Investments – Funds from Crer para Ver2
1. The investments refer to the municipalities of Cajamar and Itapecerica da Serra.
2. Investment of funds from Crer para Ver in the municipality of Benevides.

R$
thousands

2010

2011

2012

409

822

729

130

natura report 2012

100

GRI SO10

Employees from surrounding communities
Cajamar
Benevides
Itapecerica

Unit

2010
17
95
na

2011
21
60
na

2012
22
91
4

EC6. Purchases from suppliers from the
communities surrounding the plants1 2
Cajamar
Itapecerica da Serra
Benevides
Total
Percentage of expenditures with suppliers from
the surrounding communities in relation to the
total expenditures with suppliers

Unit

2010

2011

2012

R$
millions

74
1.3
47
121
nd

62
3.0
64
129
3,8

57
1.4
81
139
4,0

1. The consolidation method for this indicator was changed and, since 2011, the amounts net of recoverable taxes have been taken into
consideration. Therefore, data for 2011 e 2012 are not comparable to those of 2010.
2. The 2012 basis considers all the purchases from suppliers located at the municipalities of Cajamar and Itapecerica da Serra and
suppliers from the State of Pará that supply to any Natura unit.

CAJAMAR

The investments in the local development of Cajamar (State of São Paulo), where the com-
pany’s head offi ce is located, are mainly geared to public education. In 2012, Natura maintained
the support for the development of a methodology to assess the quality of the municipal educa-
tion so as to identify the progresses and opportunities for improvement. The municipality had
already been working in the assessment and review of the course syllabus and the support to
this methodology should add to this work and will be a reference for this process. Last year, the
pilot project involved nine schools in Cajamar, and the students of the 5th and 9th elementary
grades. The results are still under review and will serve as a basis for the adjustments required
in the educational planning of the school system in 2013.

Another initiative in the region is the Rede Escola Cajamar (Cajamar School Network), a proj-
ect launched in 2012 in partnership with the government and the private sector of the munici-
pality that offers training courses to youngsters who live in the communities and guidelines in
the search for a job position. More than 300 youngsters attended the training courses last year.
After this phase, they are referred to the recruitment processes at Natura and other compa-
nies in the region. During that period, 14 institutions became partners in this process and 29
companies offered their facilities and material for the classes and included these youngsters in
their recruitment processes. Even though the number of participants in the training courses
increased, Natura still faces the challenge of increasing the employability of these youngsters
– 250 youngsters were referred to recruitment processes last year and 47 were contracted.
Other 55 youngsters got their fi rst job without the intervention of the Rede Escola Cajamar.

natura report 2012

Since the municipality of Cajamar is located in an environmental protection area, environ-
mental management is a relevant component in its development. Accordingly, the topic is also
an important focus of Natura’s efforts in the region. In 2012, we maintained the partnership
with the NGO Mata Nativa and the Environmental Board of Cajamar to determine a shared
management of the Natural Municipal Park, involving the organization, the city government
and community leaders. Created in 2007, the park has a managing council elected last year and
determined the invitation to bid for the selection of proposals for the local stewardship plan.

SÃO PAULO

In São Paulo, the Vila Jaguará region, in the West Zone of the capital city of the State of São
Paulo, where a new administrative offi ce and a Distribution Center were set up in 2010, is con-
sidered our surrounding area. In 2012, in order to establish a relationship, the fi rst step was to
identify the local community leaders and make a diagnosis of the region to understand its needs.
The company conducted a multistakeholder dialogue with the neighboring community and the
public authorities. One of the topics that was relevant in this work was public transportation, a
major factor for the development of the region. Subsequently, Natura began to study a mobil-
ity plan, which will be one of the projects that the company will develop in the region in the
coming years.

This new Natura’s unit was expected to start operations in 2012, but its implementation was
delayed on account of the granting of the necessary permits and it is now expected to be
inaugurated in 2013. The administrative offi ce will receive the employees who are currently al-
located in Itapecerica da Serra (State of São Paulo), after the shutdown of these facilities. Also
in 2013, the São Paulo Distribution Center will start its operations and will be responsible for
the selection and preparation of the products (orders) for the consultants in the State of São
Paulo. As a result, the operations of the Distribution Center in Cajamar will be discontinued.

ITAPECERICA DA SERRA

Because of the transfer of the administrative offi ce from Itapecerica da Serra to the new build-
ing in São Paulo in 2013, we ended our local activities in 2012, after a process that began in 2011.
In addition to notifying in advance the municipal agencies of Natura’s exit from the municipality,
Natura made arrangements so as to ensure that the social projects be autonomous. One ex-
ample was the technical support to the Municipal Program of Selective Garbage Collection, in
partnership with the Municipal Green and Environmental Department and the Cooperative of
Recyclers of Itapecerica da Serra. Natura had been working in this project since 2007, support-
ing the technical training of the cooperative staff and concluded that the city administration of-
fi ce and the organization are now prepared to manage the service in the city, which had always
been the main purpose of the partnership.

BENEVIDES

In 2012, the training of 40 electromechanical professionals was completed; this is a project that
began in 2011 for the purpose of qualifying workers in Benevides (State of Pará). The training
course was organized in partnership with Senai (National Service of Industrial Training) and
part of these workers is expected to be hired to work in Natura’s new plant that will be inaugu-
rated in 2013 in the municipality (learn more about our relationship with the supplier communities
on page 91).

natura report 2012

101

GRI SO10

102

Upon the review of the company’s strategy for the surrounding communities, Natura also
identifi ed the need to create a work agenda in Benevides, adapted to its new context in the
town. The progress of the Amazônia (Amazon Program) and the construction of the new plant
allow for the strengthening of the company’s relationship and of the bonds of trust with the
local people.

Until now, Natura’s approach in the region was associated with the strategy of relationship with
the communities that supply inputs from biodiversity and covered a wider area, including many
neighboring municipalities. Under the new strategy, Natura’s action will be focused on the mu-
nicipality of Benevides and, beginning in 2013, it will develop a specifi c action plan for this region.

natura report 2012

103

shareholders

As part of the constant challenge to improve everything the company does, Natura works to
strengthen its brand and Essence also in communications to the market. We want to convey
Natura’s differentiating values and provide an increasingly clearer and more accessible lan-
guage. Natura is working to achieve this goal, guiding its relationship with investors based on
a consistent, honest and open dialogue.

Natura maintains an open channel with the market to contextualize its performance and re-
affi rm its commitments and future prospects in a process led by its Senior Vice President of
Finance, Investors Relations and Legal Affairs, Roberto Pedote, and supervised by Fábio Cefaly
and Tatiana Bravin. An important dialogue time is the Natura Day, held annually, when the
company’s executives present the plans for the future and answer the questions and receive
suggestions and which, in 2012, was attended by approximately 150 analysts and investors.
In addition to contextualizing Natura’s strategy and results, this event is considered an op-
portunity to be closer to these stakeholders and disclose more information on Natura’s value
proposal. For this reason, the event includes an exhibition of Natura’s products and the disclo-
sure of the main initiatives in sustainability and innovation. In 2012, the event was attended by
Natura relationship managers – employees who work directly with the consultants – to talk
with shareholders about their work.

Natura seeks to maintain the same level of dialogue in the Annual Shareholders’ Meeting
(ASM) which, in the past few years, attracted an ever more signifi cant number of investors,
particularly individual investors. In 2012, the Annual Shareholders’ Meeting (ASM) gathered
350 people in April, in Cajamar (State of São Paulo), and once again it included a meeting with
the Association of Investment Analysts and Professionals of Capital Markets (Apimec - State
of São Paulo) (learn more on page 20, Corporate Governance).

Additionally, Natura held approximately 600 meetings in the year, including face-to-face meet-
ings and teleconferences in Brazil and abroad. Another important communication tool is the
company’s Page on the Internet (www.natura.net/investidor).

As sustainability is an essential value to the company, Natura seeks to convey to the market
its importance and the care taken by the company in its business when it takes into consider-
ation the management principles in the economic, social and environmental aspects. It is also
a way to encourage the market to follow a similar path, creating a transformation agenda for
the future.

In 2011, Natura carried out the fi rst road show for investors of companies that invest in a triple
bottom line management (known as SRI, Socially Responsible Investors). In 2012, we used
the United Nations Conference on Sustainable Development, Rio+20, and the presence of
many investors in Brazil to gather a group with the Natura’s sustainability team. Three meet-
ings were held at Natura’s headquarters, in Cajamar, and very positive feedback was received
from participants, who were interested in learning more about our management in this area.

natura report 2012

104

The company annually monitors its performance in communication by means of the Percep-
tion Study survey that assesses the quality of its relationship with shareholders and the mar-
ket, collecting opinions from these stakeholders. The survey includes questions about the IR
routine, the company’s management and Natura’s strategy. The fi ndings show that the market
recognizes the company’s experience and active participation in its relations with investors and
analysts, and indicate some points for improvement. Natura uses these fi ndings to further
develop its work.

Natura was recognized at the IR Magazine Brazil Awards, organized by the IR magazine, as
the best company in the Social and Environmental Sustainability, Corporate Governance, and
Consumer Goods and Service categories. Additionally, it received honors in the Annual Re-
port, Meeting with the Analyst Community and IR with Individual Investors categories.

SHAREHOLDERS’ PROFILE

No signifi cant changes in the profi le of shareholders and in the composition of Natura’s capital
stock in 2012 was observed.

Shareholders’ Profi le
Individuals
Brazilian legal entities
Foreign legal entities
Total

Shareholding structure
Shareholders
Controlling shareholders
Treasury shares
Management shares
Outstanding shares
Total de Acciones

2010
7,838
560
850
9,248

2011
8,722
659
867
10,248

2012
7,821
714
926
9,461

Participación
59.83%
0.45%
0.56%
39.16%
100.00%

Cantidad de acciones
258,017,219
1,941,345
2,404,388
168,876,312
431,239,264

CONTROLLING SHAREHOLDERS

Natura’s capital stock only comprises common shares, in accordance with the determination of
BM&FBovespa’s New Market. The table below shows the number of shares of Natura’s capital
stock held by shareholders that own 5% or more of its capital stock or by the members of the
Board in 2012.

natura report 2012

105

Shareholder

Lisis Participações S.A. Controlled
by Antonio Luiz da Cunha Seabra
Utopia Participações S.A.
Controlled by Guilherme Peirão Leal
Passos Participações S.A.
Controlled by Pedro Luiz Barreiros Passos
ANP Participações S.A.
Controlled by Anizio Pinotti
RM Futura Participações S.A.
Controlled by Ronuel Macedo de Mattos
Antonio Luiz da Cunha Seabra
Guilherme Peirão Leal
Pedro Luiz Barreiros Passos
Anizio Pinotti
Ronuel Macedo de Mattos

Number of
common shares

95,946,968

91,557,964

22,606,809

22,583,608

15,918,754
3,628,920
3,462,917
855,038
854,160
602,081

22.25

21.23

5.24

3.69
0.84
0.80
0.20
0.20
0.14

STOCK PERFORMANCE

In 2012, Natura shares appreciated 67.8%, whereas the Ibovespa, the main BM&FBovespa index,
appreciated 7.2%.Since Natura went public in 2004, its shares have signifi cantly outperformed
the index, as shown in the chart below:

Bovespa Index

100 basis = 05/25/2004

05/25/2004

28/12/2009

31/07/2009

natura report 2012

106

17. Table: Average daily volume of shares traded (R$ thousands)1

2010
33,182

1. Source: Economática

2011
43,696

2012
54,337

Since Natura is listed on the BM&FBovespa New Market, it is part of the main indexes of the Bra-
zilian stock market: Ibovespa, IBrX-50 (which lists the most liquid shares on the BM&FBovespa),
ISE (Corporate Sustainability Index), Corporate Governance Index, Tag Along Share Index,
Morgan Stanley Composite Index and ICO2 (BM&FBovespa Carbon Effi cient Index).

Total volume traded (R$ million)1

2010
8,325

1. Source: Economática

2011
10,880

2012
13,394

PAYMENT OF DIVIDENDS

On February 6, 2013, the proposal for the payment, on April 17, 2013, of R$ 469.5 million in
dividends and R$ 21.8 million as interest on capital for the period (R$ 18.6 million net of income
tax) related to the results for 2012, was approved by Natura’s Board of Directors and will be
submitted to the Annual Shareholders’ Meeting (ASM) to be held on April 12, 2013.

On August 15, 2012, interim dividends totaling R$ 327.0 million and interest on capital totaling
R$ 31.0 million (net of withholding tax) were paid.

The sum of these dividends and interest on capital relative to the results for 2012 will represent
net earnings of R$ 1.97 per share (R$ 1.89 per share in 2011), corresponding to 100% of net
income1 for 2012.

natura report 2012

107

government

Natura’s belief in the strength of relationships and collectively developed solutions guides its
work with social and governmental organizations. Natura actively participates in these institutions
seeking to positively contribute to the development of public policies and infl uence social and
environmental transforming actions.

In 2012, the United Nations Conference on Sustainable Development (Rio+20) held in Brazil,
gave Natura the opportunity to prove the transforming power of social mobilization and its
importance in the defi nition of actions to develop a fairer world. Even if this event did not make
history as a time when the world’s major nations came to a consensus on the development
model that should be able to eradicate poverty and ensure natural resources for the future, the
major legacy of the conference was the dialogue and mobilization environment. The interactions
between civil society organizations, the corporate segment, local governments and other play-
ers were translated into initiatives and partnerships there and then. Natura believes that this
mobilizing drive is a powerful asset and can be the milestone for a new engagement model. The
companies, in turn, assumed an important role by creating platforms of mobilization of individuals
and, together with civil society, they will be the leading players in the formulation of the agenda
towards the future we want.

In addition to supporting the offi cial event, Natura actively participated in the parallel dialogue
initiative. Natura was represented by 22 executives who participated in 18 events, discussing
different topics, such as entrepreneurship, green economy, biodiversity, sustainable business and
innovation, which generated many commitments.

Among them, are the Commitment to Natural Capital, of Cambridge University; Caring for
Climate Commitment, of the Global Compact; Commitments and Demands for Building the
Future We Want, of the Ethos Institute; Commitment Letter of CEOs for Rio+20, of the Brazilian
Global Compact and a commitment to the conscious consumption and promotion of women’s
participation in direct sales, in partnership with ABEVD (Brazilian Association of Direct Selling
Companies) (learn more about diversity on page 48, Quality of Relationships).

With the motto “Esta conversa é com todos nós” (“This talk is with all of us”), Natura also in-
vested in the involvement of its stakeholders so that they could know and refl ect about the topics
discussed. In order to engage consultants, ten NCs were invited to participate in the conference
(learn more on page 79, Consultants and NCOs). The company also supported the participation
of its employees with special publications and a series of six meetings at Natura’s facilities with
specialists held to cause refl ection on Rio+20 (learn more on page 48, Quality of Relationships).
Additionally, Natura launched a special campaign in the major means of communication, regional
newspapers and online media not only to inform, but to foster refl ection.

Another topic that guided this work during the period was the legislation on the access to
biodiversity and associated traditional knowledge. More than ten years ago, Natura requested
the creation of a new legal framework for the research and use of inputs from Brazilian social
biodiversity. It defended a system that integrates production, consumption and, above all, favors
the conservation of the planet’s biological diversity. In 2012, Natura was invited by Farma Brasil,
a trade association from the Brazilian pharmaceutical industry, to take part of an initiative aimed
at expanding the discussion on current legislation. This initiative led to the development of a new
proposed text, submitted by businessmen to the Ministry of Environment last November.

natura report 2012

108

Natura believes that this proposal avoids restraints in the process of accessing the genetic heri-
tage and considers the critical topics for fostering research and innovation based on the genetic
heritage, and that it may trigger development from the sustainable use of these resources.

Natura believes that the law will evolve signifi cantly with these changes, particularly in terms
of benefi t sharing. The proposal, with more technical accuracy, avoids ambiguities and pro-
vides increased legal certainty. It is up to the government to analyze Natura’s proposal and
carry on with the process of review of current legislation.

Recognition of the genetic heritage to generate potential wealth, regional development and
social and environmental conservation have been guiding Natura’s work strategy in the Ama-
zon. In 2012, with this program progress, the company launched Nina (Natura Amazon In-
novation Center), an innovative model that proposes the networked production of scien-
tifi c knowledge, connecting local and large international institutions’ researchers. By means
of Natura’s government relations team, the company opened a dialogue channel with many
representatives of the Ministry of Science and Technology to assist them to defi ne the best
scope for the technological complexes in the Northern region (learn more about the Amazônia
(Amazon) Program on page 34, Social biodiversity).

OTHER TOPICS

In the tax scenario, the direct selling companies experienced a tax increase last year in São
Paulo. The impact was due to an adjustment of the methodology used for the calculation of
the Value-Added Margin (VAM), resulting in a signifi cant increase in Natura’s disbursement.
We are discussing with Cotepe (Permanent Technical Commission of the State Value-Added
Tax (ICMS)), a Confaz (National Council of Fiscal Policy) subunit, so that Brazil can adopt a
single national methodology for the calculation of the VAM, thus avoiding wide (tirar a palavra
wide da frase) differences in tax calculations between the different states.

INTERNATIONAL OPERATIONS

Natura has been working together with the governments of our International Operations in
order to make its business feasible, particularly in the company’s recent expansion in Latin
America. The International Operations are undergoing a restructuring phase as they have
just started to operate and Natura is trying to become familiar with the peculiarities of each
country, working locally and with support from Brazil, when necessary. In 2012, Natura was a
party in the discussion on the access to the genetic heritage in Colombia, based on the experi-
ence obtained from more than a decade of discussions on the topic in Brazil. In Argentina, the
company had an intense political dialogue with representatives of the Ministry of Domestic
Trade due to the changes in the import rules in that country (learn more on page 87, Suppliers).

REPRESENTATION AND SOCIAL INFLUENCE

Natura actively participates in cosmetics and direct sale industry organizations in Brazil and
abroad so that it can contribute to the discussions relevant to its business, the industry and
the entire society.

natura report 2012

109

GRI SO7 e SO8

GRI EN28

GRI EC4

Natura’s CEO, Alessandro Carlucci, is in charge of WFDSA (World Federation of Direct Sell-
ing Associations), voted into offi ce for the period from 2011 to 2014. Natura created a work-
group to support the different fronts and committees of the organization. As the company
contributes to the development of the industry’s actions at global level, this experience has
enabled Natura to learn a lot about the direct sales market around the world.

In Brasil, Natura is represented by the Senior Vice Chairman of Abihpec (Brazilian Association
of the Cosmetics, Fragrances and Toiletries Industry) and by the Chairman of ABEVD (Brazil-
ian Association of Direct Selling Companies). By means of Abihpec, Natura is a party to the
Corporate Commitment for Recycling (Cempre) – an industry’s agreement aimed at meeting
the requirements of the National Solid Waste Policy, creating processes for the proper desti-
nation of waste involving the whole chain. At the same time, Natura developed a proprietary
project to work on innovative and sustainable solutions integrated with the business and rec-
ognized the company’s impact on solid waste (learn more on page 38, Solid waste).

Natura is not a party in any litigation involving matters of competition law nor does it have a
history of signifi cant penalties or non-monetary sanctions arising from non-compliance with
laws and regulations. Accordingly, Natura did not record any fi nes or sanctions arising from
non-compliance with environmental laws and regulations.

INVESTMENTS

In 2012, Natura received fi nancial assistance from the government by means of tax incentives
and from government development agencies totaling R$ 38 million. Part of these funds originates
from the Lei do Bem (Good Law) which provides tax benefi ts to companies that develop techno-
logical innovations. Meanwhile, the fi nancial assistance for innovation, training, logistics and infor-
mation technology totaled R$ 106,1 million and was granted by BNDES (Brazilian National Bank
for Social and Economic Development) and Finep (Financial Sponsor of Studies and Projects).

Part of the work of the government relations function is to ensure tax benefi ts from important
investments. In 2012, Natura’s main investments were the construction of the new distribution
center and administrative offi ce in São Paulo (State of São Paulo), the Ecoparque in Benevides
(State of Paraná) and the expansion of the plant in Cajamar (State of São Paulo). Natura works
with the government of the State of Pará to obtain the necessary permits and follow the sched-
ule and planning of the plant aimed at creating an industrial symbiosis in the Amazon (learn more
on page 34, Social biodiversity). The company is also making progress in the construction works
in São Paulo. The new center is expected to be inaugurated in 2013.

TableEC4. Government’s resources
Tax incentives for support and sponsorships1
Lei do Bem (income tax deductions on
up to twice the spending on technological
Research and Innovation)2 x
ICMS value-added tax subsidy in
Itapecerica da Serra
Other3
Total

Unit

R$ millions

2010
9
21

0,6
36

2011
10
24

1,1
39

2012
9
22

2,0
38

1. Corporate income tax (IRPJ) incentives granted through the Rouanet Law, Sports Law, the Children and Adolescents’ Rights Fund, the
Workers’ Meal Program and ICMS Value-Added Tax incentives through the Natura Musical (Musical Natura) projects.
2. The tax benefi t related to the Lei do Bem, of 2011, was changed due to the review/audit of projects.
3. Incentive related to the extension of maternity leave by two months, established by Decree No. 7052/2009. The expense is undeductible
from Taxable Income and Social Contribution calculation basis, but is fully deductible from corporate income tax.

natura report 2012

POLITICAL LOBBYING

Natura applies its principles of ethics and transparency to political lobbying, a practice that the
company considers relevant to the business, and supports its role based on the strictest ethical
standards. Since there is no legislation regulating the activity in Brazil, Natura follows its own
guidelines, such as the Integrity Policy against Corruption and Bribery, created in 2011, which
sets forth rules of conduct for relating with public authorities. Natura has also the Campaign
Donation Policy that prohibits any donations to candidates or political parties in election peri-
ods or not.

Natura works with academic and industry entities in order to promote the need for specifi c
legislation on political lobbying in Brazil. It participates in debates on the matter and seeks to
mobilize the government in this aspect. The following personnel is authorized to represent the
company: Lucilene Prado, Elizabete Vicentini, Luciene Soares, Silene Moneta, Carlos Henrique
Silva, Kássia Reis and Luciano Pedregal.

110

GRI SO6

natura report 2012

Sérgio Gallucci

Representative in the Committee
of Legal Affairs and Government
Relations

Representation in trade organizations and associations
Organization/Association

Natura Representative
José Vicente Marino

ABA - Associação Brasileira de
Anunciantes (Brazilian Advertisers
Association)

ABERJE – Associação Brasileira
de Comunicação Empresarial
(Brazilian Association of Corporate
Communication) (www.aberje.com.
br)

ABEVD – Associação Brasileira
de Empresas de Vendas Diretas
(Brazilian Association of Direct
Selling Companies) (www.abevd.
org.br)

ABIFRA – Associação Brasileira
das Indústrias de Óleos Essenciais,
Produtos Químicos Aromáticos,
Fragrâncias, Aromas e Afi ns
(Brazilian Association of Essential
Oils, Aromatic Chemical Products,
Fragrances, Aromas and Similar
Industries)

ABIHPEC - Associação Brasileira
da Indústria de Higiene Pessoal,
Perfumarias e Cosméticos
(Brazilian Association of the
Cosmetics, Fragrances and
Toiletries Industry) (www.
abihpec.org.br)

Vanessa Giannotti

Rodolfo Guttilla*

Lucilene Prado

Pablo Montanes

Luciano Pedregal

Kassia Reis

Rodolfo Guttilla*

Lucilene Prado

Elizabete Vicentini

Luciene Soares

Kassia Reis

Ricardo Bittencourt

Isabel Fujimori

Abipla – Associação Brasileira das
Indústrias de Produtos de Limpeza
e Afi ns (Brazilian Association of
the Cleaning Products and Similar
Industries) (www.abipla.org.br)
ABPI - Associação Brasileira da
Propriedade Intelectual (Brazilian
Association of Intellectual
Property) (www.abpi.org.br)
Representation in trade organizations and associations
Organization/Association

Lucilene Prado

Natura Representative

natura report 2012

111

GRI 4.12
e 4.13

Type of Representation
Member of the National Board
Vice Chairman of the Media
Committee

Chairman of the Decision-Making
Council

Chairman
Coordinator of the Committee
of Legal Affairs and Government
Relations
Member of the Research
Committee
Member of the Ethics Council
Representative in the Committee
of Legal Affairs and Government
Relations

Vice Chairman
Effective Member of the Fiscal
Council
Representative of the Technical
and Regulatory Committee
Representative in the
Environment Group
Representative in the Taxation
and Foreign Trade Workgroup
Representative in the Foreign
Trade Workgroup

Representative in the Regulatory
Committee

Representative

Type of Representation

112

ABRASCA – Associação Brasileira
das Companhias Abertas (Brazilian
Association of Listed Companies)
(www.abrasca.org.br)
ABRH - Associação Brasileira de
Recursos Humanos (Brazilian
Association of Human Resources)
American Chamber of Commerce
- Amcham Brazil
AMVD – Asociación Mexicana de
Ventas Directas (Mexican Direct
Selling Association)
ANPEI - Associação Nacional
de Pesquisa, Desenvolvimento
e Engenharia das Empresas
Inovadoras (National Association
of Research, Development
and Engineering of Innovative
Companies) (www.anpei.org.br)
Anvisa - Agência Nacional de
Vigilância Sanitária (National Agency
of Sanitary Vigilance)
Asociacion Civil Argentina de
Empresas Brasileñas (Argentine Civil
Association of Brazilian Companies)
(www.grupobrasil.com.ar)
ASPI - Associação Paulista da
Propriedade Intelectual (São Paulo
Association of Intelectual Property)
(www.aspi.org.br)

Roberto Pedote

Representative

Ney Silva

Representative

Vice Chairman of the Strategic
People Management Committee

Cecilia Riviello

Member of the Steering Board

Luciana Hashiba

Director

Elisabete Vicentini

Responsible for Legal Affairs

Member Partner

Lucilene Prado

Representative

Cámara de Comercio de
Lima (Chamber of Commerce of
Lima)

Daniel Gonzaga

Dejan Joksimovic

Representative
Member of the Cosmetics and
Hygiene Committee

Cámara de Venta Directa de Chile
(Direct Sales Chamber of Chile)
CANIPEC – Cámara Nacional de la
Industria de Perfumaria, Cosmetica
y Articulos de Tocador e Higiene
(Mexican National Chamber of the
Perfumery, Cosmetics and Toiletry
and Hygiene Products Industry)
CAPA – Cámara Argentina de la
Indústria de Cosmética y Perfumería
(Argentine Chamber of the
Cosmetics and Perfumery Industry)

Capevedi - Cámara Peruana de
Venta Directa (Peruvian Chamber
of Direct Sales)

CASIC - Consejo de Asociaciones
de la Industria de Cosmeticos
Latinoamericana (Council of the
Latin American Cosmetics Industry
Associations)

Hans Werner

Director

Carolina Muñoz

Representative

Javier Herrero

Chairman of the Sustainable
Development Commission

Alternate Member of the Account
Review Committee

Representative
Member of the Communication
Committee
Representative

Representative in the Trade
Facilitation Committee

Pedro Gonzalez

Daniel Gonzaga

Dejan Joksimovic

Rodolfo Guttilla*

Kassia Reis

natura report 2012

Natura Representative

Silene Moneta

Pedro Gonzalez

Representation in trade organizations and associations
Organization/Association
CAVEDI – Cámara de Venta Directa
de Argentina (Direct Sales Chamber
of Argentina)
CEBDS - Conselho Empresarial
Brasileiro para o Desenvolvimento
Sustentável (Brazilian Business
Council for Sustainable
Development)
CEMEFI – Centro Mexicano para
la Filantropía (Mexican Center for
Philanthropy)
CIESP - Centro das Indústrias do
Estado de São Paulo (Center of
Industries of the State of São Paulo)
(www.ciesp.org.br)
Conar - Conselho Nacional de
Autorregulamentação Publicitária
(National Council of Advertising Self-
Regulation)

Gabriela Ocampo

Luciano Pedregal

Rodolfo Guttilla*

José Vicente Marino

Conservation International

Karina Aguilar

113

Type of Representation

Secretary of the Steering Board

Representative in the CTBIO -
Câmara Temática de Biodiversidade
(Thematic Biodiversity Chamber)

Member of the Corporate Social
Responsibility Committee

Director

CIESP Advisor – Jundiaí (State of
São Paulo)

Member of the Higher Council

Natura’s focal point at TEEB (The
Economics of Ecosystems and
Biodiversity) Brazil
Representative

Copecoh – Comité Peruano de
Cosmética e Higiene (Peruvian
Cosmetics and Hygiene Committee)

ETHOS - Instituto Ethos de
Empresas e Responsabilidade Social
(Ethos Institute of Companies and
Social Responsibility) (www.ethos.
org.br)

FNQ – Fundação Nacional da
Qualidade (National Quality
Foundation) (www.fnq.org.br)
FUNBIO – Fundo Brasileiro para a
Biodiversidade (Brazilian Fund for
Biodiversity) (www.funbio.org.br)
Fundação Dom Cabral
(Dom Cabral Foundation)
Fundação SOS Mata Atlântica (SOS
Atlantic Forest Foundation)

Daniel Gonzaga

Dejan Joksimovic

Member of the Executive Board

Guilherme Peirão Leal

Marcelo Cardoso*

Lucilene Prado

Silene Moneta

Pedro Passos

Member of the Decision-Making
Council
Member of the Ethos 10 Years
Management Council
Alternate Member of the Advisory
Board of the Ethos Platform
Representative in the MEBB -
Movimento Empresarial pela
Biodiversidade (Corporate Initiative
for Biodiversity)

Vice Chairman of the Board of
Trustees

Guilherme Peirão Leal

Member of the Advisory Board

Pedro Passos

Member of the Board

Pedro Passos

Member of the Board

Global Compact - Caring
for Climate

Denise Alves

Keyvan Macedo

GRI - Global Reporting Initiative
(www.globalreporting.org)

Rodolfo Guttilla*

Member of the Steering
Committee
Representative
Member of the Stakeholder
Council and Co-chair of the
Brazilian National Annex

natura report 2012

114

Representation in trade organizations and associations
Natura Representative
Organization/Association

Type of Representation

IBGC - Instituto Brasileiro de
Governança Corporativa (Brazilian
Institute of Corporate Governance)
(www.ibgc.org.br)
IBRI – Instituto Brasileiro de
Relações com Investidores (Brazilian
Institute of Investor Relations)
(www.ibri.org.br)
IEDI – Instituto de Estudos para
o Desenvolvimento Industrial
(Institute of Studies for Industrial
Development) (www.iedi.org.br)

Moacir Salztein

Representative in the Human
Resources Committee

Fabio Cefaly

Representative

Pedro Passos

Presidente del Consejo

IIRC – International Integrated
Reporting Committee

Roberto Pedote

Alexandre Nakamaru

Member of the Steering
Committee
Member of the Technical Task
Force

Instituto Akatu pelo Consumo
Consciente (Akatu Institute for
Conscious Consumption)
Instituto Empreender Endeavor
Brasil (Endeavor Brazil Entrepreneur
Institute) (www.endeavor.org.br)
INTA – International Trademark
Association
IPT - Instituto de Pesquisas
Tecnológicas (Institute of
Technological Research) (www.ipt.
br)
ISA - Instituto Socioambiental (Social
and Environmental Institute)
LIDE - Grupo de Líderes
Empresariais (Business Leaders
Group)
MBC – Movimento Brasil
Competitivo (Competitive Brazil
Initiative) (www.mbc.org.br)
MEI - Mobilização Empresarial pela
Inovação (Corporate Mobilization
for Innovation) (CNI)
Ministry of Science, Technology and
Innovation
Movimento Empresarial pelo
Desenvolvimento Econômico da
Mulher + Mulher 360 (Corporate
Initiative for Women’s Economic
Development + Mulher 360)
Movimento Nossa São Paulo
(Our São Paulo Movement)(www.
nossasaopaulo.org.br)

José Vicente Marino

Representative

Pedro Passos

Member of the Board

Lucilene Prado

Representative

Pedro Passos

Renata Puchala

Alessandro Carlucci

Vice Chairman of the Advisory
Board

Representative in the Sustainable
Amazon Forum
Representative

Rodolfo Guttilla*

Representative

Pedro Passos

Representative

Pedro Passos

Representative

Pedro Passos

Member of the National Council
of Science and Technology

Lucilene Prado

Member of the Board

Guilherme Peirão Leal

Chairman of the Decision-Making
Council of the Sustainable São
Paulo Institute

natura report 2012

115

Representation in trade organizations and associations
Natura Representative
Organization/Association

Type of Representation

NEF - Núcleo de Estudos Fiscais da
Escola de Direito da FGV (Center
of Fiscal Studies of the Law School
of Getulio Vargas Foundation)
PCPC Council - Personal
Care Products Council
(www.personalcarecouncil.org)

Lucilene Prado

Member of the Board

Elizabete Vicentini

Representative

United Nations Development
Programme (UNDP)

Karina Aguilar

Isabel Ferreira
Luara Maranhão
Rodolfo Guttilla*

Rede América (America Network)

Lucilene Prado

SIPATESP - Sindicato da Indústria
de Perfumaria e Artigos de
Toucador no Estado de São Paulo
(Perfumery and Beauty Products
Industry Union of the State of São
Paulo)
The Arthur W. Page Society
(www.awpagesociety.com)
UEBT – Union For Ethical Biotrade Ricardo Faucon
Water Footprint Network
WBCSD - World Business Council
for Sustainable Development
(www.wbcsd.org)

Keyvan Macedo

Rodolfo Guttilla*

Ines Francke
Alessandro Carlucci

Representative in the Brazilian
Global Compact Committee
(Comitê Brasileiro Pacto Global
– CBPG)
Representative
Representative
Vice-Presidente

Director

Representative

Chairman of the Board
Representative
Member of the Board

Liaison Delegate

WFDSA – World Foundation for
Direct Selling Associations

WWF Brasil (www.wwf.org.br)

Alessandro Carlucci
Rodolfo Guttilla*
Moacir Salztein
Guilherme Peirão Leal

Chairman
Member of the Advisory Board
Deputy Treasurer
Member of the Advisory Board

* Have withdrawn from the company.

natura report 2012

Natura
value chain

Natura’s main results in 2012, from the extraction of raw material to the disposal of packaging.

Stage 1: Extraction and transportation of raw materials and packaging
(direct and indirect suppliers)

R$ 4.8 billion paid to suppliers for the purchase of inputs and services

22.6% loyalty rate among suppliers in Brazil, a drop of 400 basis points

123,792 metric tons of Greenhouse Gas (GHG) emissions related to the extraction and
transportation of raw materials and packaging (44% of Natura’s total emission)

22,482 metric tons of GHG emissions per direct supplier (processing and transporting to
Natura) (8% of total)

Stage 2: Industrial internal processes

R$ 803 million paid to employees in benefi ts and salaries, 26.5% higher than in 2011

R$ 437 million invested in infrastructure and logistics

0.40 liter of water consumed per unit produced, same as in the previous year

25.56 grams of waste generated by unit produced compared to 20.01 grams/unit in 2011

20,545 metric tons of GHG emissions in internal processes (7.5% of total)

Stage 3: Sale of products (transportation and distribution)

3.2 billion paid to consultants for gains related to the sale of products, an increase of around
10.5% from 2011

1.5 million consultants in all operations, a 10.7% growth in our consultant base

24% loyalty rate among consultants in Brazil (compared to 19% in 2011)

40% loyalty rate among NCAs in Brazil (compared to 24% in 2011)

104 new products launched

46,041 metric tons of GHG emissions related to transportation of products to consultants
and consumers (16.5% of Natura’s total emissions)

natura report 2012

116

GRI EN29

117

EN26
(parte)

Stage 4: Use of products and packaging disposal

14% of refi lls on items billed in Brazil

125 mPt/kg is the environmental impact of packaging per number of products¹ compared to
123 mPt/kg in 2011

67,349 metric tons of GHG emissions related to the fi nal disposal of products and packaging
(24% of Natura’s total emissions)

1. The indicator also includes effects on the extraction and transformation of packaging.

Cross-sectional indicators

R$ 1.7 billion paid to the government in direct and indirect taxes, the same as in the previous year

R$ 846 million distributed to shareholders in dividends and interest on capital that were actu-
ally paid to shareholders, that is, calculated on a cash basis (an increase of 11%).

R$ 861 million in net income, an increase of 3.7%

R$ 6.345,7 million in net revenue, an increase of 13.5%

R$ 1.510,7 million in EBITDA

EBTIDA margin of 23.8%

R$ 73.2 million invested in sustainability

natura report 2012

118

creation of
environmental
value

Natura’s management of the business impact on the environment is based on an integrated view of its
chain while always seeking to reduce the negative impacts and maximize the positive impacts by means
of solutions that create shared value to the entire relationship network.

In accordance with the company’s materiality matrix, the priority environmental topics for the company
are water, climate change, social biodiversity and solid waste. All these aspects are regularly monitored
through many forums of the company, including the commitments assumed and the progresses made
in each topic (see table on page 18).

Natura’s indicators cover at least all of its commercial and industrial units, offi ces and distribution
centers in Brazil. Additionally, the company also reviews the impact of its main suppliers, including third
parties (that manufacture fi nished products for Natura), as well as raw material and packaging suppli-
ers. The company has been working to expand its management in the International Operations, with
a progressive increase in the number of indicators monitored in those locations (learn more on page
148, About this Report).

CARBON NEUTRAL

Natura has been a carbon neutral company since 2007, which means that its greenhouse gas (GHG)
emissions generated in the production process, including the company’s value chain, which cannot be
avoided, are offset through carbon credits obtained from investments in reforestation, energy effi ciency
and replacement of fossil fuel programs.

Currently, as a subprocess of the organization, the topic provided a number of lessons after its inclusion
in the discussion agenda in many decision forums and in profi t sharing.

In 2012, Natura achieved a reduction of 7.4% in its absolute GHG emissions in relation to 2008. This
data includes the company’s plants in Cajamar (State of São Paulo) and Benevides (State of Pará), and
the administrative offi ces. However, this reduction was not enough for Natura to achieve its commit-
ment to reduce absolute emissions by 10% (scope 1 and 2 of the GHG Protocol) during the period.
The company’s reduction planning was adversely affected by the increase in the share of thermoelec-
tric plants in the supply of electric energy to the Brazilian electric energy network at the end of 2012
in order to compensate the low level of the hydropower reservoirs. The inclusion of a more polluting
energy source in the network is a government necessity and increases the emission factor of this
component in the calculation of the company’s GHG inventory. Accordingly, although Natura managed
to implement all the projects that had been planned, including the reduction in the consumption of
power by its direct production processes, it was still vulnerable to a factor that is the responsibility of
the national energy network.

natura report 2012

It is important to highlight that if we consider only the emission factor of the electricity
network in 2008, we would have achieved a 21% reduction in absolute emissions in four
years. We seek to encourage the use of energy from renewable sources and less envi-
ronmental impact, acquiring energy from Small Hydropower Plants (SHP). But as we do
not have electricity network distribution from the power generation site to our spaces,
we need to account this emission using the emission factor of the national energy system,
regardless of the source of energy gained, to follow the GHG Protocol methodology.

Additionally, in 2012, Natura’s emissions followed the trend of the past years, with an increase that is
proportionally lower than the growth of the company’s business. Natura achieved a relative reduction
of 4% in relation to the previous year and of 28% since 2006, in line with its commitment to achieve a
33% reduction by the end of 2013 (learn more on page 33, Climate Change).

It is worth noting that the company’s operations do not emit or use substances that deplete the
ozone layer. The emissions of particulate materials and NOx and SOx gases in Natura’s chain
are monitored and are not signifi cant.

119

GRI EN 19/
EN20

INVENTORY OF EMISSIONS

Natura draws an inventory on a yearly basis to map the total volume of direct and indirect
emissions of greenhouse gases, taking into consideration scopes 1, 2 and 3 of the Greenhouse
Gas Protocol Initiative (GHG Protocol) and the ABNT NBR ISO 14064-1 standards. In 2012,
the inventory was audited by Ernst & Young Terco.

RELATIVE
EMISSIONS
(KG OF CO2E/
KG OF PRO-
DUCT BILLED)

3.30

3.12

3.00

0
1
0
2

1
1
0
2

2
1
0
2

EN16/17. GHG emissions
(by scope of the GHG Protocol)
Direct GHG emissions (Scope 1)
Indirect GHG emissions and power (Scope 2)
Other indirect GHG emissions (Scope 3)
Total

Unit

2010

2011

2012

metric
ton

7,969
2,249
243,094
253,312

6,062
1,865
257,089
265,015

3,435
3,576
273,198
280,209

EN16/EN17. Emissions in the value chain
Extraction and transportation of raw
materials and packaging (to direct suppliers)
Direct suppliers (processing and
transportation to Natura)
Industrial and internal process1
Sale of products (transporting and
distribution)
Use of products and packaging disposal
Grand total

Unit

2010
106,144

2011
117,276

2012
123,792

24,775

21,299

22,482

metric
ton

25,611
38,275

24,731
38,279

20,545
46,041

58,509
253,314

63,431
265,015

67,349
280,209

1. Internal processes refer to fi xed sources, exports, business trips, treatment of effl uents, international operations.

natura report 2012

120

GRI EN18
e EN26

EN29. CO2 EMISSIONS WITH TRANSPORTATION IN 2012 (METRIC TONS OF CO2E):
_Transportation of products: 46,041
_Export of products: 6,957
_Vehicles of the sales force: 733
_Vehicles of executives: 612
_Chartered transportation: 2,330
_Waste transportation: 162

REDUCTION

In order to reduce emissions, many improvement actions are in place, such as the installation
of a biomass-powered boiler in Natura’s plant in Benevides (State of Pará). Instead of diesel,
the equipment is powered by certifi ed wood briquettes. This new boiler is also prepared to
operate using plant waste, such as fruits and seeds.

The company extended the use of the fuel card to executives, senior management and sales
managers, restricting its use to ethanol in fl ex-fuel vehicles. As from 2013, Natura will also
be the fi rst company to have an ethanol-powered executive bus in its chartered fl eet, which
currently is found only in public transportation. The ethanol-powered bus produces 88% less
emissions when compared to the traditional vehicle. In the future, the company wants to ex-
tend this measure to other vehicles of the fl eet, including the product delivery trucks.

Natura’s logistics system continues to obtain positive returns with the progress of local produc-
tions in Argentina and Colombia, reducing its exports from Brazil and, consequently, reducing
emissions in transportation. In Brazil, the implementation of distribution centers in different
regions in the past years allowed for the optimization of the distribution logistics network and
also contributed to reduce CO2 emissions.

In the coming years, other projects to reduce the greenhouse gases should be implemented,
such as the creation of new box sizes for the delivery of the orders to consultants.

OFFSETTING

Emissions that cannot be avoided are offset through the acquisition of carbon credits from
forest projects (promoting forest recovery in unreclaimed areas), energy projects (aiming at
replacing fossil fuels with renewable and/or more effi cient sources) and waste treatment.

The submittal of applications to the invitation to bid for the 2011/2012 biennium fi nished in May
2011 and, in 2012, Natura signed contracts with seven of these initiatives, ensuring the offset
of 452,857 tCO2e out of the 545,224 tCO2e generated in 2011 and 2012. Other projects of
this invitation to bid are under review and negotiation to offset the remaining emissions in the
period. A new selection of projects is expected for 2013.

Natura also seeks offsetting projects in other countries in Latin America and has projects
implemented in the region. It purchased credits in Colombia once again and is at the fi nal stage
of negotiation with an initiative in Peru.

Learn about the projects support by Natura in the table below:

natura report 2012

121

2011/2012

Carbon Project in the Emas-Taquari Biodiversity Corridor – NGO Oréades
Núcleo de Geoprocessamento (States of Goiás and Mato Grosso do Sul)
The project was renewed after the positive results achieved in the previous cycle, which
started in 2009. In this new cycle, reclamation of more than 164 hectares in the same
region around the Emas National Park and the Nascentes do Rio Taquari State Park was
contracted, which should result in the offsetting of 58,000 metric tons of CO2e in 30 years.
Reforestation of Degraded Areas – ASORPAR Ltda. and Consultoria Sou-
th Pole (Colombia)
Project developed in the region of Cáceres and Cravo Norte, in Colombia, which pro-
vides for the neutralization of emissions in other Latin American operations. Upon the
2011/2012 invitation to bid, Natura purchased more 29,000 metric tons of CO2e.
Replacement of fuel in ceramic manufacturing companies – Consultoria
Sustainable Carbon
Among the actions supported, there are four projects for the replacement of non-
-renewable fuel with biomass to be used in the ceramic manufacturing companies ovens
in many regions of Brazil. The replacement of wood and fi rewood with renewable sour-
ces reduces gas emissions, avoids deforestation and improves work conditions. The list
below shows where Natura supports these replacements:

_ Cerâmicas Arrozal, GGP and Sul América (State of Rio de Janeiro), with the offset

of 60,680 metric tons of CO2e.

_Cerâmica Velotex (State of Sergipe), with the offset of 133,800 metric tons of CO2e.
_Cerâmicas Barbosa and Kamiranga (State of Pará), with the offset of 128,000 metric

tons of CO2e.

_Cerâmica Gomes de Matos (State of Ceará), with the offset of 120,200 metric tons

of CO2e.

_Cerâmica JL Silva (State of Pernambuco), with a new purchase of 34,500,000 metric

tons of CO2e.

2009/2010

Use of renewable biomass – Consultoria Sustainable Carbon (State of Mi-
nas Gerais)
This project also promotes the replacement of non-renewable fuels (native fi rewood
from the Cerrado savannah region) with biomass (sawdust, woodchips and sugarcane
bagasse) in Cerâmica Santorini’s ovens in Ituiutaba (State of Minas Gerais).
In 2011 and 2012, Natura received 38,617 additional metric tons of CO2e, and the remai-
ning 63,000 metric tons of CO2e will be delivered within the next fi ve years.
Effi cient stoves in the Recôncavo Baiano II – Instituto Perene (State of Bahia)
This is an extension of the 2008 initiative to replace rudimentary stoves with more effi -
cient ones in rural households in Bahia. Five thousand new stoves that use less fi rewood
will be installed, reducing GHG emissions. The project will offset 94,000 metric tons of
CO2e in 8 years. Of this total, more than 50% of the stoves have been installed to date.
Carbon Project in the Emas-Taquari Biodiversity Corridor – NGO Oréades
Núcleo de Geoprocessamento (States of Mato Grosso do Sul and Goiás)
Reclamation, with native species, of 200 hectares of degraded areas, of a total area of 600
hectares around the Emas National Park and the Nascentes do Rio Taquari State Park
(States of Goiás and Mato Grosso do Sul). The project is expected to offset 70,000 metric
tons of CO2e in 30 years. Planting was completed in 2012.

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122

Social and Environmental Carbon of Xingu – Associação Xingu Susten-
tável, Instituto Socioambiental (ISA) and Instituto Centro de Vida (ICV)
(State of Mato Grosso)
The purpose is to reclaim 220 hectares of degraded permanent preservation areas of
the watercourses that form the Xingu river. The target is to offset 75,000 metric tons of
CO2e in 30 years.

2008

Carbon, Biodiversity and Community in the Pau-Brasil Ecological Corri-
dor (Ibio) (State of Bahia)
Forest recovery project that is carried out in the Pau-Brasil National Park and at the
Monte Pascoal National Park in Porto Seguro (State of Bahia). This project will offset
79,000 metric tons of CO2e in 30 years. A total of 56 out of 250 hectares was recovered
and other areas will be prospected for completing the planting.

Xingu Social and Environmental Carbon – Instituto Socioambiental (ISA)
and Instituto Centro de Vida (ICV) (State of Mato Grosso)
Recovery of 116 hectares of degraded riverbank forests and springs that form the Xingu
river. The planting has already been completed and the project will offset 40,000 metric
tons of CO2e in 30 years. The fi rst issue of credits is expected for 2014.
Effi cient stoves in the Recôncavo Baiano – Instituto Perene (State of Bahia)
The project provides for the replacement of rudimentary wood stoves of the families
that live in rural communities in the Recôncavo Baiano with more effi cient stoves. All the
stoves have already been installed and the target is to offset 18,880 metric tons of CO2e
in eight years. Of this total, more than 70% of the stoves have been installed to date.

SOCIAL BIODIVERSITY

GRI EN12/
EN14

Considering the experience accumulated in more than ten years of work and research, Natura
believes it is possible to use the resources from social biodiversity in harmony with men and
nature within a sustainable model. In this period, the company established a direct relationship
with the supplier communities for the development of business with sustainable stewardship
of natural inputs, process traceability and sharing of the benefi ts generated by these resources,
always in line with Natura Policy of Sustainable Use of Biodiversity and Associated Traditional
Knowledge (Social Biodiversity Policy). This document is also in line with the guidelines of the
Convention on Biological Diversity established by the United Nations and governs Natura’s
potential impacts on biodiversity.

For the coming years, Natura should increase its investments in inputs from biodiversity in the
Pan-Amazonian region by means of the Amazônia (Amazon) Program.

ENVIRONMENTAL CERTIFICATION

GRI EN12/
EN14

In order to ensure that the extraction of the inputs from social biodiversity is carried out within
the capacity of the environment, Natura has set in place a plan for the certifi cation of plant raw
materials. This process is carried out by independent certifying entities and one of the require-
ments is production traceability, in which the producer documents and accounts for the origin
of all the materials produced.

natura report 2012

123

During the year, Natura monitored the certifi cations, together with certifying audits in the com-
munities or groups of producers. In specifi c cases, Natura also provides technical assistance to
groups to meet their needs in terms of documents required by the standards, validity of the
certifi cates of the supplier companies involved in the chain and constant attention to the up-
dates or amendments to laws related to certifi cations in effect for fi eld production. Although
certifi cation for organic cosmetics is not covered in the Brazilian legislation, Natura always seeks
to participate in technical discussion groups to assess and contribute to the development of
regulations for this purpose.

The certifi cations include family farmers and traditional communities and is divided into two cat-
egories: organic (Instituto Biodinâmico, Ecocert, Organização Internacional Agropecuária and
Instituto de Mercado Ecológico) and forest (Forest Stewardship Council). In 2012, the indicator
of certifi cation of ingredients dropped from 59% to 47% of total species, due to the discontinua-
tion of the Frutífera organic tea line, which resulted in the removal of ten certifi ed raw materials
from the list.

Additionally, Natura does not use invasive plant species, avoids monoculture and prefers organic
production. Neither does it promote activities that may transform a natural environment in
order to meet production interests (habitat conversion).

EN26. Certifi ed ingredients ¹ 2
Certifi ed ingredients
Percentage of certifi ed species

Unit
Unit
%

2010
36
61

2011
37
59

2012
27
47

1. Only plant inputs in the form of waxes, oils, extracts, essential or unprocessed oils (cosmetics and teas) are considered. Certifi cations
considered: organic (IBD, Ecocert, OIA, IMO) and forest stewardship (FSC).
2. In exceptional cases, additional volumes of raw materials may be acquired from uncertifi ed areas due to: increase in internal demand,
decreases in the production of certifi ed areas, lack of inventories at certifi ed suppliers

PR3. Origin of material
and product certifi cation
Renewable plant material
Natural plant material
Material with origin certifi cation

Unit

2010

2011

2012

%
%
%

82
7
16

81
9
12

82
8
15

Among the inputs used, three are developed from species included in the list of threatened
species, according to the Ministry of the Environment and the International Union for the Con-
servation of Nature (IUCN). They are: Brazil nut (Bertholletia excelsa), in vulnerable status,
yerba maté (Ilex paraguariensis), low risk, and ucuúba (Virola surinamensis), which is threatened.

The acquisition of these raw materials follows the principle of the sustainable use of biodiversity
and two of these raw materials are certifi ed (see table below).

GRI EN15

natura report 2012

Number of certifi ed ingredients and status of the certifi cation program 1 2 3
Status
(phase)

Especie – Línea Ekos

Production system

124

GRI EN26

Certifi ca-
tion

Açaí berry (State of Roraima)
Euterpe precatória
Açaí berry (State of Pará)
Euterpe oleracea
Andiroba (States of Amazonas and Pará)
Carapa guianensis
White pitch (State of Amazonas)
Protium pallidum
Cacao (States of Bahia and Pará)
Theobroma cacao
Lemongrass (States of Paraná
and São Paulo)
Cymbopogon citratus
Brazil nut (States of Amazonas,
Mato Grosso and Roraima)
Bertholletia excelsa
Cupuaçu (State of Roraima)
Theobroma grandifl orum
Passion fruit (States of Minas Gerais
and Paraná
Passifl ora edulis
Yerba mate (State of Rio Grande do Sul)
Ilex paraguaiensis
Murumuru palm (States of Amazonas
and Pará)
Astrocaryum murumuru
Surinam cherry (States of Paraná
and São Paulo)
Eugenia unifl ora
Piri piri (State of Paraná)
Cyperus articulatus

Agroforestry

III (fi nal)

IBD

Agroforestry

III (fi nal)

IMO

Traditional

III (fi nal)

Agroforestry

III (fi nal)

FSC

IBD

Organic

III (fi nal)

ECOCERT

Traditional

III (fi nal)

FSC

Agroforestry

III (fi nal)

IBD

Cultivation

Traditional

III (fi nal)

FSC

Traditional

Organic cultivation and
stewardship

III (fi nal)

ECOCERT

Organic cultivation

III (fi nal)

IBD

Species – Other lines

Production system

Status
(phase)

Certifi ca-
tion

Rosemary (State of Paraná)
Rosmarinus offi cinalis L.
Babassu (State of Maranhão)
Orbgnya speciosa
Buriti palm (State of Minas Gerais)
Mauritia fl exuosa
Arabian coffee (State of Minas Gerais)
Coffea arábica
Candeia (State of Minas Gerais)
Eremanthus erythropappus
Carnauba (State of Ceará)
Copernicea cerifera
Copaiba (State of Amazonas)
Copaifera spp

Organic cultivation

III (fi nal)

ECOCERT

Stewardship

Organic cultivation

III (fi nal)

Stewardship and or-
ganic cultivation

III (fi nal)

Stewardship

III (fi nal)

IBD

FSC

IBD

Stewardship

III (fi nal)

ECOCERT

natura report 2012

125

Balsam-of-Peru (State of Pará)
Ocimum americanum
Guarana (State of Bahia)
Paullinia cupana
Para cress (State of São Paulo)
Spilanthes oleracea
Palo Santo (Ecuador)
Bursera graveolens
Paramela (Patagonia-Argentina)
Adesmia buronioides
Poejo (State of Rio Grande do Sul)
Cunilla gallioides
Sage (State of Paraná)
Salvia offi cinalis
Sapucainha (State of Bahia)
Carpotroche brasiliensis

Organic cultivation

III (fi nal)

Organic cultivation

III (fi nal)

Organic cultivation

III (fi nal)

IBD

Stewardship

III (fi nal)

ECOCERT

Stewardship

III (fi nal)

OIA

Organic cultivation

III (fi nal)

ECOCERT

Organic cultivation

III (fi nal)

ECOCERT

Agroforestry

IBD

1. Ten ingredients cannot be disclosed in the table because they are under research and the related products have not yet been launched.
Five of these ingredients are certifi ed.
2. Ten raw materials used in the Frutífera line were withdrawn from the list due to the discontinuation of the products.
3. Phase I: Internal process of identifi cation and selection of a potential supplier area. This phase is characterized by the typology of pro-
ducers, the organization of the community and the existing type of stewardship (agricultural or forest); Phase II: Preparation of certifi cation
strategies, with discussion of the processes with plant product suppliers, selection of the certifying body and preliminary analysis of the
supplier area by this body (when necessary); Phase III: Certifi cation inspection in the supplier areas, implementation of the action plan to
comply with the requirements of the certifying bodies and opinion of the certifying body to obtain the seal.

WORK IN PROTECTED AREAS

GRI EN11,
EN13

Natura’s main operational units in Brazil are located in land owned by the company, which
invests in the reclamation and conservation of these areas, in accordance with the provisions in
the environmental licenses granted.

The company’s headquarters in Cajamar (State of São Paulo) are located in an area of 646,000
sq. m in an Environmental Protection Area on the Anhanguera Highway. The unit consists of
the administrative offi ce, the company’s main industrial unit and a distribution center. In 2012,
Natura completed the local stewardship plan, which included the removal of exotic species,
recovery of the native forest and increase of local biodiversity and, from then onwards, it will
continue to invest in the maintenance of the area. It is worth noting that the environmental
agency confi rmed that the stewardship plan was appropriately implemented by Natura.

In Itapecerica da Serra (State of São Paulo), the company is located on the side of Régis Bit-
tencourt Highway in an area of 96,500 sq. m within the Protection and Recovery Area of the
Springs of the Guarapiranga Water Basin. The recovery of this area was completed in 2008,
when Natura started to work on the maintenance of vegetation area.

In Benevides (State of Pará), Natura is building a new industrial unit on a 172,900 hectare plot
of land, which is part of the Industrial and Commercial Expansion Zone of the municipality.
There are two permanent protection areas on the property and the preservation actions are
provided for in the environmental licenses of the development. The construction meets the
applicable environmental criteria and is covered by an environmental license.

Additionally, the company works with suppliers of inputs of species from social biodiversity in
many regions in Brazil. Among them communities of two areas protected by the National Sys-
tem of Conservation Units: the Extractive Reserve of Middle Juruá, in the State of Amazonas,
and the Sustainable Development State Reserve of Iratapuru, in the State of Amapá.

natura report 2012

126

EN26. ENVIRON-
MENTAL IMPACT
OF PACKAGING
BY QUANTITY
OF PRODUCTS11
(MPT/KG)

137

123

125

0
1
0
2

1
1
0
2

2
1
0
2

1. Packaging of products
and supporting materials,
such as shipping boxes
and Natura Magazine are
considered..

In the Middle Juruá, which covers 253,000 hectares of protected area, the stewardship of
andiroba and murumuru palm takes place in an area of less than 1% of the total area. In 2011,
Natura obtained access to the traditional knowledge associated with the andiroba through
an unprecedented commercial agreement with a community in an environmental conserva-
tion area. The benefi t sharing contract was monitored by ICMBio (Chico Medes Institute of
Preservation of Biodiversity) and authorized by the federal government’s Genetic Heritage
Management Council (CGen).

The sustainable stewardship of the Brazil nut, copaiba and white pitch takes place in an area of
approximately 4,000 hectares of the Iratapuru Reserve, less than 0.5% of its total area, which
covers a surface of 842,000 hectares. All the activities are approved by these preservation units.

IMPACT OF PRODUCTS

Natura invests in the development of innovative technology to reduce the environmental im-
pact of its products and packaging.

In the case of packaging, Natura periodically monitors the Life Cycle Assessment (LCA), a
system that quantifi es the impact, from the extraction of raw material, production and use,
through fi nal disposal.

In 2012, the company recorded a slight increase in the total LCA impact, from 123 mPt/kg
to 125mPt/kg, due to the increase in the print run of the Natura Magazine and supporting
materials for the NCs, in line with the expansion of Natura’s sales network. Considering only
the packaging of products in the analysis, the environmental impact dropped in relation to the
previous year.

Natura uses cutting edge ecodesign concepts in its packaging, and the guidelines with respect to
this commitment include the continuous reduction of packaging mass, the use of lower impact
raw materials, in addition to the use of recycled and recyclable materials. One example was the
Ekos line, which was relaunched in 2011 and increased its social and environmental differentials
by increasing the use of post-consumption recycled materials in its packaging, resulting, last year,
in a higher rate of recycled materials use, from 9% to 11%.

On the other hand, the company recorded a small negative variation in the use of recyclable
materials due to the increase in the sales of makeup products, which have a low recyclability rate.

We were unable to meet the desired performance in the sales of refi lls, whose representative-
ness in total sales in Brazil and other operations decreased. Among the associated factors are the
increase in the sales of makeup products and perfumes, categories with little refi lling options; the
mix of promotions that increased the sales of other products; and restrictions in the supply of
refi lls of the body products category in the period. To better understand its impact, this indicator
was included in the Social and Environmental Budget, which gathers the most strategic indicators
for the company that are monitored by senior management on a quarterly basis.

Natura’s products are monitored based on an environmental table that presents data on origin,
transformation and percentage of certifi cation of raw material, percentages of use of recycled
and recyclable material, and number of product refi lling. We comply with all legal requirements
concerning information release on the ingredients used. Natura’s labels are in accordance with
the laws in effect and comply with all resolutions related to cosmetics determined by the Brazil-
ian Health Surveillance Agency (Anvisa).

natura report 2012

127

EN2. RECYCLABLE
PRODUCT (%)

0
1
0
2

1
1
0
2

2
1
0
2

EN2. Post-consumption recycled material 1
Post-consumption recycled material included
in packaging of fi nished products and support-
ing materials¹
Post-consumption recycled material included
in packaging of fi nished products

Unit

2010

2011

2012

10.4

0.8

9.4

1.1

10.8

1.6

1. The indicator considers the % of packaging materials and % of supporting materials, such as magazines, boxes for the distribution of
products and bags, arising from post-consumption recycling..

EN1. Total use of materials by type
(except water)
Direct materials

Direct materials

EN26 and EN1. Percentage of refi lls
on billed items 1
Brazil
Argentina
Chile
Colombia
France
Mexico
Peru

Unit

2010

2011

2012

Metric
tons
Cubic
meters

22,475

22,170

22,540

11,017

11,279

10,832

Unit

2010

2011

2012

17
18
14
13
10
11
19

17
18
15
15
10
10
16

14
13
13
15
11
10
15

1. From 2013 we will replace this indicator for the percentage of eco-effi cient packaging to also consider products that offer a choice of
packaging with lower environmental impact in its category.

SOLID WASTE

Natura monitors the generation of waste in the company’s units and facilities of outsourced sup-
pliers (companies that manufacture products on behalf of Natura) in Brazil. Due to the relevance
of this information, Natura has been disclosing it to the public as of last year in its quarterly perfor-
mance reports. In 2012, the company did not reach the desired effi ciency. The waste generation
rate increased from 20.01 grams per unit produced to 25.56 grams. This result is higher than the
target of 20 gram/unit produced in the period and refl ected mainly the losses on discontinued
inventories of materials (fi nished products and raw materials). Natura also recorded an increase
in the generation of sediments due to changes in the effl uent treatment process to improve the
effi ciency of the Effl uent Treatment Station and experienced some delay in the implementation
of a few projects regarding cardboard boxes.

EN22. Waste per unit produced 1
Total waste per unit produced
1.. The waste/unit produced indicator is the sum, in grams, of total direct and indirect waste divided by total units directly and indirectly
units produced by Natura

Unit
g/unit

2010
23

2011
20

2012
26

natura report 2012

In addition to the new waste management strategy, Natura invested in a project to establish a
process with guidelines for the donation of fi nished products in order to minimize losses. Since
2011, Natura has issued a guidebook for the development of products that stimulate new proj-
ects that take into consideration the strategic objectives of the reduction of waste generation,
such as the increase of post-consumption recycled materials, easy-open packaging, and types
of fi nishing to increase recyclability, among others. Aiming at engaging employees, Natura also
promotes guiding and awareness raising training courses.

EN22. Natura’s direct waste
by type and destination

Total hazardous waste (Class I) 1 2

For recycling 3
Incinerated
Disposed in landfi lls

Total non-hazardous waste (Class II - A and B)4

For recycling 3
Incinerated
Disposed in landfi lls

Grand total Natura’s direct waste 5

Natura’s indirect waste (metric tons)
Waste related to the other Natura’s units 6
Waste in Natura’s outsourced manufacturers 7
Total indirect waste

Unit

2010

2011

2012

Metric
tons
%
%
%
Metric
tons
%
%
%
Metric
tons

Metric
tons

2,163

3,228

4,969

95
5.4
0

97
2.7
0

98
1.7
0

6,254

5,767

6,964

91
0.2
9

89
0.6
10

87
0.3
12

8,416

8,995

11,933

2010
1,149
1,347
2,496

2011
1,691
1,589
3,280

2012
2,230
1,498
3,728

1. Natura does not import, export or transport this waste internationally.
2. The increase in this indicator is mainly due to the increase in losses on products.
3. Waste for recycling is considered the waste sent for composting, co-processing and transformation.
4. The growth is mainly due to the increase in the generation of sediments arising from changes in the treatment of effl uents to
improve the effi ciency of the Effl uent Treatment Station.
5. This refers to the units in Cajamar, Itapecerica da Serra, Alphaville and Benevides. Natura does not include in this indicator the
waste generated in civil construction works (rubble) carried out in its units.
6. This refers to the Distribution Centers, Advanced Centers, Hub, Shared Service Center and Natura Houses. The waste from these
units started being monitored in 2010.
7. This refers to the ten largest outsourced manufacturers of Natura’s products, which represent approximately 95% of the total
produced by these partners.

In order to stimulate recycling, since 2010, Natura has been making an experiment in Colombia
in which the consultants collect material or create collection stations at their houses or build-
ings. In Colombia, 322 metric tons of empty packaging were collected last year, a signifi cant
increase in relation to 2011, when the packaging collected totaled 235 metric tons.

In Brazil, a similar action was carried out between 2009 and 2012, in which the Natura Move-
ment mobilized consultants to collect the packaging used by their consumers. The company
noted, however, the unfeasibility of this action in the required scale and the initiative is being
reassessed. In 2012, by means of this action, 12 metric tons of empty packaging were collected,
and, between 2009 and 2012, the project collected a total of 438 metric tons.

natura report 2012

128

GRI EN24

GRI EN27

We know that this experience is still incipient in relation to the total waste generated by the
company’s products. For this reason, the new waste management strategy, under develop-
ment, will also involve the strengthening of reverse logistics (learn more about waste on page
38). In the industry sphere, Natura supports actions implemented by the Brazilian Association
of the Cosmetics, Fragrances and Toiletries Industry (Abihpec) supporting compliance with the
National Solid Waste Policy.

WATER AND EFFLUENTS

Another priority topic for Natura is water management. In addition to the development of a
specifi c water resources management strategy, which takes into consideration our value chain
(learn more on page 38, Water), Natura monitors the performance of water consumption in its
operations in Brazil (including offi ces, distribution centers and own and third-parties’ plants). This
management is monitored by the technical area on a monthly basis, presented to the Executive
Committee on a quarterly basis and also disclosed in the quarterly performance reports. In
2012, the company’s main challenge was to keep the relative consumption at the same level as
in previous years, in view of the increase in production and operation in recent years (with new
or expanded Distribution Centers, and construction works such as the implementation of a new
administrative offi ce, and a Distribution Center in São Paulo, etc).

The company achieved its target, maintaining the consumption at 0.40 liters per unit produced.
To this end, Natura delivered improvements in bathrooms, in the Effl uent Treatment Station, in
the boiler and at the Natura club, located in Cajamar, among many other improvements. Also in
Cajamar, Natura implemented a project for the electronic monitoring of consumption that en-
abled the instant identifi cation of deviations, reducing the response time to contain water losses.

Due to the lack of a public water supply system, the water resources used in the facilities in
Cajamar and Itapecerica da Serra come from semi-artesian wells. Natura’s underground water
source is the Guarani Aquifer water table and the extraction of water meets the regulations of
the permits granted by the State Department of Water and Electric Power (Daee). In 2012, a
new well was drilled to supply the growing production and Natura is waiting for Daee’s approval
to start its operation.

In 2012, there were no signifi cant spills of substances or accidents with products that caused any
environmental impact. A signifi cant spill is that which requires specialized treatment of affected
areas (removal of soil for treatment, neutralizations, etc.). In case of a spill, the Natura Emergency
Service Plan is in place to restrain and mitigate the impact.

There was an increase in the water reuse rate, which was 67% higher in relation to the previous
year. Until 2011, recycled water was used only in the irrigation system and bathrooms. Beginning
2012, one more stage was included in the treatment, improving quality of water and making it
possible to use it for other purposes, such as in the boilers to generate steam, for cooling or
heating equipment, and for cooling the air conditioning system.

In Cajamar, the effl uents are discharged into the Juqueri river. Natura is constantly monitoring
the conditions of the water body to ensure that its discharges do not harm the characteristics
of this river. In Itapecerica da Serra, the effl uent is discharged into a sinkhole, as mentioned in the
company’s environmental licenses. Meanwhile, in the Benevides unit, the effl uent is totally reused
for road cleaning and irrigation.

129

GRI EN27

EN8. WATER
CONSUMPTION
PER UNIT
PRODUCED
(LITERS/UNIT
PRODUCED)1

0.42

0.40

0
1
0
2

1
1
0
2

2
1
0
2

1. The methodology for
measuring the indicator
was changed and started
to take into consideration
the unit produced instead
of the unit billed. As a re-
sult, the data for 2010 and
2009 was recalculated

GRI EN9

GRI EN23

GRI EN10

GRI EN25

natura report 2012

130

Unit

EN8. Water consumption by source
Natura’s units1
Other units
Natura’s outsourced manufacturers2
Total water consumption3
1. It takes into consideration the units of Cajamar, Itapecerica da Serra and Benevides, which are only supplied by artesian wells.
2. Companies that manufacture fi nished products on behalf of Natura. The water consumption is controlled at the main third parties’,
which account for 94% of the total contribution.
3. It takes into consideration the extraction from wells, public system and supply by trucks.

2010
117.861
31.622
51.507
200.991

2011
127.870
51.624
68.454
247.948

2012
132.572
55.780
61.825
250.177

Cubic
meters

EN10. Volume of water recycled and reused
Recycled1 and reused2 water

Percentage of recycled water on total water
treated at the effl uent treatment station3
Total reuse percentage on total water extracted4

Unit
Cubic
meters

2010
49,733

2011
41,630

2012
69,465

1. From sanitary and industrial effl uents generated in the Cajamar unit which, after treatment, is used in plant watering, toilets and urinals,
road cleaning and refl ecting pools.
2. The water from the production process in Cajamar is reused in the drinking water system.
3. The percentage refers to the volume of recycled water from effl uent treatment compared to total volume of water treated in the Caja-
mar treatment station.
4. The reuse and recycling data refers to the volume of water recycled and reused at Cajamar. Previously, this calculation included data
from Itapecerica da Serra and Cajamar. The historical data was recalculated based on the same assumption.

EN21. Signifi cant discharges into water 1
Total volume of treated effl uents

2010

2011
102,903 100,747

2012
134,568

Unidad
Cubic
meters

1. This refers to the Cajamar and Itapecerica da Serra units. In Benevides, until 2011, the industrial effl uent was delivered for external
treatment (the total volume disclosed for 2010 and 2011 does not take Benevides into consideration), whereas the sanitary effl uent was
discharged into a septic tank and was not controlled. In 2012, every effl uent started to be treated at Natura’s own station, which is why
the volume treated increased considerably.

EN21. Effl uent treated at Cajamar

Unit

BOD1
COD2
Oils and grease

EN21 Effl uent treated in Itape-
cerica da Serra
BOD1
COD2
Oils and grease
EN21 Effl uent treated in Benevi-
des
BOD1
COD2
Oils and grease

Mg/L

Legal pa-
rameter
60
150
120

Legal pa-
rameter
60
150
120
Legal pa-
rameter
60
150
120

2010

2011

2012

7
45
15

46
145
45

53
137
28

2010

2011

2012

25
65
15

31
59
26

34
86
25

2010

2011

2012

NA
NA
NA

19
70
2

1. BOD – Biological Oxygen Demand
2. COD – Chemical Oxygen Demand
3. In Benevides, until 2011, the industrial effl uent was delivered for external treatment, whereas the sanitary effl uent was discharged
into a septic tank and was not controlled. In 2012, every effl uent started to be treated at the actual Natura’s station.

natura report 2012

EN21. Total disposal of water by quality and
destination
Treated Volume - Cajamar
Treated Volume – Itapecerica da Serra
Treated Volume - Benevides

Unit

2010

2011

2012

Cubic
meters

95,954
6,949
334

96,635
4,112
367

117,223
6,446
10,8991

1. In Benevides, until 2011, the industrial effl uent was delivered for external treatment (the total volume disclosed for 2010 and 2011
does not take Benevides into consideration), whereas the sanitary effl uent was discharged into a septic tank and was not controlled. In
2012, every effl uent started to be treated at Natura’s own station, which is why the volume treated increased considerably.

ENERGY

In 2012, Natura’s relative energy consumption was slightly higher than in the previous year.
Just like with water management, the company’s major challenge in the period was to absorb
the growth of its logistics network in recent years, including the new distribution centers in
the calculation. These units represent a relevant fi xed energy consumption for the company,
accounting for 16% of the total amount (except for the Cajamar Distribution Center, which is
accounted for in the total energy consumption of this Natura unit).

Natura’s main improvement in the period was the start up of operations of the biomass-pow-
ered boiler at the Benevides industrial unit (State of Pará), which is fed with wood briquettes
(waste from certifi ed wood used in other activities), which also reduced CO2 emissions.

The energy saved with these improvement projects was 0.9 joules, a reduction lower than in
the past two years. The slower reduction pace in relation to the previous years is due to the
increase in accumulated ecoeffi ciency and to the fact that the projects are accounted for only
once. Among the continuous actions carried out in all the units is the search for compressed air
leakages, the installation of LED or high-performance lamps, the installation of a protection fi lm
on the windows of the administrative offi ces and photoelectric sensors, among others.

The company is also attentive to the performance of outsourced suppliers (that manufacture
fi nished products for Natura) in order to monitor their consumption and encouraging im-
provement actions, which resulted in 18% reduction in the consumption of the energy matrix.
Forums are held on a monthly basis with these suppliers in order to monitor performance.

EN3 and EN4. Direct and indirect energy
consumption by primary source 1
Solar energy2
Diesel oil used in generators
Consumption of LPG
Electricity
Consumption of ethanol2
Consumption of bunker fuel oil
Consumption of briquettes3

Unit

2010

2011

2012

joules
x 1012

0.02
3
30
128
-
18
-

0.02
6
21
136
15
19
-

0.02
5
7
153
34
18
9

1. Consumption related to Natura’s units (Cajamar, Benevides, Distribution Centers, administrative support and Natura Houses).
2. In 2011, the company started to use ethanol to fi re the boilers in Cajamar.
3. Replacement of the bunker fuel oil-powered boiler with a biomass-powered boiler in Benevides, fed with wood briquettes (waste from
certifi ed wood used in other activities).

natura report 2012

131

GRI EN5

GRI EN7

GRI
EN3
and
EN4

EN3 AND
EN4. ENERGY
CONSUMP-
TION BY UNIT
PRODUCED
(JOULES/1012)1

466

410

436

0
1
0
2

1
1
0
2

2
1
0
2

1. . Calculation formula:
sum of Natura’s energy
sources (Cajamar, Be-
nevides, other units and
outsourced suppliers that
manufacture fi nished
products on behalf of
Natura) divided by all units
produced.

132

EN3 and EN4. 2012
energy matrix (%)

8 4

Electricity

LPG

Diesel

Consumption of ethanol
Consumption of
bunker fuel oil
Briquettes

Solar energy

EN3 and EN4. Total energy consumption
Cajamar and Benevides units1
Other Natura’s units in Brazil2
Energy consumption of Natura’s outsourced
manufacturers3
Total

Unit

joules
x 1012

2010
150
30

220

2011
158
39

251

2012
173
53

270

1. The energy consumption in Cajamar and Benevides corresponds to 76% of the total energy matrix of all Natura’s units.
2. This refers to the Alphaville and Itapecerica da Serra units, Natura Houses, Distribution Centers and Advanced Stations.
3. These are manufacturers of fi nished products for Natura. They are monitored and represent approximately 94% of the total units
purchased by Natura.

EN5.Energy saved 1
Due to energy effi ciency projects
Due to consumption of solar energy

Unit
joules
x 1012

2010
2.6
0.02

2011
1.8
0.02

2012
0.9
0.02

1. Amounts related to projects implemented in Cajamar (theoretical amounts).

ENVIRONMENTAL IMPACT OF SUPPLIERS

Natura also monitors the environmental impact caused by its main suppliers. Natura monitored
the performance of water and energy consumption and waste generation of input suppliers
in the following categories: accessories, packaging, graphic materials, fragrances, raw materials,
printing services, chemicals and Natura boxes. The information on outsourced suppliers (com-
panies that manufacture products on behalf of Natura) is accounted for in Natura’s general
indicators (whenever it is reported on the footnotes of tables and charts).

In 2012, data of 66 partners was reviewed. Natura has been working closely with these suppli-
ers in order to improve the data collected.

Main suppliers of packaging and raw
materials for Natura
Number of suppliers assessed

Unit

2010

2011

2012

Unit

Energy consumption
Primary electricity source – consumption of
electric energy (J)
Self-generated electricity – diesel-powered
generator (J)
Consumption of LPG (J)
Other – natural gas (J)
Total energy consumed (J)

Water consumption
Total consumption of water

joules

1.5x10¹4

9.7x1013

9.3x1013

1.0x10¹¹

2.0x1013

2.7x1013

4.9x10¹²
2.1x10¹4
3.6x10¹4

6.2x1012
1.2x1014
2.4x1014

5.7x1012
9.7x1013
2.2x1014

Cubic
meters

135,500

179,740

184,049

Generation of waste by the main suppliers of Natura
Total waste generated1

Metric
tons

577

622

1. The methodology was changed in 2012 and the volume calculated considers only the volume discharged, that is, all the waste sent to
recycling is excluded from the calculation. Since the company realized the importance of measuring also recycled waste, as of 2013, it will
disclose this information separately. Due to this change, the 2011 data was recalculated to be comparable. This was not possible in the
case of the 2010 data.

natura report 2012

133

creation of
social value

Every company and organization has a social function. Natura believes that, in addition to dis-
tributing value to its stakeholders, its main contribution to society may be delivered by means
of education. Natura believes that quality education expands horizons, increases awareness
and generates opportunities, supporting the construction of a better world. Based on this
inspiration, which is also a mission, the company created the Natura Institute.

The Natura Institute was created in 2010 as an independently headquartered and managed,
non-profi t organization. Its objective is to expand and strengthen Natura’s social initiatives,
which have already been in place since the 90s, through projects that can positively impact
education quality in public schools in Brazil and Latin America.

The projects of the Natura Institute are funded through the sales of the Natura Crer para Ver
product line, the earnings from which are fully transferred to the organization. The Institute
also receives the equivalent to 0.5% of Natura’s net income for its operations.

In order to make its projects feasible, the Natura Institute establishes public-private partner-
ships and encourages third-parties’ initiatives, focused on three operation pillars: Support to
public education management (include the best practices in the Brazilian systems and support
the redesign of the public educational management system); Innovation in educational tech-
nologies (propose innovation in educational practices, bringing together new teaching methods,
information and communication technology); Educational and social transformation (support
projects that foster social transformation based on education, incorporating the principles of
learning communities). The guidelines of the Institute include the involvement of Natura con-
sultants in its actions, raising the awareness of its relationship network with respect to educa-
tion. In 2012, the funds raised from the sales of the Crer para Ver product line was record and
exceeded the targets set for the period. In Brazil, R$ 12.8 million was raised, 53% more than
in 2011. In the other Latin American countries, the program yielded R$ 4.5 million, more than
twice the amount received in the previous year. In these operations, the amounts are invested
in the countries where the funds originated, in many activities, particularly in education initia-
tives for sustainability.

As important allies of Natura in raising these funds, the consultants promote and sell the
product of this line and do not make any profi t. Through the Natura Movement, the company
encourages the participation of the NCs in this activity to increase investments in education
actions. In 2012, the penetration of the Crer para Ver Program – percentage of consultants that
sold items of this line among all active NCs – increased to 12% (compared to 9.5% in 2011) in
Brazil. In International Operations, the rate remained at 18%.

The indicators of funds raised within the program and of the engagement of the NCs in this
activity are part of Natura’s strategic sustainability topics, under education heading, and are
monitored on a monthly basis by the company’s Executive Committee (learn more about the
Natura Institute in the organization’s annual report).

natura report 2012

134

EC8 and EC9. Crer para Ver Program in
Brazil
Net funds raised from the Crer para Ver
Program1
Penetration of the Crer para Ver Program2
Total amount from the projects developed
and supported3
Municipalities served
Schools served
Participating teachers, coordinators and
principals
Students benefi ted

Unidad

2010

2011

2012

R$
thousands

(% cycle)

R$
thousands

10,099

8,397

12,835

10
3,877

370
5,690
22,861

9,5
5,838

345
4,943
18,471

12
15,361

3,300
72,000
140,000

427,685

922,028

3,000,000

1. Refers to income before income tax allocated to the Crer para Ver Program Fund.
2. Percentage of NCs involved in the Crer para Ver Program (through the purchase of products of the line) among the active NCs.
3. The total amounts from the projects refer to the total actually invested in the year (withdrawn from the fund and used in the projects and their
execution).

EC8 e EC9. EC8 and EC9. Crer para Ver
Program in International Operations
Net funds raised from the Crer para Ver Pro-
gram1
Penetration of the Crer para Ver Program2
Total amount from the projects developed
and supported
Schools/organizations served
Participating teachers, coordinators and
principals
Students benefi ted

Unidad

2010

2011

2012

R$
thousands

(% cycle)

R$
thousands

1,369

2,146

4.497

15
NA

NA
NA

18
NA

NA
NA

18
3,243

606
405

35,933

1. Refers to income before income tax allocated to the Crer para Ver Program Fund. Previous years data was reviewed to correct inconsistencies.
2. Percentage of NCs involved in the Crer para Ver Program (through the purchase of products of the line) among the active NCs.

DISTRIBUTION OF WEALTH

In a year of vigorous growth, Natura continued to expand the creation of value for its main
stakeholders, as shown in the table below:

EC1. Distribution of wealth¹
Shareholders2
Consultants
Employees
Suppliers
Government
Total

Unit

R$ million

2010
647
2,738
769
3,707
1,477
9,338

2011
763
2,906
634
4,363
1,472
10,138

2012
846
3,211
803
4,837
1,743
11,440

1. Other information on the statements of value added is included in the Financial Statements.
2. The amounts for shareholders refer to dividends and interest on own capital during the period

natura report 2012

135

SUPPORT AND SPONSORSHIP

Natura promotes the Bem Estar Bem (Well-Being Well) by supporting initiatives related to its
beliefs, which recognize the Brazilian culture and the social and environmental entrepreneur-
ship and deliver sustainable development. In 2012, Natura restructured the management of
support and sponsorship, focusing investments on the following segments: recognition of the
Brazilian culture with a focus on music; sustainable development; strengthening os civil society
organizations; behavior and attitude and sports. With respect to the latter, Natura structured
for the fi rst time a support and sponsorship pillar for sports activities.

Last year, the company’s support and sponsorship totaled R$ 33.5 million, including funds from
incentives, a volume 38% higher than in the previous year.

Funds from Natura
Sustainable development
Recognition of the Brazilian culture with a
focus on music
Behavior and attitude

Strengthening of civil society organizations
Sports
Total funds from Natura

Unit

2010
1,702
10,721

2011
1,900
13,365

2012
12,282
11,982

N/A

750

900

thousand

6,280
NA
18,703

2,790
NA
18,806

2,311
603
28,078

2012
NA
4,617

400

455
5,472
33,550

Funds from incentives
Sustainable development
Recognition of the Brazilian culture with a
focus on music
Strengthening of civil society organizations

Sports
Total funds from incentives
Total funds from Natura and incentives

Unit

2010
350
4,722

2011
80
4,853

530

610

thousand

NA
5,602
24,305

NA
5,543
24,349

natura report 2012

See the description of the main projects supported, by focus of investment, in the table below:

136

RECOGNITION OF THE BRAZILIAN CULTURE WITH A FOCUS ON MUSIC

Natura believes in music as an expression of the Well-Being Well and recognizes the
Brazilian culture in its multiple and exclusive manifestations. For seven years, the Natura
Musical (Musical Natura) program has been the major platform of cultural sponsorship
and development and has already benefi ted more than 200 projects in 18 states in Bra-
zil, involving more than 800,000 people.

In 2012, Natura expanded its platform of invitations to bid, increasing the amount inves-
ted in projects and also the scope of the selection processes, totaling fi ve invitations to
bid for sponsorship: two national invitations by means of the Federal Cultural Incentive
Law (Rouanet Law), and three regional invitations using state cultural incentive laws, in
the states of Minas Gerais, Bahia and Pará. Natura allocated R$ 3 million to the national
invitations to bid for 11 projects. For the selections in the states, each one totaled R$ 1
million to support projects: four projects were selected in the State of Minas Gerais, fi ve
in the State of Bahia, and eight in the State of Pará. Last year, other nine projects were
directly selected to receive the support of Natura Musical.

Among the projects sponsored are the tours of Milton Nascimento, Roberta Sá and Tu-
lipa Ruiz. Natura also supported the recording of the new albums release and the release
shows of Otto and Tom Zé. The fi lm “A música segundo Tom Jobim” (Music According
to Tom Jobim), of Nelson Pereira dos Santos, also sponsored by Natura, was exhibited in
movie theaters and attracted more than 50,000 people. Natura’s regional actions have
also started to generate results: the singer Luê, one of the new names from the State of
Pará, will release her fi rst album in 2013, sponsored by Natura. The singer Marcia Castro,
from the State of Bahia, released her second album last year and will begin a tour of this
new work in 2013.

Additionally, Natura promoted the Natura Musical Festival in Belo Horizonte (State of
Minas Gerais) to provide visibility to the projects it sponsors, gathering more than 21
attractions and 45,000 people in the two events.

The musical productions of the artists supported are available for download on the
www.naturamusical.com.br portal.

SUSTAINABLE DEVELOPMENT

In addition to developing sustainable practices in its processes and engaging its consultants in
social and environmental causes, Natura invested in other actions to promote sustainability.

In 2012, the movie “Xingu”, of director Cao Hamburger, the production of which was su-
pported by Natura with its own funds, was released. The movie is about the story of the
Villas Bôas brothers who went in an expedition through the Xingu river in the 40’s and be-
came the main advocates of the preservation of the environment and indigenous culture.

Additionally, the company made an important investment for its participation in the United
Nations Conference on Sustainable Development, Rio+20. Natura was one of the suppor-
ters of the offi cial event, enabled the participation of its executives in a number of debates,
and promoted activities to include employees and consultants in the events that were held
at the same time as the conference (learn more on pages 79 and 107, Government and
Consultants and NCAs).

natura report 2012

137

STRENGTHENING OF CIVIL SOCIETY ORGANIZATIONS

We continue to support the development of a new generation of indicators for the disclosure
of integrated reports under the Global Reporting Initiative (GRI), to be launched in 2013.
Known as G4, the initiative involves specialists, organizations, companies, institutions and civil
society from many regions of the world. The fl exibility of the current model will enable organi-
zations to lay out a path for the continuous improvement of their sustainability reports.

Still in line with the G4, Natura infl uenced the mobilization of the main institutions that lead
the Climate Change topic in Brazil (GVCes, CDP, Ethos Institute, CEBDS and IBGC) to hold
a dialogue and a collective assessment on the Climate Change Supplement, open to public
consultation by the GRI last year. This event resulted in the involvement of more than 28 or-
ganizations that established a position containing many notes and improvements to the G4
on the topic.

In order to recognize the importance of culture, Natura sponsored the third construction
phase of the Brasiliana USP library, a project of the President of the University of São Paulo
(USP) with the institutional support of the “Instituto de Altos Estudos Brasileiros” (Brazilian
Institute of Higher Studies) (IEB-USP) and the Guita and José Mindlin Library (BBM-USP).
Brasiliana brings together one of the most valuable collections in the world, which is available
for research to the academic community and students in general.

Natura also sponsored the Women’s Forum, a regional edition of the international Wom-
en’s Forum for the Economy & Society, which was held in Brazil for the fi rst time. The
event was held in June and gathered more than 400 people, men and women, important
opinion makers from the government, industry, academic community and civil society.
They shared their views and perspectives for Brazil about economy, education, politics,
sustainability and social responsibility.

BEHAVIOR AND ATTITUDE

Natura supports the access to information to contribute to refl ections that allow for a
better understanding of the changes in contemporary society. Accordingly, it supports
the Frontiers of Thought, a cycle of lectures aimed at presenting behavioral trends and
attended by important thinkers, personalities and scientists. In 2012, the third year of the
project, the Frontiers of Thought sponsored the participation of philosophers Tzvetan
Todorov and Michel Onfray, economist Amartya Sen, fi lmmaker Peter Greenaway, and
researcher Michael Shermer, among others. More than 15,000 people attended the
lectures. As a consideration to our support, part of our stakeholders was able to attend
these events.

Natura understands that fashion is on the streets, in cars and at people’s homes and it
is the best expression of people’s identity. For this reason, Natura supported, for the
second year, the Fashion Mob project, of Casa de Criadores, which brings together the
work of professionals, students and audiovisual artists. Some 80 people registered for
the event and around 1,500 participants organized a parade in downtown São Paulo
(State of São Paulo).

INVESTMENTS IN SPORTS
In 2012, Natura began a few projects focused on sports, using incentive funds, among
others. The company intends to enhance its knowledge of this topic in order to im-
prove its support strategy. In total, three initiatives were sponsored, totaling R$ 591,000,
through on the Federal Sports Incentive Law.

natura report 2012

138

INVESTMENT IN SUSTAINABILITY

Natura’s sustainability-related investments and expenses totaled more than R$ 73.2 million
in 2012, a volume higher than in the previous year, when the total was R$ 70.9 million. This
amount includes investments and expenses in environmental programs, such as the prepara-
tion of strategies for solid waste and water, activities for the reduction of CO2 emissions, the
Amazônia (Amazon) Program, the development of clean technologies and relationship activities
with our stakeholders.

Unit

R$ million

EN30. Sustainability Investment Matrix1
Social and environmental projects and pro-
grams2
Promotion of dialogue channels3
Education and training4
Research in sustainable technologies
Management expenses5
Certifi cations6
Clean technologies7
Effl uent treatment and disposal of solid
waste8
Total

2010
7.8

2.5
23.8
0.6
28.4
0.1
0.8
5.1

69.0

2011
8.2

2.0
21.3
0.4
32.6
0.1
0.6
5.7

70.9

2012
9.2

1.5
19.1
0.6
37.6
0.2
0.1
5.0

73.2

1. Some amounts were recalculated due to the expansion of the scope of expenses in the International Operations and to adjustments
and corrections of retroactive data.
2. This refers to expenses and investments in projects and programs related to the priority topics: Social biodiversity, Climate Change,
Water and Solid Waste. The increase was mainly due to higher investments in the new strategy for solid waste.
3. Drop in the amounts invested in the engagement of stakeholders due to an internal reshuffl ing of expenses.
4. The drop in the amounts was due to specifi c training actions with suppliers completed in 2011 and to the reduction in the budget for
training employees.
5. This refers to expenses related to teams, studies and consulting services, additional benefi ts to employees and other general expenses.
The increased amounts are due to the inclusion, as from 2012, of the expenses of the International Operations and to the increase in the
amount of employees’ benefi ts.
6. This refers to expenses with forest, organic, management system (ISO) and sustainable construction certifi cations. The higher amount in
2012 is due to the long-term audit contract for management systems.
7. This refers to expenses with clean technologies implemented in Natura’s units.
8. The drop in the amounts was mainly due to savings and effi ciency in expenses with waste management and to the replacement with
lower cost suppliers.

natura report 2012

creation of
economic value

139

2012 was characterized by important progress in the company’s results, such as the recovery of
the production of the company’s consultants in Brazil and the progress of its International Opera-
tions, which exhibit growing profi tability and are becoming a relevant business platform.

CONSOLIDATED
NET REVENUE
(IN MILLION R$)

5,136.7 5,591.4 6,345.7

2010 2011 2012

CONSOLIDATED
EBITDA
(R$ MILLION)

1,256.8 1,425.0 1,510.7

2010 2011 2012

In the period, Natura’s net revenue increased 13.5%, reaching R$ 6.345.7 million last year. The
EBITDA totaled R$ 1.510.7 million, with a 23.8% margin, and net income amounted to R$ 861.2
million, representing a 3.7% increase.

At the end of the year, Natura’s International Operations had an 11.6% share of the company’s
revenue, a record since the beginning of the acceleration of the expansion in Latin America in
2010. The net revenue of the units under consolidation (Argentina, Chile and Peru) grew 28% in
local currency and, for the units under implementation (Mexico and Colombia), the consolidated
net revenue grew 25.2%. In Brazil, net revenue totaled R$ 5.611 million, an increase of 10.3%
from 2011. The fi gures do not include Natura’s operation in France, which is classifi ed as “other
investments”.

In December, the acquisition of Australia’s Aesop brand, which is present in 11 countries, rep-
resented one more consistent investment in our long-term strategy, enabling the access to an
expressive and global brand, with excellent products offered by means of a unique purchase ex-
perience in concept stores. This investment should increase Natura’s exposure in markets outside
Latin America, also allowing the sharing of relevant skills between both companies.

SELLING, ADMINISTRATIVE AND GENERAL EXPENSES

In 2012, Natura’s expenses totaled R$ 11.6 million compared with an income of R$ 63.1 million
in the previous year. The positive result of this indicator in 2011 is due to the impact of non-
recurring effects of the untimely recognition of PIS and COFINS tax credits.

In Brazil, the relative increase in selling expenses in 2012 (32.7% in 2012 compared to 33.1%
in 2011) was mainly motivated by the adjustments in incentives to Natura Consultant Advisors
(NCAs) related to the production program and to the increase in marketing investments. As for
Natura’s administrative expenses, if the reversal of employee profi t sharing, which favored the
result for 2011 – in that year the variable compensation was not paid to management due to
non-achievement of social targets– is excluded, the indicator appears stable.

In the International Operations, selling expenses also increased in relation to the previous year
(44.6% in 2012 compared to 45.0% in 2011), due to investments in marketing and higher ex-
penses in the initial phase of the implementation of the NCA model in Argentina, Chile and Co-
lombia. Administrative expenses also increased as a result of an infl ationary pressure in Argentina
and due to a smaller base in 2011 on account of the reversal of profi t sharing that year.

Other operating income and expenses represented R$11.6 million in 2012 and income of R$
63.1 million in 2011. In 2011, other income was the result of the impact of the non-recurring
effect of the recognition of PIS and Cofi ns tax credits.

natura report 2012

140

CASH FLOWS

In 2012, the 115.4% increase in free cash generation was the result of the reduction by R$ 281.1
million in investments in working capital due to the progress in inventory management, recov-
ery of taxes, and accounts payable that were positively impacted by the 2012 calendar and by
the concentration of capital expenditures in the last months of the year.

In order to support the company’s strategy for robust growth in the coming years, in 2012, Na-
tura maintained signifi cant investments in property, plant and equipment, and intangible assets
in the amount of R$ 437 million (capital expenditures), higher than in 2011, when investments
reached R$ 350 million. The funds were invested in the expansion of our production capacity,
information technology and logistics. Natura will continue to invest signifi cantly in 2013, allocat-
ing around R$ 450 million to the inauguration of its new soap plant in Benevides (State of Pará)
and of the new distribution Center in São Paulo, to the expansion of the Cajamar production
capacity, and to the acquisition of systems that should allow for a signifi cant improvement in the
purchase experience of its consumers by means of digital technologies (learn more on page 31,
Strategy and Perspectives).

Summary of consolidated cash fl ow 1
(R$ million)
Net income for the year
(+) Depreciation and amortization
Non-cash items (foreign exchange variation)
Internal cash generation
(Increase) decrease in working capital
Cash generated by operating activities
Acquisition of intangible assets
Free cash generation1

2011

2012

Var %

830.9
109.9
23.3
964.1
(207.2)
756.9
(346.4)
410.6

861.2
141.2
38.3
1.040.7
281.1
1.321.8
(437.4)
884.3

3.7
28.4
64.2
7.9
235.7
74.6
26.3
115.4

1. (Internal cash generation) +/- (changes in working capital and long-term receivables and liabilities) – (acquisitions of property, plant and
equipment).

RESULTS OF OPERATIONS

In Brazilian operations, Natura’s net revenue totaled R$ 5.611,2 million, a 10.3% increase. The
EBITDA margin was 27.1%, compared to 29.0% in the previous year. The increase in revenue
showed a better balance between the increase in the consultant base and productivity. In 2012,
the number of NCs increased 8% in Brazil to 1.2 million consultants, whereas their production
remained stable, interrupting the downward trajectory. Among NCAs, the result was more
consistent and productivity increased 21% (learn more on page 72, Consultants and NCAs).

The profi t margin accrued from the exports from Brazil to International Operations was de-
ducted from the cost of sales of the relevant operations, showing the real impact of these
subsidiaries on the company’s consolidated result. Accordingly, the pro forma Statement of
Income Brazil shows only total sales in the domestic market.

natura report 2012

141

GRI 2.8

Pro forma fi nancial highlights - Brazil
Total number of consultants – end of the
period* (in thousand)
Product units for resale (in million )
Gross revenue
Net revenue
Gross profi t
Gross margin (%)
Selling expenses
Administrative and general expenses
Employee profi t sharing
Management compensation
Other operating income (expenses), net
Operating income (expenses), net
Income before income tax and social contri-
bution
Net income
Ebitda
Ebitda margin (%)

1. Number of consultants at the end of the sales cycle 18.

2011
1,175.5

410.5
6,898.9
5,087.6
3,611.3
71.0
(1,686.5)
(577.9)
(30.2)
(9.4)
65.7
(73.5)
1,299.4

901.1
1,476.1
29

2012
1,269.4

445.8
7,629.4
5,611.2
3,971.7
70.8
(1,835.3)
(645.6)
(74.4)
(20.7)
(5.9)
(90.9)
1,298.9

896.8
1,522.6
27.1

Var %
7.9

8.6
10.6
10.3
10.0
(20) b.p.
8.8
11.7
NA
NA
NA
23.6
0.0

(0.5)
3.2
(190) b.p.

In Natura’s International Operations, which already represent 11.6% of Natura’s total net rev-
enue, the profi tability of the Operations under Consolidation (Argentina, Chile, Peru) totaled
R$ 78.4 million, with an EBITDA margin of 16.1%, and in the Operations under Implementation
(Mexico and Colombia), Natura got close to the breakeven point.

This refl ects the important progresses achieved in the region, such as the continuous increase
in the local production volume to around 10% of the needs for December 2012 and the stabi-
lization of the NCA model in Colombia, Chile and Peru, in addition to adjustments in the Sus-
tainable Relationship Network in Mexico. Natura is particularly confi dent and excited about its
activities in International Operations, and expects to become one of the most relevant players
in the market in the countries in which it operates.

This scenario allowed for a 27.4% increase in local currency in the Operations under Consolida-
tion and of 32.6% in the Operations under Implementation in the year accrual.

Pro forma Ebitda per operation block
(R$ million )
Brazil
Argentina, Chile and Peru
Mexico and Colombia
Other investments
Ebitda

2011

1,476.1
43.0
(24.2)
(69.9)
1,425.0

2012

Variation %

GRI 2.8

1,522.6
78.4
(8.2)
(82.0)
1,510.7

3.2
82.3
n/d
17.3
6.0

natura report 2012

142

GRI 2.8

Pro forma fi nancial highlights - operations
under consolidation (Argentina, Chile, Peru)
- (R$ million)
Total number of consultants – end of the
period (in thousand )*
Product units for resale (in million )
Gross revenue
Net revenue
Gross profi t
Gross margin (%)
Selling expenses
Administrative and general expenses
Financial income (expenses)
Income (loss) before income tax and social
contribution
Net income (loss) for the year
Ebitda
Ebitda margin (%)

Pro forma fi nancial highlights - operations
under implementation (Mexico and
Colombia)1 - (R$ million)
Total number of consultants – end of the
period (in thousand)
Product units for resale (in million)
Gross revenue
Net revenue
Gross profi t
Gross margin (%)
Selling expenses
Administrative and general expenses
Financial income expenses)
Income (loss) before income tax and social
contribution
Net income (loss) for the year
Ebitda
Ebitda margin (%)

2011

157.3

32.9
441.5
335.1
212.5
63.4
(148.8)
(23.2)
(2.6)
36.6

31.9
43.0
12.8

2011

85.6

14.9
172.9
149.2
92.2
61.8
(99.8)
(17.6)
(1.2)
(27.6)

(31.0)
(24.2)
(16.2)

2012

Variation %

190.6

21.1

35.2
649.7
487.2
340.2
69.8
(224.2)
(31.0)
(2.2)
71.7

60.0
78.4
16.1

7.1
47.1
45.4
60.1
640 b.p.
50.6
33.5
NA
95.7

88.1
82.3
330 b.p.

2012

Changes %

111.2

30.0

17.3
263.5
226.7
153.4
67.7
(137.5)
(23.4)
(0.3)
(11.4)

(12.4)
(8.2)
(3.6)

15.9
52.4
52.0
66.4
580 b.p.
37.7
32.8
NA
NA

NA
66.0
NA

natura report 2012

143

GRI 3.1-3.11

about
this report

Natura’s purpose is to present to its relationship
network complete information about its perfor-
mance, offering each of its stakeholders the best
conditions to assess the company’s progress.

For this reason, during 13 years Natura has
been preparing its annual sustainability report
following the Global Reporting Initiative (GRI)
guidelines and, for 11 years, it has been pub-
lishing its sustainability and annual (fi nancial)
reports as a single document.

Its strategy for the disclosure of results also
includes other communication material that
seek the same language and a comprehensive
approach to performance, including the eco-
nomic, social and environmental aspects (see
table below).

In addition to the improvements to make this
communication increasingly important, the
company made some progresses in the pub-
lication of the printed report and launched a
website with more interactive content. The
structure of the content in both formats gives
priority to relevant topics. The presentation of
the content is concise, favoring the reading in-
terest of Natura’s stakeholders.

In order not to lose the consistency of the
report, Natura continues to publish the com-
plete version, with detailed information on
the more than 100 indicators regularly moni-
tored. This report is available in PDF format
on Natura’s website (learn more in Technical
Information below).

BROAD COMMUNICATION

Natura Management Report – main performance data for the year published in the Valor
Econômico newspaper and Diário Ofi cial (Offi cial Gazette) on February 7, 2013. Availa-
ble in Portuguese and in English.

Natura Annual Report (printed version) – summarized format, objective information and
more accessible and simpler language, with room for company stakeholders to express
their opinion about Natura’s performance and relationship practices. Available in Portu-
guese, English and Spanish.

Website – reformulated this year, the website is now more interactive and includes more
resources than the printed version, such as video fi lms and links to other company’s
documents and publications, taking advantage of the information connectivity principle.
Available in Portuguese and in English at www.natura.net/relatorio. The website is also
adapted for tablets and smartphones.

Natura Annual Report (full version) – available for download in PDF format also from the
website www.natura.net/relatorio. This version presents the full content of the report with
detailed and comprehensive information. Available in Portuguese, English and Spanish.

Quarterly Information – this is the quarterly information to the market, mandatory for
listed companies, and repeats the same integrated approach, providing information on
Natura’s performance with respect to the main social and environmental indicators.

natura report 2012

144

GRI 4.14
e 4.15

GRI 3.13

GRI 3.9

INTEGRATED REPORT

The improvements in our reporting process are
intended to be as close as possible to an integrat-
ed report, which is a global trend and is aimed
not only at combining fi nancial and non-fi nancial
documents in the same publication but at refl ect-
ing a corporate strategy that effectively includes
all dimensions of the business in its management
and in the analysis of risks and opportunities.

To learn more about this topic, Natura partici-
pated in the main global forums that discuss this
matter: The company sponsored the develop-
ment of the fourth generation of GRI indicators,
which are expected to take into consideration
an enhanced integration between fi nancial and
non-fi nancial information. The company is also a
member of the International Integrated Report-

ing Council (IIRC), which gathers global leaders
of companies, investors, academic institutions,
industry associations, regulatory and standardiza-
tion bodies seeking to create a global standard for
integrated reports.

The global committee of the IIRC works on the
defi nition of global indicators and principles, and
the fi rst version of which is expected to be is-
sued in 2013.

Together with other important global companies,
Natura is in the group of companies that partici-
pate in the pilot project. One of the adaptations
of our report this year helped, for example, high-
lighting the relevant topics in the printed material
and I n the website.

TECHNICAL INFORMATION

The performance indicators are in accor-
dance with the GRI G3.1 guidelines and
meet the A+ application level. The data re-
fers to the period from January 01 to De-
cember 31, 2012. The scope of social and
environmental information is mainly related
to the activities in Brazil, where our pro-
duction is concentrated and, consequently,
where most of our social and environmen-
tal impacts occur. In contrast, the economic
data includes all of our operations, in Bra-
zil and abroad. Every year, Natura seeks to
include a larger number of indicators from
the International Operations. However, the
company is aware that it needs to increase
the monitoring of the International Opera-
tions, which constitutes a challenge.

In the main environmental impacts – water
and energy consumption and waste genera-
tion – the fi gures also include data from out-
sourced suppliers in Brazil (companies that
manufacture fi nished products on behalf of
Natura). This enables Natura to produce a
more accurate diagnosis of the impact gen-
erated by its operations.

Possible signifi cant changes in relation to the pre-
vious years, as well as changes in the calculation
basis or measurement techniques, are presented
throughout the report and in the tables. The re-
port also presents data on the relationship with
the stakeholders that are part of Natura’s daily
routine: employees, Natura consultants, Natura
Consultant Advisors (NCAs), consumers, suppli-
ers, supplier communities, surrounding commu-
nities, shareholders and government.

The annual report was assued by Ernst &
Young Terco Auditores Independentes S.S.

The process of collecting the information is
supported by a communication consultancy
fi rm for sustainability and includes over 50
interviews with representatives of both the
internal audience and management, in addi-
tion to the updating of indicators by many
departments of the company. For the printed
version of this report, over 20 people from
outside Natura, representing our stakehold-
ers, were interviewed. The quantitative indi-
cators are collected using an online tool that
is fi lled out by the departments in charge.

GRI 3.1;
3.6 e 3.7

GRI
3.9-11

natura report 2012

APPLICATION LEVEL

The Natura Annual Report meets the requirements of the GRI A+ application level in accordance
with the parameters presented in the table below:

145

C+

B+

A+

t
r
o
p
e
r

e
h
t

t
n
e
t
n
o
C

Report on:

1.1;

G3 Profi le

2.1 – 2.10;

3.1 – 3.8; 3.10 – 3.12;

4.1 – 4.4; 4.14 – 4.15

G3 management
approach

Not required

G3 performance
indicators &
sector supplement
performance
indicators

Minimum of any 10
performance indicators
(core or additional),
including at least one
from each dimension:
economic, environ-
mental, and social.

If they are available,
sector indicators may
be reported on, as long
as seven of them are
not sector indicators

All profi le and gov-
ernance indicators:
1.1 – 4.17

All profi le and gover-
nance indicators: 1.1
– 4.17

d
e
r
u
s
s
A
y
l
l
a
n
r
e
t
x
E

t
r
o
p
e
R

d
e
r
u
s
s
A
y
l
l
a
n
r
e
t
x
E

t
r
o
p
e
R

Management ap-
proach disclosures
for each indicator
category

Minimum of any
20 performance
indicators (core or
additional), including
at least one from
each dimension. In
they are available,
sector indicators may
be reported, as long
as 14 of them are not
sector indicators

d
e
r
u
s
s
A
y
l
l
a
n
r
e
t
x
E

t
r
o
p
e
R

Management approach
disclosures for each
indicator category

Mandatory report on
sector indicators one
year after the launch of
the fi nal version of the
supplement

natura report 2012

MATERIALITY MATRIX

The materiality matrix is the graphical repre-
sentation of Natura’s priority sustainability-
related topics (see chart). It is not only at the
base of the report content, but it also pro-
vides a diagnosis on which senior manage-
ment can make plans for the company, which
are consequently refl ected in its report.

Reviewed every two years, the matrix is the
result of cross-reference of the social and en-
vironmental topics indicated as being relevant
by our stakeholders (external axis) with their
importance to the company (internal axis), in
accordance with its strategy, its risks or op-
portunities and its pioneering spirit.

The matrix presented in this report was de-
veloped between 2010 and 2011 based on the
dialogue panels with stakeholders from Brazil
and, for the fi rst time ever, from the Interna-
tional Operations. This enabled Natura to de-
velop a corporate matrix with a broader per-
spective that refl ects the needs of the locations
in which it operates. The priority sustainability
topics identifi ed are: water, education, sustain-
able entrepreneurship, climate change, quality
of relationships, waste and social biodiversity
(learn more on pages 35 and 40).

For further information on this report, please
contact the team in charge for its preparation via
e-mail: relatorioanual@natura.net.

146

GRI 3.5; 4.14
e 4.15

GRI 3.4

EXTERNAL
Stakeholders’ interests

Education
Waste
Water
Climate Change
Quality of relationships
Social biodiversity
Sustainable
entrepreneurship

INTERNAL
Importance to Natura

natura report 2012

147

GLOBAL COMPACT

Since 2000, Natura has been a signatory of the
Global Compact, a UN initiative that brings
together companies, workers, and civil soci-
ety to promote sustainable growth and civic
awareness. The company is also a member of
the Global Compact Steering Committee and
signatory of its Caring for Climate program.

Natura is also part of the Global Compact
Brazilian Committee (CBPG), created from
the par tnership between Ethos Institute and
the UN Development Programme (UNDP)
in 2003.

The CBPG is a voluntary group made up of
companies, UN agencies in Brazil, legal enti-
ties, academia and civil organizations that
promote the adoption and inclusion of the
principles of business management. For fur-
ther information on this initiative, please visit
www.pactoglobal.org.br

THE GLOBAL COMPACT PRINCIPLES

See on page 149 the list of the GRI indicators
that meet the Global Compact principles:

1. Respect the protection of human rights

2. Prevent human rights violations

3. Uphold freedom of association at work

4. Eliminate forced labor

5. Abolish child labor

6. Eliminate discrimination at work

7. Support a precautionary approach to en-
vironmental challenges

8. Promote environmental responsibility

9. Encourage environmentally friendly tech-
nologies

10. Work against corruption in all its forms,
including extortion and bribery

Natura supports the Global Reporting Initia-
tive (GRI). As an organizational stakeholder,
it contributes to the GRI mission to develop
globally accepted sustainability reporting guide-
lines through the participation of stakeholders.

natura report 2012

148

G3.1 INDEX

1 - Strategy and analysis

Profi le

Description

Report Pages

Details on part not reported

1.1

1.2

Message from the CEO and Chairman of
the Board.

Description of key impacts, risks and
opportunities.

Total

5; 6

Total

5; 6

2 - Organizational profi le

Profi le

Description

Report Pages

Details on part not reported

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

2.10

Name of the organization.

Brands, products and/or services.

Operational structure.

Location of organization’s headquarters.

Countries where the organization operates.

Legal form.

Markets served.

Scale of the organization.

Changes during the reporting period.

Awards and certifi cations.

Total

7; 141;
142

9- 17

3 – Report parameters

Profi le

Description

Report Pages

Details on part not reported

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

3.10

3.11

3.12

3.13

Reporting period.

Previous report.

Reporting cycle.

Contact point.

Defi nition of content.

Boundary of the report.

Scope of the report.

Basis for preparing the report.

Data measurement techniques and the
bases of calculations.

Consequences of restatement of
information.

Signifi cant changes.

GRI summary.

External assurance.

Total

144

143

146

144

148-158

185 e
186

4 - Governance, commitments and engagement

Profi le

Description

Report Pages

Details on part not reported

4.1

4.2

4.3

4.4

4.5

4.6

4.7

Governance structure.

Indication of whether the Chair of the
highest governance body is also an
executive offi cer.

Number of members of the highest
governance body that are independent and/
or non-executive members.

Mechanisms for recommendations to
governance bodies.

Linkage between compensation and
economic, social and environmental
performance.

Processes to ensure confl icts of interest are
avoided.

Qualifi cation of members.

Total

20; 21;
23; 25

Total

49; 50

Total

26- 29

Total

natura report 2012

149

4.8

4.9

4.10

4.11

4.12

4.13

4.14

4.15

4.16

4.17

Internally-developed values, codes of
conduct and principles.

Procedures of the Board of Directors.

Self-assessment of the Board of Directors.

Precautionary principle.

Charters, principles and initiatives.

Memberships in associations.

List of stakeholders.

Identifi cation of stakeholders.

Total

111-115

45; 46,
143,146

33; 143;
146

Engagement of stakeholders.

Total

45; 46

Key topics and concerns raised by
stakeholders.

Total

45; 46

G3.1 DMA

Description

Report Page

Details on part not reported

ECONOMIC PERFORMANCE INDICATORS

DMA EC

Information on economic management
approach

Aspects

Economic performance

Market presence

Indirect economic impacts

Total

139

9;31

31;39;72

Performance
indicator

Description

Economic performance

Report Pages

Details on part not
reported

Global Compact
Principles

EC1

EC2

EC3

EC4

Direct economic value generated and
distributed, including revenue, operating
costs, employee compensation, donations
and other community investments, retained
earnings, and payments to capital providers
and governments.

Total

134

Financial implications and other risks
and opportunities for the organization’s
activities due to climate change.

Partial

Coverage of the organization’s defi ned
benefi t plan obligations.

Total

Signifi cant fi nancial assistance received from
government.

Partial

109

There is no specifi c analy-
sis of the effects associated
with climate change in the
risk management process.
Important mitigation proj-
ects are focused on the im-
pacts that Natura’s business
may generate and they have
become formal subprocess-
es of the company. Carbon
Credit is a voluntary initia-
tive of Natura, non-compul-
sory, and does not refl ect
the fi nancial implication of
risks of climate change, such
as adaptation.

Not applicable because Na-
tura does not work with Ex-
port Credit Agencies.

natura report 2012

150

Market presence

EC5

EC6

EC7

Range of ratios of standard entry-level
salary by gender to local minimum salary at
signifi cant locations of operation.

Partial

There are no differences
in salaries by gender. Al-
though this data is moni-
tored accordingly, it is not
considered relevant to the
business due to a different
understanding of the diver-
sity issue.

1; 6

Policies, practices and proportion of
spending on locally-based suppliers at
signifi cant locations of operation.

Procedures for local hiring and proportion
of senior management hired from the
local community at signifi cant locations of
operation.

Total

100

Total

57; 58

Indirect economic impacts

EC8

EC9

Development and impact of infrastructure
investments and services provided primarily
for public benefi t through commercial, in-
kind or pro bono engagement.

Understanding and describing signifi cant
indirect economic impacts, including the
extent of impacts.

Total

92; 99;
134

72; 91;
92; 97;
134

G3.1 DMA

Description

Report Page

Details on part not reported

ENVIRONMENTAL PERFORMANCE INDICATORS

DMA EN

Information on environmental management
approach

Aspectos

Materials

Energy

Water

Biodiversity

Emissions, effl uents and waste

Products and services

Compliance

Transport

Overall

Description

Performance
indicator

Materials

Total

118

122

33;131

38;129

38;118;
127

126

122

120

18; 32;
118

Report Pages

Details on part not
reported

Global Compact
Principles

reported

Natura
total
direct materials used by
weight and volume, but did
not classify them as non-re-
newable materials because
the information is not avail-
able..

Natura will start to mea-
sure this data in 2012 and,
accordingly, to report it in
the 2015 results.

8; 9

EN1

Materials used by weight or volume.

Partial

127

EN2

Percentage of materials used that are
recycled input materials.

Total

127

natura report 2012

151

8; 9

8;9

8; 9

7,8

7;8;9

Direct energy consumption by primary
source.

Indirect energy consumption by primary
source.

Energy saved due to conservation and
effi ciency improvements.

Total

135-136

Total

135-136

Total

135-136

Initiatives to provide energy-effi cient
or renewable energy-based products
and services, and reductions in energy
requirements as a result of these initiatives.

Initiatives to reduce indirect energy
consumption and reductions achieved.

Total

135

Total water withdrawal by source.

Total

129-
130

Natura’s does not have di-
rect energy-based products
its portfolio. However,
in
based on a more systemic
view, some of Natura’s prod-
ucts may be considered indi-
rect energy-based products
(such as shower products),
but there are no clear and
recognized methodologies
to quantify their energy con-
sumption.

Energy

EN3

EN4

EN5

EN6

EN7

Water

EN8

EN9

EN10

Biodiversity

EN11

EN12

EN13

EN14

EN15

Water sources signifi cantly affected by
withdrawal of water.

Percentage and total volume of water
recycled and reused.

Location and size of land owned, leased or
managed in, or adjacent to, protected areas
and areas of high biodiversity value outside
protected areas.

Description of signifi cant impacts of
activities, products and services on
biodiversity in protected areas and areas of
high biodiversity value outside protected
areas.

Habitats protected or restored.

Strategies, current actions and future plans
for managing impacts on biodiversity.

Number of IUCN Red List species and
national conservation list species with
habitats in areas affected by operations, by
level of extinction risk.

Emissions, effl uents and waste

EN16

EN17

EN18

Total direct and indirect greenhouse gas
emissions by weight.

Other relevant indirect greenhouse gas
emissions by weight.

Initiatives to reduce greenhouse gas
emissions and reductions achieved.

Total

129

Total

129-
130

125-
126

122-
123

125-
126

122-
123

Total

123

Total

119

Total

119

Total

120

natura report 2012

152

8,9

7; 8

7;8;9

8; 9

EN19

EN20

EN21

Emissions of ozone-depleting substances by
weight.

Total

119

NOx, SOx and other signifi cant air
emissions by type and weight.

Total water discharge by quality and
destination.

Total

119

Total

130-131

EN22

Total weight of waste by type and disposal
method.

Partial

127-128

Natura does not take into
consideration the concept of
waste reuse, only recycling. In
this case, there may be waste
that can be reused (for exam-
ple: plastic drums), but these
processes are controlled by
the companies that receive
the waste. Additionally, Na-
tura does not use the under-
ground injection process as
destination and does not have
a waste inventory because the
waste department temporar-
ily stores the waste for proper
lawful destination.

Total number and volume of signifi cant
spills.

Total

129

Weight of transported, imported, exported
or treated waste deemed hazardous under
the terms of the Basel Convention Annex
I, II, III and VIII, and percentage of waste
shipped internationally.

Total

128

Natura does not export
waste.

EN23

EN24

EN25

Identity, size, protected status, and
biodiversity value of water bodies and
related habitats signifi cantly affected by the
reporting organization’s discharges of water
and runoff.

Partial

129

Products and services

EN26

Initiatives to mitigate environmental impacts
of products and services, and extent of
impact mitigation.

Partial

120-
121;
123-
124;
126-
131

EN27

Percentage of products sold and their
packaging materials that are reclaimed by
category.

Partial

129-130

natura report 2012

Natura provides information
about water bodies impacted
by its discharges, but it does
not report on the size and
value of the biodiversity of
the water body. This informa-
tion not relevant to the com-
pany’s business.

Natura reports on a num-
ber of initiatives to mitigate
environmental impacts of
products and services.

The company does not in-
clude initiatives to mitigate
noise-related impacts in the
report. Natura’s material-
ity matrix prioritized envi-
ronmental topics such as
greenhouse gases, impact
of products with a special
attention to solid waste.
Noise pollution was not
included because it is not
relevant to our business.

Natura will begin a new proj-
ect to meet its eagerness
to use reverse logistics of
post-consumption packag-
ing. With this project, Na-
tura aims to comply with the
National Solid Waste Policy
and it also believes that this
is a more proper social, eco-
nomic and environmental
way. The recycling initiative
is still in place in some loca-
tions, but the percentage
fi gures are immaterial due
to the complexity of Na-
tura’s business model, which
is based on direct sales and
does not provide for col-
lection stations. Natura will
soon review this initiative in
order to fi t it in a broader
context, together with the
reverse logistics project and
the national industry agree-
ment for post-consumption
packaging. The information is
not yet available. Natura will
report on the results in 2015.

Monetary value of signifi cant fi nes and total
number of non-monetary sanctions for
non-compliance with environmental laws
and regulations.

Total

109

Signifi cant environmental impacts of
transporting products and other goods
and materials used for the organization’s
operations, and transporting members of
the workforce.

Total

120;
123;
124

153

Total environmental protection
expenditures by type.

Total

138

7;8;9;

Compliance

EN28

Transport

EN29

Overall

EN30

G3.1 DMA

Description

Report Page

Details on part not reported

LABOR PRACTICES AND DECENT WORK PERFORMANCE INDICATORS

DMA LA

Information on labor practices
management approach

Aspects

Employment

Labor/ management relations

Occupational health and safety

Training and education

Diversity and equal opportunity

Equal compensation for women and men

Total

52-54;
56-59;66

52; 53

40; 54;
56

Performance
indicator

Employment

LA1

LA2

LA3

LA15

Description

Report

Pages

Details on part not
reported

Global Compact
Principles

Total workforce by employment type,
employment contract, and region.

Total

52; 54;
62

Total number and rate of employee
turnover by age group, gender and region.

Parcial

63; 64

Benefi ts provided to full-time employees
that are not provided to temporary or
part-time employees, by signifi cant location
of operation.

Total

65; 66

Return to work and retention rates after
parental leave, by gender.

Total

Natura does not segment
by gender and age group.
Although this data is moni-
tored accordingly, it is not
considered relevant to the
business due to a different
understanding of the diver-
sity issue.

natura report 2012

Labor/ management relations

LA4

LA5

Percentage of employees covered by
collective bargaining agreements.

Minimum notice period(s) regarding
operational changes, including whether it is
specifi ed in collective agreements.

Total

Occupational health and safety

154

1; 2; 3

Percentage of total workforce represented in
formal joint management-worker health and
safety committees that help monitor and advise
on occupational health and safety programs.

Total

1;2;3

1; 6

LA6

LA7

LA8

LA9

Natura reports on different
data on health and safety at
the workplace, but it does not
report on the segmentation of
this information by region. This
information is not relevant to
the company’s business.

Rates of injuries, occupational diseases, lost
days, and absenteeism, and total number of
work-related fatalities, by region.

Partial

Education, training, counseling, prevention,
and risk control programs in place to assist
workforce members, their families, or
community members regarding serious
diseases.

Total

Health and safety topics covered in formal
agreements with trade unions.

Total

Training and education

LA10

LA11

LA12

Average hours of training per year per
employee by employee category.

Partial

Programs for skills management and
lifelong learning that support the continued
employability of employees and assist them
in managing the fi nal part of their career.

Percentage of employees receiving regular
performance and career development
reviews.

Total

55; 56

Total

58; 59

Diversity and equal opportunity

LA13

Composition of governance bodies and
breakdown of employees per employee
category according to gender, age group,
minority group membership, and other
indicators of diversity.

Partial

Equal compensation for women and men

LA14

Ratio of basic salary and compensation of
women to men by employee category.

Total

59; 60

its
Natura breaks down
employees’ report in accor-
dance with its view of diver-
sity but does not segment
the data by gender and age
group. This information is
not relevant to the com-
pany’s business.

natura report 2012

G3.1 DMA

Description

Report

Page

Details on part not reported

155

HUMAN RIGHTS PERFORMANCE INDICATORS

DMA HR

Information on human rights management
approach

Aspects

Management and investment practices

Non-discrimination

Freedom of association and collective
bargaining

Child labor

Forced and compulsory labor

Security practices

Indigenous rights

Assessment

Remediation

49; 55; 61;
89; 91-92;
96

89; 91;92

89;96

Total

Performance
indicator

Description

Management and investment practices

Report Pages

Details on part not
reported

Global Compact
Principles

1,2,3,4,5

1,2,3,4,6

1; 6

1; 3

1; 5

HR1

HR2

HR3

Percentage and total number of signifi cant
investment agreements and contracts that
include human rights concerns, or that have
undergone human rights screening.

Percentage of signifi cant suppliers and
contractors that have undergone human
rights screening, and actions taken.

Total hours of employee training on
policies and procedures concerning
aspects of human rights that are relevant
to operations, including the percentage of
employees trained.

Total

89; 96

Total

89; 95

Total

Non-discrimination

HR4

Total number of incidents of discrimination
and corrective actions taken.

Total

Freedom of association and collective bargaining

HR5

Child labor

HR6

Operations identifi ed in which the right
to exercise freedom of association and
collective bargaining may be at signifi cant risk,
and actions taken to support these rights.

Total

Operations identifi ed as having signifi cant
risk for incidents of child labor, and
measures taken to contribute to the
abolition of child labor.

Total

89; 96

Forced and compulsory labor

HR7

Operations identifi ed as having signifi cant risk
for incidents of forced or compulsory labor,
and measures taken to contribute to the
elimination of forced or compulsory labor.

Total

89; 96

natura report 2012

156

Natura provides informa-
tion on its security prac-
tices, which include training
in Human Rights, but it does
not report on the percent-
age of security teams sub-
ject to training and out-
sourced employees
that
participated in the training
program in relation to the
total number. This data is
not available.

Security practices

HR8

Percentage of security personnel trained
in the organization’s policies or procedures
concerning aspects of human rights that are
relevant to the operations.

Partial

HR9

Assessment

HR10

Remediation

HR11

Total number of incidents of violations
involving rights of indigenous peoples and
actions taken.

Total

Percentage and total number of operations
that have been subject to human rights
reviews and / or impact assessments.

Total

Number of grievances related to human
rights fi led, addressed and resolved through
formal grievance mechanisms.

Total

G3.1 DMA

Description

Report Page

Details on part not reported

SOCIAL PERFORMANCE INDICATORS

DMA SO

Information on social management
approach

Aspects

Surrounding communities

Corruption

Public policy

Anti-competitive behavior

Performance
indicator

Compliance

Description

Surrounding communities

21;26
91; 98;
108-110

21;26;110

108;109

108;110

110

Total

Report Pages

Details on part not
reported

Global Compact
Principles

SO1

SO9

SO10

Nature, scope and effectiveness of any
programs and practices to assess and
manage the impacts of operations on
communities, including entering, operating
and leaving.

Operations with signifi cant potential
or actual negative impacts on local
communities.

Prevention and mitigation measures
implemented in operations with signifi cant
potential or actual negative impacts on local
communities.

Total

91; 97;
99

91- 93;
95; 96;
99

91- 93;
95; 96;
100-
102

natura report 2012

157

Corruption

SO2

SO3

SO4

Public policy

SO5

SO6

Percentage and total number of business
units reviewed for risks related to
corruption.

Percentage of employees trained in
organizations’ anti-corruption policies and
procedures.

Actions taken in response to corruption
incidents

Total

26; 89

Public policy positions and participation in
public policy development and lobbying.

Total amount of fi nancial and in-kind
contributions to political parties, politicians
and related institutions by country.

Total

110

Total

114

Anti-competitive behavior

SO7

Compliance

SO8

Total number of legal actions for anti-
competitive behavior, anti-trust, and
monopoly practices and their outcome.

Total

109

Monetary value of signifi cant fi nes and total
number of non-monetary sanctions for
non-compliance with laws and regulations.

Total

109

G3.1 DMA

Description

Report Page

Details on part not reported

PRODUCT AND SERVICE RESPONSIBILITY PERFORMANCE INDICATORS

DMA PR

Information on products and services
management approach

Total

83-86

Aspects

Customer health and safety

Product and service labeling

Marketing communications

Customer privacy

Compliance

Description

Performance
indicator

Customer health and safety

Total

Report Pages

Details on part not
reported

Global Compact
Principles

PR1

PR2

Lifecycle stages in which health and safety
impacts of products and services are
assessed for improvement, and percentage
of products and services subject to such
procedures.

Total number of incidents of non-
compliance with regulations and voluntary
codes concerning health and safety impacts
of products and services during their
lifecycle, by type of outcome.

Total

natura report 2012

158

Product and service labeling

PR3

PR4

PR5

Type of product and service information
required by procedures, and percentage
of products and services subject to such
information requirements.

Total number of incidents of non-
compliance with regulations and voluntary
codes concerning product and service
information and labeling, by type of
outcome.

Total

44; 86;
127

Total

Practices related to customer satisfaction,
including results of surveys measuring
customer satisfaction.

Total

50; 70;
71; 82;
88; 92

Marketing communications

PR6

PR7

Programs for adherence to laws, standards
and voluntary codes related to marketing
communication, including advertising,
promotion, and sponsorship.

Total number of incidents of non-compliance
with regulations and voluntary codes
concerning marketing communication,
including advertising, promotion, and
sponsorship, by type of outcome.

Total

Customer privacy

PR8

Compliance

PR9

Total number of substantiated complaints
regarding breaches of customer privacy and
losses of customer data.

Total

Penalties related to the supply and use of
products and services.

Total

The indicator is reported in
full, however, as Natura does
not sell banned products, it
considers that the company
is in full compliance.

natura report 2012

159

fi nancial
statements

natura report 2012

fi nancial

statements

BALANCE SHEETS AS OF DECEMBER 31, 2012 AND 2011
(In thousands of Brazilian reais - R$)

For the Year Ended December 31, 2012
and Independent Auditors’ Report

ASSETS
CURRENT ASSETS
Cash and cash equivalents
Short-term investments
Trade receivables
Inventories
Recoverable taxes
Related parties
Derivatives
Other receivables
Total current assets

NONCURRENT ASSETS
Long-term assets:
Recoverable taxes
Deferred income tax and social contribution
Escrow deposits
Other noncurrent assets
Investments
Property, plant and equipment
Intangible assets
Total noncurrent assets

TOTAL ASSETS

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Borrowings and fi nancing
Trade and other payables
Suppliers - related parties
Payroll, profi t sharing and related taxes
Taxes payable
Other payables
Total current liabilities

NONCURRENT LIABILITIES
Borrowings and fi nancing
Taxes payable
Provision for tax, civil and labor risks
Others provisions
Total noncurrent liabilities

SHAREHOLDERS’ EQUITY
Capital
Treasury shares
Capital reserves
Earnings reserves
Proposed additional dividend
Other comprehensive losses
Total equity attributable to owners of the Company
Noncontrolling interests
Total shareholders’ equity

Note

Company (BR GAAP) Consolidated (BR GAAP and IFRS)
2011

2012

2011

2012

5
6
7
8
9
28.1.
4.2.
12

9
10.a)
11
12
13
14
14

72,767
1,168,487
530,033
158,003
23,417
25,908
80,271
130,532
2,189,418

12,952
94,813
267,598
23,187
1,311,364
357,443
206,036
2,273,393

4,462,811

166,007
-
535,309
217,906
69,417
37,908
28,184
115,328
1,170,059

12,299
80,145
244,938
4,562
1,253,721
332,215
78,929
2,006,809

3,176,868

1,144,390
498,672
651,416
700,665
144,459
-
80,928
157,787
3,378,317

151,350
214,246
349,537
41,295
-
1,012,089
228,545
1,997,062

5,375,379

515,610
-
641,872
688,748
201,620
-
28,626
126,783
2,203,259

111,239
189,552
295,839
29.935
-
800,434
162,754
1,589,753

3,793,012

Note

Company (BR GAAP) Consolidated (BR GAAP and IFRS)
2011

2012

2011

2012

15
16
28.1.

15
17
18
19

20.a)
20.c)

20.b)

844,261
252,318
254,535
98,351
303,833
44,820
1,798,118

1,144,421
106,928
38,488
68,760
1,358,597

427,073
(66,105)
155,905
308,079
491,343
(10,199)
1,306,096
-
1,306,096

4,462,811

66,424
183,317
293,024
58,551
260,027
29,359
890,702

852,549
97,955
49,600
35,818
1,035,922

427,073
(102,849)
160,313
292,457
490,885
(17,635)
1,250,244
-
1,250,244

3,176,868

999,462
649,887

211,814
501,509
52,040
2,414,712

1,325,057
177,259
63,293
88,961
1,654,570

427,073
(66,105)
155,905
308,079
491,343
(10,199)
1,306,096
1
1,306,097

5,375,379

168,962
488,980
-
132,045
446,800
37,932
1,274,719

1,017,737
140,545
64,957
44,809
1,268,048

427,073
(102,849)
160,313
292,457
490,885
(17,635)
1,250,244
1
1,250,245

3,793,012

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

The accompanying notes are an integral part of these fi nancial statements.

STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012 AND 2011
(In thousands of Brazilian reais - R$)

NET INCOME
Other comprehensive losses-
Gains from translation of fi nancial
statements of foreign subsidiaries
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO
Owners of the Company

The accompanying notes are an integral part of these fi nancial statements.

Note

Company (BR GAAP) Consolidated (BR GAAP and IFRS)
2011
830,901

2012
861,222

2011
830,901

2012
861,222

7,436
868,658

5,561
836,462

7,436
868,658

5,561
836,462

868,658

836,462

868,658

836,462

STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2012 AND 2011
(In thousands of Brazilian reais - R$)

Note

Company (BR GAAP) Consolidated (BR GAAP and IFRS)
2011

2012

2011

2012

861,222

830,901

861,222

830,901

10.b)

7
8
19

CASH FLOW FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
Provision for losses on swap and forward transactions
Provision (reversal) for tax, civil and labor contingencies
Interest and infl ation adjustment of escrow deposits
Income tax and social contribution
(Gain) loss on sale on property, plant and equipment
and intangible assets
Equity in investees
Interest and exchange rate changes on borrowings and
fi nancing and other liabilities
Exchange rate changes on other assets and other liabilities
Stock options plans expenses
Provision for discount on assignment of ICMS credits
Allowance for doubtful accounts
Allowance for inventory losses
Provision for healthcare plan and carbon credits
Recognition of untimely used tax credits
Recognition of tax credits related to lawsuit

(INCREASE) DECREASE IN ASSETS
Trade receivables
Inventories
Recoverable taxes
Other receivables
Subtotal

INCREASE (DECREASE) IN LIABILITIES
Domestic and foreign suppliers
Payroll, profi t sharing and related taxes, net
Taxes payable
Other payables
Provision for tax, civil and labor contingencies
Subtotal

CASH GENERATED BY OPERATING ACTIVITIES

OTHER CASH FLOWS FROM OPERATING ACTIVITIES
Payments of income tax and social contribution
Payments of derivatives
Payment of interest on borrowings and fi nancing

NET CASH GENERATED BY OPERATING ACTIVITIES

CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment and intangible assets
Proceeds from sale of property, plant and equipment and intangible assets
Withdrawal (payment) of escrow deposits
Short-term investments
Redemption of short-term investments
Dividends received from subsidiaries
Dividends received from subsidiaries

NET CASH USED IN INVESTING ACTIVITIES

CASH FLOW FROM FINANCING ACTIVITIES
Repayments of borrowings and fi nancing - principal
Proceeds from borrowings and fi nancing
Sale of treasury shares due to exercise of stock options
Payment of dividends and interest on capital
Interim dividends and interest on capital
Acquisition of treasury shares
Capital increase through subscription of shares (353,289
common shares at average price of R$39.69)

NET CASH GENERATED (USED) IN FINANCING ACTIVITIES

Gains (losses) arising on translating foreign currency cash and cash equivalents

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

63,594
(52,087)
(5,176)
(17,371)
344,907

(2,098)
(59,380)

145,660
691
2,712
-
2,776
(1,460)
32,942
(7,311)
(715)
1,308,906

2,500
61,363
53,373
(13,068)
104,168

68,310
39,800
1,623
(23,028)
(5,936)
80,769

1,493,843

(293,751)
(23,428)
(87,480)

1,089,184

(215,929)
2,098
(5,289)
(3,015,724)
1,847,237
66,148
(48,843)

(1,370,302)

(462,885)
1,474,413
30,834
(490,951)
(363,533)
-

187,878

(93,240)

166,007
72,767

27,565
(16,442)
(2,866)
(28,841)
330,890

1,559
(54,789)

94,985
22
6,359
-
(492)
9,801
10,012
(15,461)
(11,887)
1,181,316

(41,125)
(42,615)
(14,648)
(171,952)
(270,340)

69,443
(5,218)
28,692
34,006
(816)
126,107

1,037,083

(255,182)
(15,082)
(57,812)

709,007

(277,036)
2,535
72,973
-
-
34,000
(121,173)

(288,701)

(425,383)
822,047
1,240
(430,079)
(332,809)
(104,452)

9,012

(460,424)

(40,118)

206,125
166,007

141,178
(52,302)
4,623
(21,049)
414,878

15,692
-

163,228
9,101
10,844
807
7,942
(23,842)
44,152
(11,617)
(1,665)
1,563,192

(17,486)
11,925
29,525
(48,570)
(24,606)

162,102
79,769
(2,650)
14,108
(6,287)
247,042

1,785,628

(320,805)
(18,488)
(104,332)

1,342,003

(437,451)
3,135
(32,649)
(4,213,731)
3,715,059
-
-

(965,637)

(629,650)
1,708,574
30,834
(490,951)
(363,533)
-

255,274

(2,860)

628,780

515,610
1,144,390

109,921
(14,305)
(7,998)
(51,173)
406,829

13,457
-

121,674
(7,767)
13,369
323
(675)
19,726
12,384
(40,378)
(16,852)
1,389,436

(70,918)
(136,948)
(45,224)
(157,950)
(411,040)

121,752
(30,702)
24,060
(14,132)
(829)
100,149

1,078,545

(319,623)
(18,382)
(76,700)

663,840

(346,367)
3,726
92,341
-
-
-
-

(250,300)

(648,687)
1,045,702
1,240
(430,079)
(332,809)
(104,452)

9,012

(460,073)

1,914
-
(44,619)

560,229
515,610
-
(44,619)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(93,240)

(40,118)

628,780

ADDITIONAL INFORMATION TO THE STATEMENTS
OF CASH FLOWS
Restricted cash
Bank overdrafts - unused

The accompanying notes are an integral part of these fi nancial statements.

-
299,500

-
117,900

-
343,600

6,757
235,500

INCOME STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2012 AND 2011
(In thousands of Brazilian reais - R$, except earnings per share)

NET REVENUE
Cost of sales
GROSS PROFIT
OPERATING (EXPENSES) INCOME
Selling expenses
Administrative and general expenses
Employee profi t sharing
Management compensation
Equity in investees
Other operating income (expenses), net
INCOME FROM OPERATIONS BEFORE
FINANCIAL INCOME (EXPENSES)
Financial income
Financial expenses
INCOME BEFORE INCOME TAX AND
SOCIAL CONTRIBUTION
Income tax and social contribution
NET INCOME
ATTRIBUTABLE TO
Owners of the Company
EARNINGS PER SHARE - R$
Basic
Diluted

Note

Company (BR GAAP) Consolidated (BR GAAP and IFRS)
2011
5,591,374
(1,666,300)
3,925,074

2012
6,345,669
(1,868,045)
4,477,624

2011
5,848,777
(2,375,514)
3,473,263

2012
6,249,086
(2,438,873)
3,810,213

22
23

23
23
24.1
28.2
13
26

25
25

10.b)

(1,642,380)
(899,128)
(29,555)
(20,739)
59,380
15,472
1,293,263

129,831
(216,965)

1,206,129
(344,907)
861,222

(1,503,069)
(816,818)
(3,765)
(9,443)
54,789
43,579
1,238,536

86,502
(163,247)

1,161,791
(330,890)
830,901

(2,212,205)
(772,688)
(90,799)
(20,739)
-
(11,643)
1,369,550

161,808
(255,258)

1,276,100
(414,878)
861,222

(1,952,740)
(680,730)
(30,168)
(9,443)
-
63,077
1,315,070

122,698
(200,038)

1,237,730
(406,829)
830,901

861,222

830,901

861,222

830,901

27.1.
27.2.

2,0081
1,9980

1,9320
1,9278

2,0081
1,9980

1,9320
1,9278

The accompanying notes are an integral part of these fi nancial statements.

STATEMENTS OF VALUE ADDED
FOR THE YEAR ENDED DECEMBER 31, 2012 AND 2011
(In thousands of Brazilian reais - R$, except additional information)

REVENUES
Sales of products and services
Allowance for doubtful accounts
Other operating (expenses) income, net
INPUTS PURCHASED FROM THIRD PARTIES
Cost of sales and services
Materials, electricity, outside services and other
GROSS VALUE ADDED
RETENTIONS
Depreciation and amortization
WEALTH CREATED BY THE COMPANY
TRANSFERRED VALUE ADDED
Equity in investees
Financial income - includes infl ation adjustments
and exchange differences
TOTAL WEALTH FOR DISTRIBUTION

DISTRIBUTION OF WEALTH:
Employees and payroll taxes
Taxes and fees
Financial expenses and rentals
Dividends
Interest on capital
Retained earnings

Note

7
26

Company (BR GAAP) Consolidated (BR GAAP and IFRS)
2011
7,499,050
7,524,250
(88,277)
63,077
(4,362,838)
(2,624,578)
(1,738,260)
3,136,212
(109,921)
(109,921)
3,026,291
122,698
-

2012
7,501,382
7,608,134
(122,224)
15,472
(4,823,121)
(2,846,755)
(1,976,366)
2,678,261
(63,594)
(63,594)
2,614,667
189,211
59,380

2011
6,847,932
6,887,213
(82,860)
43,579
(4,538,954)
(2,610,197)
(1,928,757)
2,308,978
(27,565)
(27,565)
2,281,413
141,291
54,789

2012
8,515,446
8,665,145
(138,056)
(11,643)
(4,836,794)
(3,025,657)
(1,811,137)
3,678,652
(141,178)
(141,178)
3,537,474
161,805
-

129,831
2,803,878

(2,803,878)
(333,466)
(1,369,813)
(239,377)
(796,531)
(58,347)
(6,344)

86,502
2,422,704

(2,422,704)
(250,870)
(1,182,449)
(158,485)
(762,563)
(61,130)
(7,207)

161,805
3.699,280

(3,699,280)
(802,966)
(1,743,401)
(291,691)
(796,531)
(58,347)
(6,344)

122,698
3,148,989

(3,148,989)
(634,261)
(1,472,345)
(211,483)
(762,563)
(61,130)
(7,207)

Additional information to the statements of value added
R$541,669 and R$442,063 of the amounts recorded in line item ‘Taxes and fees’ in 2012 and 2011, respectively, refer to reverse charge State VAT (ICMS) levied on the estimated
profi t margin set by the State Departments of Finance based on sales made by Natura consultants to fi nal customers.
To analyze this tax impact on the statement of value added, these amounts should be deducted from those recorded in ‘Sales of goods and services’ and ‘Taxes and fees’ since sales
revenue does not include the estimated profi t attributable to Natura consultants on the sale of products, in the amounts of R$3,210,727 and R$2,906,137 in 2012 and 2011,
respectively, considering an estimated profi t margin of 30%.

The accompanying notes are an integral part of these fi nancial statements.

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NOTES TO THE INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2012
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)

1. GENERAL INFORMATION
Natura Cosméticos S.A. (“Company”) is a publicly-traded company, registered in the
special trading segment called “Novo Mercado” in the São Paulo Stock Exchange
(BM&FBOVESPA), under the ticker “NATU3”, and headquartered in Itapecerica da Ser-
ra, State of São Paulo.
The Company’s and its subsidiaries’ activities (“Natura Group” or “Group”) include the
development, production, distribution and sale of cosmetics, fragrances, and hygiene pro-
ducts, substantially through direct sales by Natura Beauty Consultants. The Company also
holds equity interests in other companies in Brazil and abroad.
On December 20, 2012, Natura Cosméticos S.A. entered into a purchase and sale agre-
ement, subject to certain conditions precedent, for the acquisition of 65% of Emeis
Holdings Pty Ltd., an Australian manufacturer of premium cosmetics and beauty products
that operates under the brand name “Aesop” in Australia, Asia, Europe and North Ame-
rica. The price of the acquisition agreed by the parties was AU$68.25 million, subject to
certain adjustments.
The Company expects that the acquisition will be closed by April 30, 2013, and that the
acquisition price will be paid from the Company’s cash fl ow.

2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
2.1. Statement of compliance and basis of preparation
The Company’s fi nancial statements include:
• The consolidated fi nancial statements prepared in accordance with the Interna-
tional Financial Reporting Standards (IFRSs), issued by the International Accounting
Standards Board (IASB), and the accounting practices adopted in Brazil, identifi ed
as Consolidated - IFRS and BR GAAP.
• The Parent’s individual fi nancial statements prepared in accordance accounting
practices adopted in Brazil, identifi ed as Company - BR GAAP.
The accounting practices adopted in Brazil include those established in the Brazi-
lian Corporate Law as well as the Pronouncements, Instructions and Interpreta-
tions issued by the Accounting Pronouncements Committee (CPC) and approved
by the Brazilian Securities and Exchange Commission (CVM).
The individual fi nancial statements present the valuation of investments in subsi-
diaries, joint ventures and associates which are measured by the equity method,
as required by legislation prevailing in Brazil. Therefore, these individual fi nancial
statements are not fully compliant with IFRS, which requires that these investments
be carried at fair value or acquisition cost.
Since there is no difference between the consolidated shareholders’ equity and the
consolidated net income attributable to owners of the Company recorded in the
consolidated fi nancial statements prepared in accordance with IFRS and accoun-
ting practices adopted in Brazil and the Company’s shareholders’ equity and net in-
come disclosed in the individual fi nancial statements prepared in accordance with
accounting practices adopted in Brazil, the Company elected to present the indivi-
dual and the consolidated fi nancial statements as a single set, placed side-by-side.
The fi nancial statements have been prepared based on the historical cost basis
except for certain fi nancial instruments that are measured at their fair values, as
described in the accounting policies below. The historical cost is generally based on
the fair value of the consideration paid in exchange for an asset.
The signifi cant accounting practices applied to the preparation of these consolida-
ted fi nancial statements are presented below. These policies have been consisten-
tly applied in the previous annual reporting period presented, except as otherwise
indicated.
New or revised pronouncements applied for the fi rst time in 2012
The accounting policies adopted in 2012 are consistent with those adopted in the
fi nancial statements of the previous year, except for the following revisions to IFRS
in force from January 1, 2012:
IAS 12 Income Taxes (review)-deferred taxes – Underlying asset recovery.
The revision clarifi es the determination of deferred tax calculation on investment
property measured at fair value. Introduces a rebuttable presumption that the
deferred tax on investment proper ty measured at fair value model in IAS 40
(CPC 31) must be set based on the fact that its carrying amount will be recovered
through sale. Additionally, introduces the requirement that deferred tax assets not
subject to the depreciation that are measured using the revaluation model in IAS
16 (CPC 27) always be measured based on the sale of the asset. This review will
have validity for annual periods beginning on or after January 1, 2012. This review
did not generate an impact on the fi nancial position, performance, or disclosures
of society.
IFRS 1 initial adoption of IFRS (revised)-Hyperinfl ation and removal of fi xed dates
for First Adoption (review).
The IASB has provided guidance on how an entity should resume the presentation
of fi nancial statements based on IFRS as their functional currency is no longer sub-
ject to hyperinfl ation. The revision will be effective for annual periods beginning on
or after July 1, 2011. This review did not generate any impact on society.
IFRS 7 fi nancial instruments-Disclosure — Major Requirements for disclosure of
derecognitions.
The revision requires additional disclosure on fi nancial assets transferred but not
derecognized assets to allow the user of the fi nancial statements of the company
understand the relationship between the assets that were not derecognized assets
and corresponding liabilities. Additionally, the review requires disclosure about the
continuous involvement of the entity with the assets derecognized assets, to allow
users to evaluate the nature of the involvement and the related risks. The revised
standard will have validity for annual periods beginning on or after July 1, 2011.
The company has no assets with these characteristics, so there was no impact on
its fi nancial statements.

2.2. Consolidation
a) Subsidiaries and joint-controlled entities
Subsidiaries are all entities over which the Company has the power to govern the
fi nancial and operating policies so as to obtain benefi ts from their activities and
in which generally holds more than 50% of the equity interest. In the applicable
cases, the existence and the effect of potential voting rights, currently exercisable
or convertible, are taken into consideration to determine if the company control
another entity. Subsidiaries are fully consolidated from the date in which control is
transferred to the Company and cease to be consolidated, when applicable, when
control no longer exists.
In the cases control is jointly held, the consolidation of the fi nancial statements is
made proportionately to the interest percentage.
b) Companies include in the consolidated fi nancial statements

Direct interest:
Indústria e Comércio de Cosméticos Natura Ltda.
Natura Biosphera Comércio de Cosméticos e Serviços Ltda.
Natura Cosméticos S.A. - Chile
Natura Cosméticos S.A. - Peru
Natura Cosméticos S.A. - Argentina
Natura Inovação e Tecnologia de Produtos Ltda.
Natura Cosméticos y Servicios de Mexico, S.A. de C.V.
Natura Cosméticos de Mexico, S.A. de C.V.
Natura Distribuidora de Mexico, S.A. de C.V.
Natura Cosméticos Ltda. - Colombia
Natura Cosméticos España S.L. - Spain
Natura (Brazil) International B.V. - The Netherlands

Indirect interest:
Via Indústria e Comércio de Cosméticos Natura Ltda.-
Natura Logística e Serviços Ltda.
Via Natura Inovação e Tecnologia de Produtos Ltda.:
Ybios S.A. (proportionate consolidation - joint control)
Natura Innovation et Technologie de Produits SAS - France
Via Natura (Brazil) International B.V. - The Netherlands:
Natura Brasil Inc. - USA – Delaware
Natura Brasil Inc. - USA – Nevada
Natura Brasil SAS – France
Natura Europa SAS – France

Equity interest - %
2011

2012

99.99
99.99
99.99
99.94
99.97
99.99
99.99
99.99
99.99
99.99
100.00
100.00

99.99
-
99.99
99.94
99.97
99.99
99.99
99.99
99.99
99.99
100.00
100.00

Equity interest - %
2011

2012

99.99

-
100.00

100.00
100.00
100.00
100.00

43.33
100.00

100.00
100.00
100.00
100.00

The consolidated fi nancial statements have been prepared based on the fi nancial sta-
tements as of the same date and consistent with the Company’s accounting policies.
Investments in subsidiaries have been eliminated proportionately to the investor’s in-
terests in the subsidiaries’ shareholders’ equity and net income or loss, intergroup
balances and transactions and unrealized profi ts, net of taxes.
The operations of the direct and indirect subsidiaries are as follows:
• Indústria e Comércio de Cosméticos Natura Ltda.: engaged principally in the pro-
duction and sale of Natura products to Natura Cosméticos S.A. - Brazil, Natura Cos-
méticos S.A. - Chile, Natura Cosméticos S.A. - Peru, Natura Cosméticos S.A. - Argen-
tina, Natura Cosméticos Ltda. - Colombia, Natura Europa SAS - France, and Natura
Cosméticos de Mexico S.A. de C.V..
• Natura Biosphera Comércio de Cosméticos e Serviços Ltda.: engaged in trading,
including by electronic means, of products from Natura brand.
• Natura Cosméticos S.A. - Chile, Natura Cosméticos S.A. - Peru, Natura Cosméticos
S.A. - Argentina, Natura Cosméticos Ltda. - Colombia and Natura Distribuidora de
Mexico, S.A. de C.V.: their activities are an extension of the activities conducted by the
parent company Natura Cosméticos S.A. - Brazil.
• Natura Inovação e Tecnologia de Produtos Ltda.: it is engaged in product and tech-
nology development and market research. It is the only owner of Natura Innovation
et Technologie de Products SAS - France, a research and technology satellite center
opened in 2007 in Paris.
• Natura Europa SAS - France: engaged in the purchase, sale, import, export and
distribution of cosmetics, fragrances in general, and hygiene products.
• Natura Cosméticos de Mexico, S.A. de C.V.: engaged in the import and sale of
cosmetics, fragrances in general, and hygiene products to Natura Distribuidora de
Mexico, S.A. de C.V..
• Natura Cosméticos y Servicios de Mexico, S.A. de C.V.: engaged in the provision of
administrative and logistics services to Natura Cosméticos de Mexico, S.A. de C.V. and
Natura Distribuidora de Mexico, S.A. de C.V..
• Natura Cosméticos España S.L.: company in start-up stage and its activities will be
an extension of the activities carried out by its parent company Natura Cosméticos
S.A. - Brazil.
• Natura Logística e Serviços Ltda.: engaged in the provision of administrative and
logistics services to Natura Group companies based in Brazil.

• Natura Innovation et Technologie de Produits SAS - France: engaged mainly in
research activities developed for in vitro testing as an alternative to animals testing,
for to the safety and effi ciency of test active compounds, skincare products and
new packaging materials.
• Ybios S.A.: On June 29, 2012, the company sold its share and no longer had
equity interest in Ybios. The effects of this sale were not relevant. Engaging in
biotechnology research, management and development of projects, products and
services, and may also enter into agreements and/or partnerships with universities,
foundations, companies, cooperatives, associations and other public and private
entities, provide services in the biotechnology area, and holding of equity interest
in other companies.
• Natura Europa SAS – France, Natura Brazil Inc. e Natura International Inc.: in Ja-
nuary 2009 the shares of these subsidiaries were assigned as a capital contribution
to the holding company Natura (Brazil) International B.V. - The Netherlands, and
the Company became the indirect holder of such interests through this company
headquar tered in The Netherlands.
2.3. Segment reporting
Information per operating segments is consistent with the internal report pro-
vided to the chief operating decision maker. The chief operating decision maker,
responsible for allocating resources to the operating segments and assessing their
performance, is the Company’s Executive Committee.
2.4. Translation of foreign currency
a) Functional currency
Items included in the fi nancial statements of the Company and each one of the subsidiaries
included in the consolidated fi nancial statements are measured using the currency of the
main economic environment in which the companies operate (“functional currency”).
b) Foreign currency transactions and balances
Foreign currency-denominated transactions are translated into the Company’s func-
tional currency – Brazilian reais (R$) - at the exchange rates prevailing on the dates of
the transactions. Balance sheet accounts are translated at the exchange rates prevailing
at the end of the reporting period. Foreign exchange gains and losses arising on the
settlement of such transactions and the translation of monetary assets and monetary
liabilities denominated in foreign currency are recognized in profi t or loss, in line items
“Financial income” and “Financial expenses”.
c) Presentation currency and translation of fi nancial statements
The fi nancial statements are presented in Brazilian reais (R$), which corresponds to
the Group’s presentation currency.
In preparing the consolidated fi nancial statements, the statements income statement
and the statement of cash fl ows, and all other changes in foreign subsidiaries’ assets and
liabilities, whose functional currency is the local currency, are translated into Brazilian
reais at the average monthly exchange rate, which approximates the exchange rate
prevailing at the date of the underlying transactions. Balance sheets are translated into
Brazilian reais at the exchange rates prevailing at yearend.
The effects of exchange differences resulting from these translations are presented in
line item ‘Other comprehensive income’ and in shareholders’ equity.
2.5. Cash and cash equivalents
Include cash, demand deposits and short-term investments redeemable within up to 90
days from the investment date, highly liquid or convertible to a known cash amount and
subject to immaterial change in value, which are recorded at cost plus income earned
through the end of the reporting period and do not exceed their fair or realizable values.
2.6. Financial instruments
2.6.1. Categories
The category depends on the purpose for which fi nancial assets and fi nancial liabili-
ties were acquired or contracted and is determined on the initial recognition of the
fi nancial instruments.
Financial assets held by the Company are classifi ed into the following categories:
Financial assets measured at fair value through profi t or loss
Consist of fi nancial assets held for trading, when acquired for such purpose, principally
in the short term. These assets are measured at fair value at the end of the repor-
ting period and any differences are recognized in profi t or loss. Derivative fi nancial
instruments are also classifi ed in this category. Assets in this category are classifi ed in
current assets.
In the case of the Company, this category includes only derivative fi nancial instruments.
The balances of outstanding derivatives are measured at their fair values at the end of
the reporting period and classifi ed in current assets or current liabilities, and changes
in fair value are recorded in “Financial income” or “Financial expenses”, respectively.
Held-to-maturity fi nancial assets
Comprise investments in certain fi nancial assets classifi ed by treasury at their origination
as held to maturity, and are measured at amortized cost using the effective interest
method, less losses due to reduction of the recoverable amount. The Society does not
have investments held to maturity during the years ended December 31, 2011 and 2012.
Available-for-sale fi nancial assets
When applicable, this category includes non-derivative fi nancial assets that either desig-
nated as available for sale or are not classifi ed into any of the other categories, such as
(a) loans and receivables; (b) held-to-maturity investments; or (c) fi nancial assets at fair
value through profi t and loss. These fi nancial assets include shares of investment funds
and government debt securities. In this category are registered instruments which are
held for an indefi nite period and may be sold to meet liquidity needs or changes in
market conditions.
Loans and receivables
Include non-derivative fi nancial assets with fi xed or determinable payments that are not
quoted in an active market. They are recorded in current assets, except for maturities
greater than 12 months after the end of the reporting period, when applicable, which are
classifi ed as noncurrent assets. After initial measurement, these fi nancial assets are accoun-
ted for at amortized cost, using the effective interest method (effective interest rate), less
loss by decrease in recoverable value. Amortized cost is calculated taking into account any
discount or premium on acquisition and fees or costs incurred. In December 31, 2012 and
2011 include trade accounts receivable (note 7).
Financial liabilities held by the Company are classifi ed into the following categories:

Financial liabilities at fair value through profi t or loss
They are classifi ed as fair value through profi t or loss when the fi nancial liability is
either held for trading or it is designated as fair value through profi t or loss.
Other fi nancial liabilities
They are measured at the amortized cost using the effective interest method. As of De-
cember 31, 2012 and 2011, in the case of the Company, comprise borrowings and fi nan-
cing (note 15) and domestic and foreign trade payables.
2.6.2. Measurement
Regular purchases and sales of fi nancial assets are recognized on the transaction date,
i.e., on the date the Company agrees to buy or sell the asset. Loans and receivables and
held-to-maturity fi nancial assets are measured at amortized cost.
Financial assets at fair value through profi t or loss are initially recognized at their fair value
and transaction costs are recognized in the income statement. Gains or losses resulting
from changes in the fair value of fi nancial assets at fair value through profi t or loss are
recognized in the income statement, in “Finance income” or “Finance costs”, respectively,
for the period in which they occur. Changes in fi nancial assets classifi ed as “Available for
sale”, when applicable, are recorded in “Other comprehensive income” and shareholders’
equity until the fi nancial assets are settled, when they are ultimately reclassifi ed to profi t
or loss for the year.
2.6.3. Offsetting fi nancial instruments
Financial assets and fi nancial liabilities are offset and the net amount is presented
in the balance sheet when there is a legally enforceable right to set off recognized
amounts and the intent to either settle them on a net basis, or to recognize the
asset and settle the liability simultaneously.
2.6.4. Derecognition of fi nancial instruments
UA fi nancial asset (or, where applicable, a part of a fi nancial asset or part of a group of
similar fi nancial assets) is downloaded when:
The rights to receive cash fl ows from the asset have expired;
The company transferred its rights or risk receiving the cash fl ows of the asset or has
assumed an obligation to pay the received cash fl ows in full.
2.6.5. Derivative instruments and hedge accounting
Derivative transactions contracted by the Group consist of swaps and non-deliverable
forwards (NDFs) intended exclusively to hedge against the foreign exchange risks rela-
ted to the positions in balance sheets and projected cash outfl ows in foreign currency
for capital increases in foreign subsidiaries.
They are measured at fair value, and changes in fair value are recognized through profi t
or loss, except when they are designated as cash fl ow hedges, to which changes in
fair value are recorded in “Other comprehensive income” within shareholders’ equity.
The fair value of derivatives are measured by the Company’s treasury department
based on information on each contracted transaction and related market inputs at
the end of the reporting period, such as interest rates and exchange coupon. When
applicable, these inputs are compared with the positions reported by the trading desks
of each involved fi nancial institution.
Even though the Group uses derivatives for hedging purposes, it does not apply hedge
accounting.
The fair values of derivatives are disclosed in note 4.
2.6.6. Effective interest method
Used to calculate the amortized cost of a debt instrument and allocate its interest
income over the related period. The effective interest rate is the rate that exactly
discounts estimated future cash receipts (including all fees and points paid or received
that form an integral part of the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of the debt instrument or, where
appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than
those fi nancial assets classifi ed as fair value through profi t or loss.
2.7. Trade receivables and allowance for doubtful debts
Trade receivables are stated at their nominal amount, less the allowance for doubtful
debts, which is recognized based on the history of losses using an aging list, in an amount
considered suffi cient by management to cover possible losses, as described in note 7.
2.8. Inventories
Carried at the lower of average cost of purchase or production and net realizable value.
Details are disclosed in note 8.
The Company considers the following when determining its provision for inventory losses:
discontinued products, products with slow turnover, products with expired validity and pro-
ducts that do not meet quality standards.
2.9. Investments in subsidiaries, associates and jointly controlled entities
The Company holds interest only in subsidiaries.
Subsidiaries are entities in which the Company, directly or through other subsidia-
ries, has ownership rights that provide it with the ability to direct the subsidiaries’
activities and to elect the majority of the subsidiaries’ management members on a
permanent basis. Subsidiaries are the companies over which the Company has con-
trol. Control is the power to govern the fi nancial and operating policies of an entity
so as to obtain benefi ts from its activities, which in general consists of the ability to
exercise the majority of the voting rights. Potential voting rights considered when
assessing the control exercised by the Company over the other entity, when they can
be exercised at the time of the assessment.

Investments in subsidiaries are accounted for by the equity method of accounting. The
fi nancial statements of subsidiaries are prepared for the same reporting date of the
Company. Adjustments are made, if necessary, to conform their accounting policies to
those adopted by the Company.
Under the equity method of accounting, the share attributable to the Company of
the profi t or loss for the period of such investments is accounted for in the income
statement, in line item “Equity in investees”. Unrealized gains and losses arising on
transactions between the Company and the investees are eliminated based in the
percentage interest held in such investees. The other comprehensive income of subsi-
diaries, associates and jointly controlled entities is recorded directly in the Company’s
shareholders’ equity, in line item “Other comprehensive income”.
2.10. Property, plant and equipment
Stated at cost of purchase or construction, plus interest capitalized during construction
period, when applicable, for the case of eligible assets, and reduced by accumulated de-
preciation and impairment losses, if applicable.
Rights in tangible assets that are maintained or used in the operations of the Group, ori-
ginated from fi nance leases, are recorded as purchase fi nancing, and a fi xed asset and a fi -
nancing liability are recognized at the beginning of each transaction, where assets are also
submitted to depreciation calculated based on the estimated useful lives of the assets.
Land is not depreciated. Depreciation of the other assets is calculated under the straight-
-line method to distribute their cost over their useful lives, as follows:

Years
25
13
3
5 - 13
14
3

Buildings
Machinery and equipment
Molds
Facilities and leasehold improvements
Furniture and fi xtures
Vehicles
The useful lives are reviewed annually.
Gains and losses on disposals are calculated by comparing the proceeds from the sale
with the carrying amount, and are recognized in the income statement.
2.11. Intangible assets
2.11.1. Software
Software and ERP systems licenses purchased are also capitalized and amortized at
the rates also described in note 14, and expenses on the software maintenance are
recognized as expenses when incurred.
The ERP system purchase and implementation costs are capitalized as intangible assets
when there is evidence that future economic benefi ts will fl ow into the Company,
taking into consideration its economic and technologic viability. Expenses on software
development recognized as assets are amortized under the straight-line method over
its estimated useful life. The expenses related to software maintenance are expensed
when incurred.
2.11.2. Trademarks and patents
Separately purchased trademarks and patents are stated at their historic cost. Trade-
marks and patents acquired in a business combination are recognized at fair value on
the acquisition date. Amortization is calculated on a straight-line basis at the annual
rates described in note 14.
2.11.3. Carbon credits - Carbon Neutral Program
In 2007 the Company assumed to its employees, customers, suppliers and sharehol-
ders the commitment to become a Carbon Neutral company, which consists of off-
setting all the emissions of Greenhouse Gases (GHGs) by its entire production chain,
from raw material extraction to post-consumption. Even though this commitment is
not a legal obligation, since Brazil did not adopt the Kyoto Protocol requirements, it is
considered a constructive obligation, under CPC 25 - Provisions, Contingent Liabilities
and Contingent Assets, which required the recognition of a provision in the fi nancial
statements if it can result in a disbursement and be realizably measured.
The liability is estimated using audited carbon emission inventories taken on an annual
basis and valued based in the average price per ton of carbon of outstanding contracts
and the estimated prices of future carbon purchases. As of December 31, 2012, the
liability’s balance recognized in line item “Other provisions” (see note 19) refers to
total carbon emissions in 2007-2012 that were not fully offset through the related
projects, thus preventing the awarding of a carbon neutral certifi cate.
In line with its beliefs and principles, the Company elected not to directly purchase any
carbon credits and invested, instead, in socio-environmental projects in communities.
Accordingly, the expenses incurred will produce carbon credits as these projects are
completed or mature. During this period, these expenses are recognized at cost as
intangible assets (see note 14) as they represent a right for future use. As of December
31, 2012, the balance recognized in intangible assets refers to expenses incurred in
socio-environmental projects that will result in future carbon neutral company cer-
tifi cates.
The obligation to become a carbon neutral company will be met when the related
carbon neutral company certifi cates are actually awarded to the Company, and thus
these assets will be offset against said liabilities.
The difference between the assets and liabilities as of December 31, 2012 refers to
the cash amounts that the Company will still disburse on other socio-environmental
projects to ensure the future issuance of carbon neutral company certifi cates.
2.12. Research and product development expenses
In view of the high level of innovation and the turnover rate of the products in the
Company’s sales portfolio, the Company adopts the accounting policy of recognizing
product research and development expenditure as expenses for the year, when in-
curred.
2.13. Leases
Lease classifi cation is made at the inception of the lease. Leases where the lessor does
not retain substantially all the risks and rewards incidental to ownership are classifi ed as
operating leases. Lease payments under an operating lease are recognized as an expense
on a straight-line basis over the lease term.

Leases where the Group retains substantially all the risks and rewards incidental to ow-
nership are classifi ed as fi nance leases. These leases are capitalized in balance sheet at
the commencement of the lease term at the lower fair value of the leased asset and the
present value of minimum lease payments.
Each lease payment is apportioned between liabilities and the fi nance charges so as to
permit obtaining a constant effective interest rate on the outstanding liability. The corres-
ponding obligations, less the fi nance charge, are classifi ed in current liabilities and noncur-
rent liabilities, according to the lease term. Property, plant and equipment items purchased
through fi nance leases are depreciated over their useful lives, as described in note 2.10, or
over the lease term, when it is shorter.
2.14. Impairment assessment
Property, plant and equipment, intangible assets and, when applicable, other noncur-
rent assets are annually tested to identify evidences of impairment, or also signifi cant
events or changes in circumstances that indicate the carrying value of an asset may
not be recoverable. Where applicable, when there is a loss, arising from situations
where the carrying amount of an asset exceeds its recoverable amount, defi ned as
the higher of its value in use and its fair value less costs to sell, this loss is recognized
in the income statement.
For impairment assessment purposes, assets are grouped at the lowest levels for which
there are separately identifi able cash fl ows (cash-generating units, or CGUs).
The recoverable amount of an asset or cash-generating unit is determined defi ned
as being the larger of the value in use and the net selling value. In the estimation of
the value in use of the asset, the estimated future cash fl ows are discounted to their
present value using a pre-tax discount rate that refl ects the weighted average cost of
capital for the industry in which it operates the cash-generating unit. The net selling
value is determined, whenever possible, on the basis of the contract of sale fi rm in a
transaction in commutative bases, between knowledgeable and interested parties, ad-
justed for expenses attributable to the sale of the asset, or, where there is no contract
of sale fi rm, based on the market price of an active market, or in the price of the most
recent transaction with similar assets.
2.15. Trade payables
These are initially recognized at their nominal amounts, plus interest, infl ation adjust-
ments and exchange differences through the end of the reporting period, when ap-
plicable.
2.16. Borrowings and fi nancing
Initially recognized at fair value of proceeds received less transaction costs, plus charges,
interest, adjustments and exchange differences incurred through the end of the repor-
ting period, as shown in note 15.
2.17. Provision for tax, civil, and labor contingencies
The provisions for contingent liabilities are recognized when the Group has a
legal or constructive obligation as a result of past events, and it is probable that
disbursements will be required to settle the obligation, and its value can be reliably
estimated. Provisions are quantifi ed at the present value of the expected disbur-
sement to settle the obligation using the appropriate discount rate, according to
related risks.
Adjusted for infl ation through the end of the reporting period to cover probable
losses, based on the nature of contingencies and the opinion of the Company’s
legal counsel. The bases for and nature of the provisions for tax, civil, and labor
contingencies are described in note 18.
2.18. Current and deferred income tax and social contribution
Recognized in the income statement, except, when applicable, in the proportion rela-
ted to items recognized directly in shareholders’ equity. In this case, taxes are recogni-
zed directly in shareholders’ equity, in line item “Other comprehensive income”.
Except for the foreign subsidiaries, which apply the tax rates prevailing in each one
of the countries where they are located, income tax and social contribution on the
Company’s and its Brazilian subsidiaries’ profi ts are calculated at the tax rates of 25%
and 9%, respectively.
Current income tax and social contribution expenses are calculated using the laws and
regulations enacted by the end of the reporting period, pursuant to Brazilian tax re-
gulations. Management periodically measures the positions assumed in the income tax
return regarding the situations where applicable tax law is subject to possibly different
interpretations and, when appropriate, recognizes provisions based on the amounts it
expects to pay tax authorities.
Deferred income tax and social contribution are calculated on temporary differences
between the tax base of assets and liabilities and their carrying amounts. Deferred
income tax and social contribution are calculated using the tax rates enacted on the
end of the reporting period and that must be applied when the corresponding defer-
red income tax and social contribution assets are realized or deferred income tax and
social contribution liabilities are settled.
Deferred income tax and social contribution assets are recognized only to the extent
that there is a reasonable certainty that future taxable income will be available and
against which temporary differences can be offset.
The amounts of deferred income tax and social contribution assets and liabilities are
only utilized when there is a legally enforceable right to offset current tax assets against
tax liabilities and/or when current deferred income tax and social contribution assets
and liabilities are related to the income tax and social contribution levied by the same
tax authorities on the taxable entity or different taxable entities, where there is inten-
tion to settle the net balances. Details are disclosed in note 10.
2.19. Stock option plan
The Company offers equity-settled share-based compensation plans to its execu-
tives.
The stock option plan is measured at fair value on grant date and is expensed during
the vesting period as a balancing item to “Additional paid-in capital”, in shareholders’
equity. At the end of the reporting period, the Company’s management reviews its
estimates on the number of options vesting based on the conditions fulfi lled and,
when applicable, recognizes in the income statement the effect arising from the
revision of the initial estimates as a balancing item to shareholders’ equity. The details
are disclosed in note 24.2.

The cost of transactions settled with equity securities is recognized, together with
a corresponding increase in equity under the heading “additional paid-in Capital”,
throughout the period in which the performance and/or service conditions are fulfi l-
led, ending on the date on which the employee acquires the full right to prize (date
of acquisition). The cumulative expense recognized for equity instruments transac-
tions settled on each base date up to the date of acquisition refl ects the extent to
which the vesting period has expired and the best estimate of the number of equity
securities Company to be acquired. The expense or credit in the statement of inco-
me of the period is recorded under the heading “administrative expenses”.
When an award of equity instruments settlement is cancelled, it is treated as if it had
been acquired on the date of cancellation, and any expense not recognized award is
registered immediately. This includes any award where non-vesting conditions within
the control of the company or the counterparty were not met. All cancellations of
transactions settled with equity securities are treated in the same way.
The dilution effect of options open is refl ected as additional share dilution in the
calculation of diluted earnings per share (Note 27.2).
2.20. Profi t sharing
The Company recognizes a profi t sharing liability and an expense based on a formula
that takes into consideration the net income attributable to the owners of the Com-
pany after certain adjustments, which is linked to the achievement of operational goals
and specifi c objectives, established and approved at the beginning of each year.
2.21. Dividends and interest on capital
The proposed distribution of dividends and interest on capital made by the Company’s
management included in the portion equivalent to the mandatory minimum dividends
is recognized in line item “Other payables” in current liabilities, as it is considered as a
legal obligation provided for by the Company’s bylaws; however, the portion of dividends
exceeding minimum dividends declared by management after the reporting period but
before the authorization date for issuance of these fi nancial statements is recognized in
line item “Proposed additional dividends” and their effects are disclosed in note 20.(b).
For corporate and accounting purposes, interest on capital is stated as allocation of
income directly in shareholders’ equity.
2.22. Treasury shares
Own equity instruments which are reacquired (Treasury shares) and recognized at ac-
quisition cost and deducted from shareholders ‘ equity. No gain or loss is recognized in
the income statement on the purchase, sale, issue or cancellation of the company’s own
equity instruments. Any difference between the book value and the consideration is
recognized in other capital reserves.
2.23. Actuarial gains and losses of healthcare plan and other costs related to em-
ployees’ benefi t plans
The company has defi ned contribution retirement plans, which require that con-
tributions are made to the funds administered separately from the equity of the
Company. The company also provides certain benefi ts of extension of medical assis-
tance to retired employees. The costs associated with the contributions made by the
company and its subsidiaries to the plans are recognized on the accrual basis. The
costing of the benefi ts granted by the defi ned benefi t plans is established separately
for each plan using the projected unit credit method.
Actuarial gains and losses recorded in the retirees’ healthcare expansion plan are re-
corded in the income statement in accordance with IAS 19 and CPC 33 – Employee
Benefi ts, based on the actuarial calculation prepared by an independent actuary, as
detailed in note 19.

2.24. Revenue and expense recognition
Sales revenue is recognized when all risks and rewards of ownership of the product
are transferred to the customers and there are recognized on an accrual basis.
Revenues are recognized to the extent in which it is probable that the economic
benefi ts associated with the transaction will accrue to the Company, and when such
benefi ts can be reliably measured. Sales revenues are primarily generated through
sales made by the Natura Beauty Consultants (our clients), measured based on the
fair value of the consideration received (or to be received), excluding any discounts,
rebates and taxes or charges with respect to such sales. Sales revenue is recognized
when the signifi cant risks and rewards of title to products have been transferred
to the client, which generally occurs upon delivery thereof to the Natura Beauty
Consultants.
Sales revenue is generated and accumulates initially in the subsidiary sales ledger of
the Company, as of the moment in which the proof of shipping is issued in the name
of our clients. However, as our revenues are recorded for accounting purposes only
when the fi nal delivery of products has occurred, the Company makes a provision
to eliminate the amount of revenues with respect to products shipped but not yet
received by the Natura Beauty Consultants as of the closing date of the fi nancial
statements for each period.
Income from tax incentives, received in the form of a monetary asset, is recognized
in the income statement when received as a balancing item to costs and investment
already incurred by the Company in the jurisdiction where the tax incentive is gran-
ted. There are no established conditions to be met by the Company that might affect
the recognition of tax incentives.
The portion of tax incentives recognized in the income statement is allocated to the
tax incentive reserves, in the “Earnings reserves”, in shareholders’ equity.
2.25. Statement of value added
The purpose of this statement is to disclose the wealth created by the Company and
its distribution during a certain reporting period, and is presented by the Company, as
required by the Brazilian Corporate Law, as an integral part of its individual fi nancial
statements, and as additional disclosure of the consolidated fi nancial statements, since
this statement is not required by IFRSs.
The statement of value added was prepared using information obtained in the same
accounting records used to prepare the fi nancial statements and pursuant to the pro-
visions of CPC 09 - Statement of Value Added. The fi rst part of this statement includes
the wealth created by the Company, represented by revenue (gross sales revenue,
including taxes levied thereon, other income, and the effects of the allowance for
doubtful accounts), inputs acquired from third parties (cost of sales and purchase of
materials, electricity, and services from third parties, including taxes levied at the time
of the acquisition, the effects of impairment losses, and depreciation and amortization),
and the value added received from third parties (equity in investees, fi nancial income,
and other income). The second part of the statement of value added presents the
distribution of wealth among personnel, taxes, fees and contributions, lenders and
lessors, and shareholders.
2.26. New and revised standards and interpretations
a) Standards, interpretations and revised standards not yet effective and which
were not early adopted by the Company

Standard

Main requirements

IFRS 9 Financial
instruments

IFRS 10 - Consolidated
Financial Statements

IFRS 11 - Joint
Arrangements

IFRS 12 - Disclosure of
Interests in Other Entities

IFRS 13 - Fair Value
Measurement

IAS 27 Demonstrações

Classifi cation and Measurement end the fi rst part of the project to supersede “IAS 39
Financial Instruments: Recognition and Measurement”. This new standard adopts a simple
approach to determine whether a fi nancial asset is measured at amortized cost or fair
value, based on the way an entity manages its fi nancial instruments (its business model)
and contractual cash fl ow typical of fi nancial assets. IFRS 9 also requires only one method
to be adopted to determine impairment losses.

IFRS 10, establishes principles for the presentation and preparation of the consolidated
fi nancial statements when an entity controls one or more entities. The IFRS 10 overrides
the requirements of SIC-12 Consolidation special purpose entities and IAS 27 consolida-
ted fi nancial statements and separate.

IFRS 11 provides for a more realistic refl ection of agreements together, focusing on the
rights and obligations of the agreement, rather than its legal form. The standard addresses
inconsistencies in the treatment of an agreement together, requiring a single method to
treat in controlled entities jointly through the equity method. The IFRS 13 replaces IAS
31 and SIC jointly Controlled Enterprises-13 jointly controlled entities-non-monetary
Contributions by Shareholders. Early application is permitted. The main effects of the
adoption of IFRS 11 will be the end of proportionate consolidation, which will not affect
the consolidated information of the company.

Effective date

Effective for annual periods
beginning on or after January 1, 2013

Effective for annual periods
on or after January 1, 2013