In channels
page 23
Innovation
page 28
Operations and
logistics
page 32
How we
generate value
In our processes
page 34
Index
–
Introduction
Who we are
About Natura
page 13
Where we are
page 14
Performance
page 16
Our Essence
page 4
Highlights
page 5
Message from
the founders
page 6
Message
from the
Executive
Committee
page 8
econômico
outros
social
ambiental
Valores
que
retornam
para o
mundo
Strategy
page 10
Governance
page 19
Social biodiversity
page 36
•
s
o
t
D esign d
e t o r n
o
R
•
26% de embalagens
ecoeficientes1
Diferentes fontes
ajudam a
realimentar nossos
processos e
produtos
s
i
a
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ões e
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N
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x p e r iê
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•
53,5% dos lares
do Brasil têm produtos
Natura ao menos
uma vez por ano 2
Produtos seguros,
de qualidade e que
estimulam valores
e comportamentos
sustentáveis
xperiê
• E
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investidos
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220 parceiros, incluindo
Núcleo de Inovação
na Amazônia e
hub em Nova York
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novos canais de venda:
farmácias, lojas
e aplicativos
da por relaçõ
ais • Ve
n
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r a n s f orm
a
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T
ã
30% do portfólio
renovados a cada ano,
que significa cerca de
220 produtos lançados
o
e
13 centros de distribuição
1,4 milhão de produtos
separados3, para atender
a mais de 49 mil pedidos
por dia no Brasil
o
ã
ç
a
ransform
o • T
O q u e ext
r
a
s •
12,2% dos
insumos vêm
da biodiversidade
pan-amazônica
(em valor de vendas)
83% dos insumos
de origem vegetal
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Our culture
page 21
Education
page 38
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fornecedores
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Proposta de valor
Nossos recursos
Como transformamos
Valores gerados
Natura Musical
page 40
INTRODUCTION
Presentation
Communication
in constant
evolution
–
Our report seeks to provide an
integrated view of the multiple
facets of life in the company
WEL COME TO THE ABRIDGED version of the Natura 2015 Annual
Report. Here we have selected the main facts and results during the year. The indicators
of our economic, social and environmental performance may be viewed in greater detail
on our website www.natura.com.br/relatorio-anual, our main medium for communicating
performance.
During another year, we have sought to evolve in applying the Integrated Reporting
guidelines set forth by the IIRC, the International Integrated Reporting Council. The objective
is to continuously enhance the clarity with which we demonstrate the correlation between
the economic, social and environmental impacts generated by our business decisions.
An important step forward in this direction is the use of a methodology for measuring
environmental profi t and loss (EP&L). Prepared for the fi rst time ever by a company in Brazil,
this is aimed at the valuation of environmental impacts. This initial application is fundamental to
enable us to refi ne the calculation methodology in order to discover the real impacts caused
by our businesses so that we may promote concrete improvements where the environmental
effects of our operations are concerned.
Once again we have followed the Global Reporting Initiative (GRI) G4 guidelines,
the international reference standard in sustainability reporting which we were pioneers in
adopting fi fteen years ago. Natura’s communication of its performance is the result of a
consistent evolution in the way the company holds itself accountable to society, guided by the
transparent presentation of our contributions towards generating value for all the stakeholder
groups with whom we relate.
Enjoy reading it!
Marcelo Bicalho Behar
Director of Corporate Affairs
Ambitions
page 41
See the complete
version of the 2015
Annual Report on
the website
www.natura.com.br/
relatorio-anual
INTRODUCTION
Our essence
_
Reason for Being
Beliefs
Our Reason for Being is to create
and sell products and services
that promote well-being/being well.
well-being
is the harmonious 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.
Vision
Due to our corporate behavior,
the quality of the relations we establish
and our products and services,
we will be a group of brands with
strong local and global expression,
identified with the community of people
committed to building a better world
through a better relationship with themselves,
with others, with the
nature of which they are a part,
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 pursuit of 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 in relationships.
The greater the individual diversity, the greater the wealth
and vitality of the whole system.
The pursuit of 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.
4
2015
Highlights
Achievements
Our international operations are expanding vigorously, representing almost 30% of
Natura revenues. In reais, gross revenue grew 65%, totaling R$ 2.9 billion.
We inaugurated a logistics hub in Itupeva (São Paulo), one of the most modern in
the world. In conjunction with the São Paulo distribution center, the complex has
helped boost delivery quality, ensuring that our products get to the consumer even
more rapidly.
We revitalized direct selling with the introduction of new digital tools, providing our
consultants and consumers with a faster, more efficient commercial experience.
We finalized the plan to open Natura-owned stores, the first of which will be
inaugurated before the end of 2016.
We successfully implemented the sale of the Sou line in drugstores, the fastest
growing retail segment.
We applied a valuation methodology to measure environmental impacts throughout
the value chain. Natura’s first Environmental Profit and Loss (EP&L) assessment was
concluded in 2015, and will help us draft actions to promote a positive impact by
2050, as set forth in our Sustainability Vision.
The Instituto Natura commemorated its fifth anniversary, while the Believing is
Seeing line, which raises funds for investment in education, completed 20 years in the
market.
We were listed on the Dow Jones Sustainability Index for the second year running.
We gained recognition from the UN with the Champions of the Earth award, in the
Entrepreneurial Vision category, granted to personalities and companies having an
outstanding commitment to sustainability.
Challenges
In Brazil, we suffered an
unexpected increase in tax
load and were affected by
the exchange devaluation
in a recessive economic
environment.
The cosmetics, fragrances and
toiletries segment shrank for the
first time in 23 years, retracting
6%. This impacted net revenue,
which at R$ 7.89 billion was
3.6% down on 2014. As a result
EBITDA totaled R$ 1.5 billion, a
3.8% reduction compared with
the previous year.
Natura’s environmental
performance is directly linked
with business performance.
The reduction in the scale of
production had a negative effect
on eco-efficiency indicators.
INTRODUCTION
Message from the founders
Courage to
transform
2015 eloquently displayed the
complexity of our time. Analyzed from
various different perspectives, the year
tested our limits to the extreme. As global
citizens, we enthusiastically accompanied
the emergence, in December, of the new
international agreement drawn up at the
Climate Conference in Paris, where the
leaders of the nations of the world gathered
just one month after the terrorist attacks
in the French capital. This emblematic city,
which inspires us so much, whether as a
cradle of republican ideals or as the center
of the world of beauty, did not give in to
terror and inaugurated a new phase in
dealing with climate change.
There are characteristics that link
these lamentable episodes. They reflect
the reality of an era: the sharp distortion
of individual and collective values that
culminates in the negation of the ethics
of life. Terrorism, corruption and disregard
for the environment are some of the
many signs of the exhaustion of a mental
model that has begun to threaten our
coexistence in society and the very survival
of humans on this planet. At this time, we
are compelled to reaffirm the sense of
dignity and responsibility that we should
have toward one another, which is the
foundation of the tenets that sustain us as
individuals and as a company.
In our country, we experienced severe
This moment calls for transformations
setbacks in social and economic gains.
We were again astonished by the crisis
of governability caused by innumerous
investigations of corruption that lay bare
the inadequacy of our political system. As
if that were not enough, we also witnessed
the biggest environmental tragedy in recent
history that swept millions of tons of mud
and iron ore waste through the states of
Minas Gerais and Espírito Santo and into
the sea.
in all dimensions, from individual to
collective, from private to public, from
local to global. We must, therefore, have
the courage to carry through these
transformations, though without ever
losing sight of our ethical foundation. To
find solutions within the complex web of
interests that unite us, it is important to
be open to cooperation, to contradictory
opinions and to open dialogue. Only then
we will be able to build a new consensus
that is tolerant when faced with differences
and that will foster fair and sustainable
development. It is important to remember
that courage literally means “acting with
the heart.”
This is what we have done at different
times in our history when we also faced
adverse moments. Supported by our
belief in the strength of relations and
interdependence, in 2015 we achieved the
results made possible by a company with a
global network, an effort that began in the
late 1980s, with the first of our International
Operations. Today, they already represent
nearly 30% of our business and continue
to grow at an accelerated pace. In addition
to welcoming our brands, concepts and
products, these markets inspire us, teach
us, enrich our worldview and reinforce the
prospects of entering new geographies.
It is the same determination that
mobilizes us to face the challenges of
the Brazilian market. As founders, we are
committed to supporting the changes
needed to increase the value created by
our Reason for Being, which is well being
well. We understand that our brands
must keep up with the new demands
of consumers and of society as a whole
by offering experiences, products and
services through a variety of channels, both
physical and virtual, while always driving
sales through relationships. Therefore, our
role is to always ensure that, through the
values of Our Essence, we will find the
expressions that best meet the spirit of the
time. The moment calls for action: everyone,
whether government leader, businessperson
or citizen, must endeavor to meet the
Sustainable Development Goals set forth by
the United Nations.
To travel this path together, we invite
everyone to join in the spirit of the words
of South African leader and Nobel Peace
Prize winner Nelson Mandela, whose
wisdom and persistence ended one of
the most perverse systems ever created:
“Together we must suppor t courage
where there is fear, foster agreement
where there is conflict and inspire hope
where there is despair.”
Antonio Luiz da Cunha Seabra,
Guilherme Peirão Leal and
Pedro Luiz Barreiros Passos
6
INTRODUCTION
From left to right, top to
bottom, members of the
Natura Board of Directors:
Plínio Villares Musetti,
Giovanni Giovannelli,
Marcos de Barros Lisboa,
Luiz Ernesto Gemignani,
Pedro Luiz Barreiros Passos,
Antonio Luiz da Cunha
Seabra, Silvia Lagnado and
Guilherme Peirão Leal
A
P
/
F
r
a
n
ç
o
i
s
M
o
r
i
7
INTRODUCTION
Message from the Executive Committee
Beauty, pleasure
and sustainability
The business environment we are
experiencing reflects the new world at
the beginning of this century marked
by intense, fast-paced, comprehensive
and interdependent relationships and by
exponential connections. We believe that
one success factor for companies in this
environment is having the agility to identify
new expressions of their basic tenets that
are in keeping with the spirit of this time
of transformation. Natura is moving rapidly
toward the assimilation of this reality. In
2015, we advanced in the understanding,
development and amassing of the capacities
required to meet the renewed demands of
our relationship network.
An important step was to understand
that to promote well being well in the world
today means to also provide beauty, pleasure
and sustainability to those who maintain
a relationship with us. It is to be present
in consumers’ lives when and where they
want it. It is to know them well enough to
be able to surprise them. It is to put all of
the company’s structures at the service
of our consultants to ensure their success.
It is to create platforms that enable the
management of this network with the speed
and quality it requires. It is to organize and
reorganize itself in a flexible way, on a daily
basis, based on the circumstances and needs.
It is to innovate with the agility of a startup
and to gain economies of scale with the
strength of a global company.
In 2015, we took the first steps of
this evolution in our way of thinking and
acting. Profoundly impacted by the country’s
economic environment, by the increase
in the tax load and by the devaluation
of the local currency, the results for the
year do not express everything to which
we had aspired, but reaffirm some of our
strategic choices, such as our vocation for
international expansion. Our performance
was heavily influenced by the expansion of
our International Operations, which already
account for nearly 30% of Natura’s total
business. In Brazil, our largest market, the
cosmetics, fragrances and toiletries industry
suffered a retraction due to the recession,
an occurrence without precedent in the
last 23 years. Given these distinct forces, we
achieved consolidated net revenue of R$7.9
billion, with EBITDA of R$1.5 billion and net
income of R$513 million.
The significant evolution of our
International Operations is the fruit of the
visionary efforts of more than 30 years of
Natura, which evolves permanently and still
has a lot to offer. We have strengthened
the strategic integration and the decision-
making process of our leaders to better
meet the needs in each country, to
disseminate knowledge and to accelerate
the incorporation of practices, tools and
processes. In the same way, we support
and seek mutual learning experiences with
Aesop, which in three years has tripled its
revenue and doubled the number of stores
around the world. In 2015, it opened a store
in São Paulo, its first unit in Latin America.
In every market, we want to be closer
and more responsive to consumers’ needs.
By providing the best experience in terms of
access, convenience, quality, communication
and service, we are always driving and
evolving sales through relationships. That’s
why we have invested in expanding our
technological capacity to process and
interpret information and in offering
everyone, from managers to consultants,
the opportunity to adequately serve each
market segment or public. Similarly, we
have been increasingly adopting digital tools
that support our sales. For example, with
the Você Conect@ project, which gives
our consultants connection and access to
applications and payment methods through
tablets and mobile phones, and also with
the Rede Natura (Natura Network),
which is our digital platform through which
customers and franchise consultants can
develop relationships.
We also have successfully tested
our business models in different channels.
We tested the launch of the Sou brand in
drugstores in cities in the interior of São
Paulo state, which generated positive results,
ensuring its expansion across Brazil this year.
We developed the Natura store format in
shopping malls to meet urban consumers’
need for prompt delivery and to encourage
experimentation of our products, with the
first store scheduled to open by June 2016.
More than being definitive paths for
Natura’s future, these initiatives symbolize
an attitude that is consistent with the
demands of modern times: the adoption
of a new execution pace that is faster,
convenient and simple, and in synch with the
interconnected and dynamic environment
of collaborative creation in which we live.
We do not want definitive answers to the
challenges that arise, but instead, we want to
rely on a powerful advantage: the collective
intelligence and commitment of our
relationship network. We want to awaken in
people, both inside and outside of Natura,
the spirit of leadership and entrepreneurship
required to build, together, creative solutions
and in this way fulfill people’s aspiration for a
life of beauty, pleasure and sustainability, all at
the same time.
Roberto Oliveira de Lima,
Chief Executive Officer, on behalf of
the Executive Committee
8
INTRODUCTION
In the photo on top, from left to right, members of the Natura Executive Committee:
Agenor Leão de Almeida Júnior, Vice President, Digital Technology; José Roberto Lettiere, Vice President, Finance and Investor Relations; Robert Claus Chatwin, Vice President,
Internationalization; Roberta Salvador, Legal and Compliance Director ; Roberto Oliveira de Lima, Chief Executive Officer ; João Paulo Ferreira, Vice President, Networks; Erasmo
Toledo, Vice President, International Operations; Fátima Rossetto, Director, People and Culture; Andrea Alvares, Vice President, Marketing and Innovation¹; Josie Peressinoto
Romero, Vice President, Operations and Logistics; and Gerson Valença Pinto, Vice President, Innovation.
1From January 2016.
9
INTRODUCTION
Strategy
Multiple forms
of expression
_
We intend to develop the Natura business model
using different channels and technologies to deliver
the best buying experience as a means of driving
expansion in Brazil and overseas
WE ARE A COM PANY
focused on providing its consumers with
the best buying experience via different
channels. Our efforts, work and dedication
are directed, above all, at enhancing the
mechanisms that facilitate relationship selling.
We are addressing consumers who have
new habits, who use multiple channels and
means of payment and who, at the same
time, value experimentation, an enjoyable
buying experience and expect the best value
for their money. As is to be expected, our
1.9 million Natura Consultants (NCs) also
experience this multiple offer of brands and
relationship channels.
Within this context, Natura is striving
to develop its business model, offering
products and services that promote
beauty, pleasure and sustainability, all at
once. To do this, we want to communicate
and generate the best possible value
proposition for each consumer and
consultant segment. We seek to invest in
new technologies, constantly attuned to
the demands of life in large urban centers.
In operational terms, we intend
to become an increasingly effi cient and
productive organization, capable of
responding rapidly to consumer needs
while retaining our focus on the cash
generation which will enable us to expand
our operations to new markets.
Encouraged by what we have learned
from the success of our operations
in Latin America (Argentina, Chile,
Colombia, Mexico and Peru), we plan
to expand Natura’s internationalization.
We are focused on maintaining the pace
of growth in the region, where market
presence, consumer preference and team
engagement are all on the increase. To do
this, we are further integrating strategy and
decision making to accelerate the transfer
of innovation and knowledge to the
diverse countries in which we operate.
Similarly, the ongoing international
growth of the Aesop brand (including
the fi rst Brazilian store, inaugurated in
the São Paulo in 2015) is helping to build
the company’s experience in the retail
trade and in the developed markets.
This experience is complemented by the
multichannel model in place in France.
While our development strategy for
the coming years is adjusting to a market
reality undergoing intense transformation,
the company remains fi rmly rooted in
the Natura fundaments. We have always
sought to achieve economic, social and
environmental results in a balanced and
integrated manner. Fortunately, these days
an increasing number of companies are
concerned about ethics and sustainability.
We are prepared to continue to
contribute to building this new corporate
culture which values doing business
responsibly, reaffi rming the practices
adopted by Natura since its foundation.
10
economic
others
social
environmental
Values
that
return to
the world
Our business model
–
We seek to organize our activities in a circular way. Processes are
designed to leverage the full potential of the resources involved
with a view to boosting productivity while reducing environmental
impact.It is a model which undergoes constant renewal: as each
cycle ends, it lays the foundation for the coming cycle. The fact that
most of the ingredients in Natura products come from plants (83%)
enhances environmental preservation and the social development
of the suppliers of these inputs. In our open innovation model,
Brazilian and global partners share traditional knowledge, science
and design in the development of new product lines. A large part
of our packaging has great recycling potential and the company
incentivizes the use of refi lls. But it is the Natura consultants who
provide an essential service throughout this chain. They are the ones
who advise customers on the best way to use company products,
creating an experience which exceeds consumer expectations,
leverages results and forges closer links with the brand. Through
our products and services, we foster more sustainable values and
behaviors. The fl ows created by our model generate impacts in four
major spheres: environmental, cultural, economic and social. These
spheres overlap and encompass all company processes.
n
e
i
r
e
p
x
E
ce •
N a t u r a Ex
p
e
r
i
e
53.5% of Brazilian
households purchase
Natura products at
n
c
e
least once a year2
•
N
a
t
u
r
Safe, high quality
products that
a
r
promote values and
u
t
a
sustainable
commitments
ience • N
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a E
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a
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•
n
C once
p
t
R$221 million
invested in
innovation
a
n
d
p
r
o
d
u
c
t
d
Global open
innovation network
with over 220 partners,
including the Amazon
Innovation Center
and the hub
in New York
t
p
Conce
•
n
esig
e t u rn of info
R
29% eco-efficient
packaging1
terials •
a
m
d
n
a
n
Different sources
that are fed back to
o
i
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a
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r
products
our processes and
terials • Return of info
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Social
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c
a
W h a t we e
12.3% of inputs
are from Pan
Amazonian
biodiversity
(in sales value)
x
t
r
a
83% of production
inputs are
plant-based
t
a
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W
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•
S u pp
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and raw materials
suppliers
More than 2,000
families supplying
social and
biodiversity inputs
s and pro
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t
ie
i o n s hip sellin
t
g v
i
a
e l a
R
els •
n
n
a
h
c
e
l
p
i
t
l
u
m
1.9 million consultants
in Brazil and overseas
m
u
l
t
97% on-time delivery
to consultants
Launch of new sales
channels: drugstores,
stores and applications
i
p
l
e
c
h
a
n
n
a
i
g v
ionship sellin
t
els • R
ela
r a n s f orm
a
ti
o
n
T
io n •
t
u
b
i
r
t
s
i
d
d
n
a
30% of the portfolio
renewed every year,
with approximately
220 product launches
13 distribution centers
1.4 million products
picked³ to fulfill over
49,000 orders a day
in Brazil
a
n
d
d
i
s
t
r
i
b
u
t
n
o
ti
a
ransform
ion • T
Value proposition
Our resources
How we transform
Values generated
economic
others
social
environmental
Values
that
return to
the world
INTRODUCTION
d
t
c
u
d
o
r
p
d
n
a
e s i g
•
n
C once
p
t
R$221 million
invested in
innovation
a
n
d
Global open
innovation network
with over 220 partners,
including the Amazon
Innovation Center
and the hub
in New York
t
p
Conce
n
•
esig
e t u rn of info
r
R
m
29% eco-efficient
packaging1
terials •
a
m
d
n
a
n
o
i
t
a
m
r
Different sources
that are fed back to
our processes and
products
terials • Return of info
a
t
i
o
n
a
n
d
m
a
n
e
i
r
e
p
x
ce •
N a t u r a Ex
p
e
r
i
53.5% of Brazilian
households purchase
Natura products at
least once a year2
e
n
c
e
•
E
a
r
u
t
a
Safe, high quality
products that
promote values and
sustainable
commitments
ience • N
e
r
p
x
N
a
t
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r
a E
C
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l
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•
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Our
Essence
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well being well
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p
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o
d
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t
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t •
c
a
r
t
x
e
W h a t we e
x
12.3% of inputs
are from Pan
Amazonian
biodiversity
(in sales value)
e
w
t
a
h
83% of production
inputs are
plant-based
W
tract •
e e
x
t
r
a
c
t
•
W
h
a
t w
c
i
m
o
n
o
c
E
n
t
r
a
p
n
o
i
t
•
s
e r
S u pp
li
e
196 packaging
and raw materials
suppliers
More than 2,000
families supplying
social and
biodiversity inputs
r
c
o
m
m
u
n
i
t
ie
c
u
d
s and pro
T
r a n s f orm
a
ti
o
t
e l a
R
i o n ship sellin
g v
i
Social
els •
n
n
a
h
c
e
l
p
i
t
l
u
m
a
1.9 million consultants
in Brazil and overseas
97% on-time delivery
to consultants
Launch of new sales
channels: drugstores,
stores and applications
i
g v
ionship sellin
ela
t
a
m
u
l
t
i
p
l
e
c
h
a
n
n
els • R
io n •
t
u
b
i
r
t
s
30% of the portfolio
renewed every year,
with approximately
220 product launches
i
d
d
n
a
n
13 distribution centers
1.4 million products
picked³ to fulfill over
49,000 orders a day
in Brazil
o
ti
a
ransform
ion • T
n
a
n
d
d
i
s
t
r
i
b
u
t
Value proposition
Our resources
How we transform
Values generated
1 Progressively reducing negative environmental impacts and intensity of
resource use throughout the product life cycle.
2 Kantar Worldpanel (October 2014 to September 2015).
3 Does not include Aesop.
Economic
Economic indicators
(R$ million)
Consolidated net revenue
Consolidated EBITDA
Consolidated net income
Free cash generation
2013
2014
2015
7,010.3 7,408.4 7,899.0
1,609.0 1,554.5 1,495.9
513.5
732.8
842.6
818.1
208.6
295.1
Average daily stock trading volume1
61.1
47.9
30.2
% revenue contribution from IOs (%)
Distribution of wealth
(R$ million)
Shareholders2
Consultants
Employees
Suppliers
Government
16.1
19.2
27.0
2013
2014
2015
854
4,107
917
5,425
1,804
702
4,122
1,075
5,925
1,724
352
4,166
1,245
6,374
2,149
Caption:
IOs: International Operations; NCs: Natura Consultants; NCAs: Natura
Consultant Advisors.
Notas:
1Source: Bloomberg.
2Figures correspond to the dividends and interest on equity effectively
paid out to shareholders, i.e., cash accounting basis.
Environmental
Social
Other indicators
2013
2014
2015
Relationship quality (%)
2013 2014 2015
2013
2014
2015
Relative GHG emissions (kg
CO2e/kg product billed)3 4
2.93
3.00
3.17
GHG emissions in the value chain
(‘000s of tons)4
328,452 332,326 321,267
Water consumption (liters/unit
produced)
% of post-consumer recycled
materials
% of eco-efficient packaging5
0.40
0.45
0.49
1.4
22
1.2
29
2.9
26
3CO2 (or CO2 equivalent): measure used to express greenhouse gas
emissions based on the global warming potential of each gas.
4Includes GHG Protocol scopes 1, 2 and 3.
5Packaging at least 50% lighter than regular/similar packaging; or
comprising 50% post-consumer and/or renewable non-cellulosic
materials that do not increase mass.
Climate sur vey – Favorability among
employees (Brazil and IOs)6
Supplier loyalty (Brazil and IOs)7
NC loyalty in Brazil7
NCA loyalty in Brazil7
Consumer loyalty in Brazil7
NCs loyalty International Operations
NCAs loyalty International Operations
6Climate survey – Hay Group.
7Loyalty survey – Ipsos Institute.
78
30
23
38
52
38
47
75
24
28
30
64
39
45
78
18
30
29,5
58
37
52
Overall rating in brand image
sur vey in Brazil (%)8
78
74
73
Believing is Seeing Funds Raised
(R$ million)
21.9
25.5
30
Cumulative business volume in
Amazon region (R$ million)
385
582
752
Families benefiting in Supplier
Communities9
3,117
3,121
2,251
8Brand Essence Survey - Ipsos Institute.
9Reduction due to discontinuation of relations with two communities
and the classifi cation of a third as idle (no input purchases).
11
Who
we are
Topics from the 2050 Sustainability Vision
addressed in this chapter
Our Network
Employees
Management and organization
Ethics and transparency
WHO WE ARE
About Natura
A powerful
relationship
network
_
Natura is the largest Brazilian
cosmetics and beauty products
multinational
The São Paulo
distribution center is the
most modern of its kind
in Latin America,
integrated in a system
which ensures that a
large part of the products
reach the consumer
in up to 48 hours
SI NCE THE COMPANY was
founded in 1969, it has been driven by
relationship selling. We reach millions of
consumers through 1.37 million Natura
Consultants (NCs) in Brazil and 505,000
in our International Operations (IOs), in
Argentina, Chile, Colombia, France, Mexico
and Peru.
Natura has five plants, located in
Cajamar (São Paulo) and Benevides
(Pará), with a total annual production
capacity of 508 million units – in addition
to manufacturing by third-party suppliers
in Argentina, Colombia and Mexico. The
company has eight distribution centers in
Brazil, the one in São Paulo being the most
modern in Latin America, conceived to fully
integrate people with physical and cognitive
disabilities into the labor force. The system
is completed by a logistics hub in Itupeva
(São Paulo) and distribution centers in the
countries in which we operate.
manufacturer Aesop, which has 135 stores in
eighteen countries in America, Asia, Europe
and Oceania, predominantly located in large
urban centers.
We have more than 7,700 employees
together with companies that share our
belief in building a fairer world. In 2015, we
received important acknowledgements,
particularly worthy of note being three
aligned with our strategic focuses:
Infrastructure investments over the last
five years have enabled the company to carry
out 42% of deliveries in Brazil and 60% of
deliveries in the International Operations in
up to 48 hours.
Natura’s constant pursuit of innovation
in concepts and products is supported by
research and technology centers in São
Paulo, Manaus and New York (USA), as well
as the multichannel operation in Paris. Our
international activities are complemented by
a 78.75% stake in the Australian cosmetics
in Brazil and overseas (including Aesop),
oriented by an organizational culture focused
on the sustainable development of our entire
relationship network.
Natura is one of the largest B Corps in
the world, having become the first publicly
traded company to gain this certification in
2014. This seal is an international certification
awarded by B-Lab to organizations whose
businesses seek to generate a positive
social and environmental impact. This is a
reaffirmation of our commitment to working
• Champions of the Earth Award, in the
Entrepreneurial Vision category, granted
by the United Nations Environment
Program (UNEP) to personalities
and companies having an outstanding
commitment to sustainability
First place in the Exame IBRC Ranking
for customer service excellence
• Champion in the consumer goods
•
sector in the Exame magazine Biggest
and Best ranking
13
Where we are
The Natura
world
WHO WE ARE
Mexico
Production and
distribution
130,400 NCs
5 Natura manufacturing
units
4 in Cajamar
1 in Benevides
9 distribution centers
in Brazil
Itupeva Hub (São Paulo)
São Paulo DC (São Paulo)
Canoas DC (Rio Grande do Sul)
São José dos Pinhais DC
(Paraná)
Mathias Barbosa DC (Minas
Gerais)
Uberlândia DC (Minas Gerais)
Castanhal DC (Pará)
Jaboatão dos Guararapes DC
(Pernambuco)
Simões Filhos DC (Bahia)
4 research and innovation
centers
Cajamar (São Paulo)
Benevides (Pará)
Manaus (Amazonas)
New York (USA)
Stakeholder groups and
sales channels
• More than 1.37 million NCs
in Brazil
• More than 505,000 NCs in
the International Operations
• More than 7,700 employees
in Brazil and overseas,
including Aesop
• Approximately 5,000
•
suppliers
30 social biodiversity
relationship communities
• Rede Natura (online sales
platform) available in every
state in Brazil and in Chile
135 Aesop stores in 18
countries in Europe, Oceania,
Asia and America
•
• More than 700 points of
sale in Raia Drogasil chain
drugstores in the state of
São Paulo
14
Canada
United States
New York (USA)
Innovation Hub
Aesop
New York
Paris (France)
Natura Store
1,060 NCs
Colombia
Production and distribution
72,300* NCs
Peru
Distribution
91,500* NCs
Brazil
Production and distribution
and Aesop store
1.4 million* NCs
Chile
Distribution
73,400* NCs
Brazil
Argentina
Production and
distribution
139,600 NCs
Norway
Sweden
United
Kingdom
Germany
Switzerland
Paris (France)
Natura Store
1,060 NCs
France
Italy
WHO WE ARE
Aesop
Zurich
Aesop
Berlin
South Korea
Japan
Hong Kong
Taiwan
Macau
Malaysia
Singapore
Aesop
Tokyo
Aesop
Hong Kong
Aesop
Melbourne
Aesop
São Paulo
15
Australia
Natura Operations
Distribution Centers
Countries with Aesop Stores
*includes Natura Consultants and Natura Consultant Advisors (NCAs)
WHO WE ARE
Performance
Ever more
global
_
The International Operations
already account for almost 30%
of Natura’s business and continue
to grow rapidly
ACCOUNTING FOR
ALMOST a third of Natura’s net revenues,
the International Operations (IOs) have
expanded significantly over the last five years,
at an average annual growth rate of 47%. The
operations comprise Argentina, Colombia and
Mexico – where we have local production
through partners –, as well as Chile and Peru
and Bolivia, which employ a commercial
representation model. We also operate in
France, through direct sale and retail.
In Latin America, we are the leaders
in brand preference in Chile, with 35%, in
Argentina (23%) and in Peru (26%), and brand
awareness continues to grow in the more
recent operations in Colombia and Mexico.
Our opportunities for international
expansion are as significant as the rate at
which these countries are subscribing to the
Natura value proposition. We are among the
top 11 companies with the best corporate
reputation in Argentina and among the top
50 in Mexico, according to a study by the
consultancy Merco. The company’s reputation
is further strengthened by recognition of its
people management practices. Natura is in
the best company to work for rankings in
Colombia (1st), Argentina (2nd), Peru (2nd) and
Chile (6th).
Argentina is the company’s largest
operation outside Brazil and is the
headquarters of the International Operations.
We initiated production in the country in 2010,
and currently half the products invoiced are
manufactured locally, helping reduce costs and
CO2 emissions from product transportation,
Growth in the IOs*
(R$ million)
Gross revenue
Ebitda
2,914
245
1,765
1,411
103
52
2013
2014
2015
2013
2014
2015
Above, on left, the headquarters of the International
Operations in Argentina. Above, the store in France moves
*International Operations: Latin America, France and Aesop.
to new address in Marais, and helps us to identify trends
as well as boosting our local economic and
social impact. We are the second largest direct
sale operation in Argentina and leader in a
number of CTF segments. Our sales network
comprises more than 140,000 Argentinean
consultants, having grown 130% in five years.
In Mexico, where the company also has its
own production, a quarter of the products
commercialized are manufactured locally.
Our relationship network in the IOs has
more than 505,000 consultants (NCs) and
continues to expand, driving increased share
in these markets. We are the leaders in direct
sales in Chile, with more than 73,000 NCs
and Natura Consultant Advisors (NCAs), and
the fourth largest company in the Cosmetic,
Toiletry and Fragrance market. To expand sales
alternatives in this market, we launched the
Chilean version of the Rede Natura, our first
experience with this project outside Brazil.
The model enables the NCs to maintain their
online pages for the sale of Natura products
under a digital franchise model (read more on
page 27).
In addition to the Rede Natura model in
Chile, the company operates a differentiated
direct sale format in Mexico, the second largest
cosmetics market in Latin America, coming only
after Brazil. The Sustainable Relations Network
has been in place since 2011. Its growth rate
is accelerated, reaching 33% last year, with a
total of 130,400 NCs. The model is based on
multilevel direct selling, driving entrepreneurship
while incorporating sustainability-related
concepts of quality and inclusion. The
consultants can set up their own sales
networks and develop new links with Natura
as these networks grow and as they undertake
community-based social and environmental
initiatives. Natura has also operated in Bolivia
for 28 years, employing a distinct distribution
model. Year on year growth is strong, with the
consultant base reaching 22,000 in 2015.
To support this increasingly important
expansion, Natura has stepped up logistics
investments in Latin America. We are building
a new distribution center in Argentina which
is scheduled to come into operation in 2016.
The company’s largest production investment
outside of Brazil, the new distribution center
will expand order processing capacity in the
country by 80%. Colombia gained its new,
enlarged high tech distribution center last
year. The facility will ensure the infrastructure
necessary for the growth projected in the
country up to 2018. In Peru, Natura installed
a new pick to light line, a technology which
optimizes order fulfillment, boosting the
number of orders picked from 220 to 300 an
hour. The logistics investments in the IOs are
focused on the modernization and expansion
of facilities, using high technology order picking
similar to the Brazilian operation.
16
WHO WE ARE
A leap
in growth
for Aesop
_
Three years after its
acquisition by Natura,
the Australian brand has
expanded greatly. It also
arrived in South America,
opening a first store in
São Paulo
Michael O’Keeffe, CEO of
Aesop, highlights major
advances, resulting, for
example, in the store
in São Paulo (above),
designed by the architect
Paulo Mendes da Rocha
New home
in France
–
Known as the global center of beauty and
cosmetics, France represents a strategic
presence for the Natura brand. In 2015, we
enhanced our representation with a sales
model based on consultants, website and
a company store. We also moved from the
Saint-Germain region to Marais, a more
contemporary district in which the store may
operate seven days a week. The model in
France enables us to capture trends, reinforce
the international positioning of the brand and
gain experience in multichannel sales.
THE R APID EXPANSION of the Aesop brand,
which was incorporated into Natura in 2013, exceeded all
the company’s initial expectations. In these three years, the
number of stores has doubled. Currently there are 135 stores
in 18 countries, all in large urban centers located worldwide.
Moreover, revenues have tripled, while Ebitda has grown by a
factor of seven. In 2015, a further 37 units were inaugurated,
one of which in São Paulo, the brand’s first retail outlet in
South America.
Natura has supported the cosmetics brand of Australian
origin in its ambition to gain in scale and global reach. In turn,
Aesop provides Natura with key insights into operating in highly
competitive, mature markets such as Europe, Asia and the
United States, while retaining its entrepreneurial spirit and agility.
Find out about the outlook for Aesop in 2016 in this
interview with CEO Michael O’Keeffe:
What has it been like working together with
Natura over the last three years?
Time has just flown and things are coming on really well.
17
Natura has supported our growth both in terms of strategic
advice at board level and at the operating level. Aesop is a truly
international brand but is still small in the markets in which it
operates, which means there will be many opportunities for
growth in coming years.
How do the companies work with each other?
Natura gave us a great deal of support for the launch
of our first store in Latin America, in São Paulo, in practical
questions such as logistics and product registration. As a
global leader in sustainability, the company has also helped
us improve our practices in this area. For our part, we have
provided support in Natura’s movement towards becoming a
multichannel operation based on our retail experience in the
markets we operate in. Additionally, Natura’s recent bout of
accelerated growth has proven to be extremely valuable for us.
What is the outlook for Aesop for 2016?
We will continue to expand in 2016, starting up
operations in two new countries: Denmark and Thailand. We
plan to open another 40 stores in the countries in which
we already operate, and we will launch our e-commerce
operation. Above all, we expect to make the most of the
collaboration and synergies with Natura to drive the growth of
the two brands.
WHO WE ARE
Five year overview
_
Net revenue
(R$ billion)
7.9
5.6
Number of Natura
consultants
(million)
1.9
1.4
Average
annual
growth rate
8%
Average
annual
growth rate
9%
2011
2015
2011
2015
Net revenue International
Operations
(R$ billion)
Relative CO2 emissions
(kg CO2e/kg product)
2.3
Average
annual
growth rate
47%
0.5
3.21
3.17
Average
annual
growth rate
1.4%
2011
2015
2012*
2015
*Compared with 2012 because it is the base year for the
company’s commitment to a 33% reduction in relative emissions
by 2020.
Dividends
(declared, R$ per share)
1.896
0.818
2011
2015
Average
annual
growth rate
19%
Performance
The challenge
of the Brazilian
market
_
The conjuncture resulted in
an even tougher competitive
environment in Brazil, demanding
great discipline in managing
cash and investments
20 15 SAW A MARKED
contrast between the company’s
results in Brazil and in the International
Operations (IOs). While business
overseas continues to expand rapidly, in
Brazil the deterioration in the economic
environment, the increase in tax load
and the devaluation of the Real further
complicated the retraction in sales and
profitability the company has experienced
in recent years.
Consolidating the Brazilian and the
International Operations, Natura had a
gross revenue of R$ 10.8 billion in 2015
(8.6% up on 2014), with almost 1.9 million
consultants (an increase of 8% over the
previous year), Ebitda of R$ 1.5 billion
(decrease of 3.8%), net income of R$
513 million (down 29.9%) and free cash
generation of R$ 818 million (compared
with R$ 209 million in 2014).
It should be noted that in Brazil,
where Natura’s gross revenue totaled
R$ 7.89 billion, 3.6% down on 2014, the
cosmetics, fragrances and toiletries market
experienced its first retraction in the
last 23 years, according to the industry
associations Sipatesp/Abihpec1.
In a year in which revenues were
under pressure in our largest market,
rigorous cash management prevailed.
Natura rationalized Capex investment,
which totaled $ 383 million, in line with
the guidance of R$ 385 million for 2015
and down on the R$ 505.7 million invested
in 2014. This freed up R$ 313.6 million
in working capital in 2015, compared
with the consumption of R$ 208.3
million the previous year. As a result, free
cash generation totaled R$ 818 million
compared with R$ 209 million in 2014.
The projection for 2016 Capex
investment is approximately R$ 350
million, aimed at ongoing reinforcement in
technology and in segmentation capacity
for product offerings, as well as the
inauguration of the first Natura stores in
Brazil, the expansion of the Aesop global
chain and ongoing growth in Latin America.
1Sipatesp/Abihpec: respectively the São Paulo state
and the Brazilian Cosmetic, Toiletry and Fragrance
industry associations
18
WHO WE ARE
Governance
Closer
and
closer
_
The return of the founders to the
co-chairmanship of the Board
of Directors symbolizes the new
business expansion cycle
WITH THE END of Plínio Villares
Musetti’s term as chairman of the Board of
Directors in April 2015, Natura’s founding
partners Antonio Luiz Seabra, Guilherme
Peirão Leal and Pedro Luiz Barreiros
Passos resumed their co-chairmanship,
the position they had held until 2013. The
decision reflects their desire to retain close
links with the company as the new business
expansion cycle gains traction.
franchises. Together with Luiz Ernesto
Gemignani and Marcos de Barros
Lisboa, they constitute the 50% of the
independent external board members.
“These are adjustments that are in tune
with the company’s natural dynamics,
aligning governance with the company’s
new strategic vision”, says Corporate
Governance director Moacir Salzstein.
In the course of 2015, the Board
In the renewal process, Raul
Gabriel Beer Roth and Júlio Moura
Neto left the board after years of
important contributions to the company’s
development. The vacancies were filled
with the re-election of Silvia Lagnado, an
executive with a brilliant career in the
consumer goods industry, and the arrival
of Giovanni Giovannelli, who has broad
experience in technology companies and
proceeded with the review of company
strategy, focused on structural questions,
the market and the consumer. In
conjunction with company executives,
initiatives and priorities were defined for
the next three years, underscoring the
revitalization of the direct sale channel,
multichannel opportunities, portfolio
rationalization and the concentration of
investments in priority brands and projects.
19
Expansion of the Executive Committee
In order to achieve the company’s strategic goals, the Executive
Committee (Comex) was reinforced to ensure the execution of
the strategy agreed upon with the Board of Directors. In 2015,
we reorganized the former Brands and Products area, which was
renamed Marketing and Innovation, incorporating the management of
the company’s marketing matrix. Commercial management continues
to report to the vice president of Networks.
At the beginning of 2016, we hired Andrea Figueiredo Teixeira
Alvares as vice president of Marketing and Innovation. A graduate
in Business Administration, she has broad experience in large
multinational corporations.
Comex now comprises the CEO, nine vice presidents (Digital
Technology, Finance and Investor Relations, Innovation, International
Operations, Internationalization, Marketing, Networks, Operations
and Logistics and People and Culture), and the directors of the Legal
and Compliance and Strategic Planning and Management Systems
areas. The reorganization of the executive board favors process
integration and ensures alignment between Comex and company
strategy, driving greater dynamism and faster decision making.
Ethics and transparency
Natura’s mechanisms to promote control and transparency
are evolving year on year. In 2015, the company created the
Compliance area, which holds a seat on the Executive Committee,
as well as a new channel to receive reports on corruption and any
cases related to the Board of Directors, its supporting committees
and the Executive Committee.
Other types of non-conformance continue to be handled by the
Ombudsman and the Natura Ethics Committee, also headed by the
Compliance Officer, whose function is to analyze all reports received
via both channels. These changes are designed to intensify Natura’s
anti-corruption controls and reinforce ethical conduct.
Natura voluntarily adopts best practices as established under
the US Sarbanes-Oxley act, which provides for audit and security
mechanisms aimed at fraud prevention. For the first time, these
standards were also applied in Argentina. The company is planning
to extend this control to the other operations in Latin America.
WHO WE ARE
Our culture
Leadership
development
incorporates
hands-on
experience
_
Our leadership development
program Mosaico uses
experiences to stimulate agility,
flexibility and empathy
CEO Roberto Lima presents the Mosaico Project to leaders in Cajamar (São Paulo)
TO OVERCOM E the challenges
product and service commercialization.
in today’s business world we strive to
extend the capabilities of the people
who work with us. In addition to hiring
recognized and experienced talent from
the market, we prioritize measures aimed
at driving leadership capacity to provide
the skill sets and knowledge necessary to
execute company strategy. The focus is on
ensuring managers understand the needs
of consumers and, by extension, the Natura
Consultants (NCs).
Launched in 2015, the new leadership
development program called Mosaico
is focused on living experiences applied
to the reality of the business and the
solution of routine questions, leveraging
the multidisciplinary make up of the group.
In the phase called Living Natura, executed
between October and December,
managers underwent experiences designed
to stimulate a wide-ranging systemic vision
of the entire business by means of activities
in key areas such as manufacturing, product
picking, consumer care, order delivery and
The Mosaico program combines self-
knowledge and business strategy. As the
name suggests, it consists of a framework
of panels, divided into priority and optional
subjects. This means that all par ticipants
share a common development base and
build up their personal program with
optional modules in accordance with the
requirements of their function and their
personal interests.
“The different practical experiences
make learning more hands-on and effective,
bringing it closer to the day to day issues
faced in the company. In one of them,
for example, the employees spend a day
on the production line. In another, they
pick the orders to be delivered to the
consultants. They will then accompany the
delivery of the order to the home of the
NC or the end consumer”, says Anaísa
Carlini, Human Resources manager.
An application for cell phone or
tablet provides support for the program,
with additional materials, suggestions for
reading and videos to complement the
training. The software was developed in
Portuguese, Spanish and English to ensure
it is accessible to all Natura employees.
In 2015, 300 leaders took part in
the first phase of the program. Within
three years, all the company’s 700 or so
managers should have completed the
full program. The organization in modules
enables the incorporation of new
subjects into the program in accordance
with business needs and the Natura
succession process.
Another key program feature was
the emphasis placed on internal knowledge
and experience and resource optimization.
As a result, 70% of the program content
uses internal leaders as facilitators
and multipliers of the contents in which
Natura is specialized, such as direct sales
and cosmetics, with support from external
consultancies for the development of
new competencies such as digital
technologies, internationalization, new
channels, among others.
A favorable climate for all
In 2015, we achieved the best result
in favorability* at Natura since monitoring
of the indicator was begun in 1995. With an
average rating of 78% for the entire company,
the score was three percentage points higher
than the target set for the period, equaling the
2013 result.
This result positions Natura in the group
of companies with the best organizational
climate in a market benchmark comprising
the 10% of companies with ratings of 76% or
higher in the survey conducted by the Hay
Group.
In the International Operations, we
maintained a high favorability rate; at 86% it
climbed two percentage points compared
with the previous year. We have also obtained
outstanding results in work place assessments:
Natura came in first place among the best
companies to work for in Colombia, second in
Argentina and Peru, and sixth in Chile.
*Favorability is equivalent to the percentage of employees who
gave the items surveyed a score of 4 and 5 on a scale from 1 to
5 points
20
Climate
survey:
Favorability 1
–
Natura2
78%
75%
78%
2013
2014
2015
Brazil
77%
73%
75%
2013
2014
2015
International Operations3
84%
86%
80%
2013
2014
2015
Favorability in the IOs
Argentina
Chile
Colombia
France
Mexico
Peru
2013
2014
2015
86
78
83
88
80
77
88
82
88
81
81
80
78
83
89
77
78
87
1Hay Group. The data do not take into account the
International Businesses Management area, the offi ce in
Buenos Aires responsible for coordinating all the International
Operations.
2Consolidated data for Brazil and the International Operations
3Consolidated data for the International Operations.
WHO WE ARE
Our culture
Natura’s
Mission
_
“We are Natura.
Inspired by Our Essence
and our proximity with nature,
science and technology,
we propose to expand and mobilize
our Relationship Network,
in pursuit of creative solutions
in pursuit of
that promote a life of
beauty, pleasure and
sustainability, all at once.”
sustainability, all at once.
BASED ON THE fundaments of Our
Essence, we have sought to provide more practical
orientation in the conduct of routine company
activities, synthesizing our Mission as members
of Natura. To do this, we organized encounters
with employees in Brazil and in the International
Operations and listened to the founders and the
Executive Committee. Now this text and the
concepts within it will be disseminated throughout
the company’s operations so that everyone may
be more closely attuned with the goals set forth in
our strategy.
The Natura Mission will be part of our
routine until we are sure it has been incorporated
into organizational culture. This work was initiated
at the end of last year, with the presentation of
the new mission in awareness workshops and
management meetings. “It was very interesting to
see how people were able to recognize themselves
and connect key elements of the Mission with their
experience in Natura”, said CEO Roberto Lima,
who led the initial encounters.
The next step will be to connect the Mission
with all the Natura management mechanisms,
from strategic planning to managing performance
indicators, ensuring an ongoing, focused direction
in decision making. In parallel, we will seek to
incorporate the mission into all our systems, symbols
and daily work rituals, so that employees will
internalize it as the purpose which reinforces the links
between us as members of the same organization.
2 1
The key elements of our Mission:
Proximity to nature
For us, nature is the source of life, inspiration and creativity for
everything we do. Our relationship with nature is one of love.
Science and technology
We study and use traditional and leading edge knowledge. For
us, access to the best in science and technology is fundamental
for creating and delivering products and services that value every
aspect of life.
Relationship Network
We have built the company based on quality relationships. For us, it
is essential to cultivate relationships, develop dynamics and articulate
resources for our ecosystem to attract more and more people and
partners who identify with our purpose.
Creative solutions
We relentlessly pursue the most creative solution for each problem
we encounter. For Natura, the more creative a solution is, the
greater its positive impact and the smaller its negative impact will be
for all concerned.
Beauty, pleasure and sustainability, all at once
We do not separate moments of beauty from moments of pleasure
or from sustainability. With unbridled enthusiasm, we rise to the
daily challenge of making beauty, pleasure and sustainability possible
all at once in each experience provided by Natura.
How we
generate
value
Topics from the 2050 Sustainability Vision
addressed in this chapter
Brands and products
Packaging
Climate change
Social biodiversity
Supply chain
Waste
Water
Our Network
Natura Consultants
Communities
Management and
organization
Management model
HOW WE GENERATE VALUE
In channels
Where and
how the
consumer
wants it
_
To enhance our business model,
we are making our products
available in new channels,
facilitating the shopping
experience
Consultant Márcia
Carvalheira’s store
was transformed by
the Vitrine project
C ONSUME RS ARE AT THE
heart of our strategy. We strive to offer
them the best brand experience, as well
as fulfilling their needs in terms of access
to and use of products. We are attuned to
the demands of modern life in large urban
centers and to new consumption habits.
In a world undergoing transformation
at an accelerated rate, the demand for
practicality, speed and convenience is
growing. This consumer is also more
demanding when it comes to quality and
price, given the more extensive offer of
brands and products.
advantage of an extensive and relevant
product portfolio, with certain lines readily
adaptable for sale in retail channels, as well
as a brand that enjoys broad consumer
acceptance.
Natura identified the daily beauty
care brand Sou as being ideal for
commercialization in drugstores. As a
rapidly expanding channel, drugstores
have also gained increasing importance
for consumers. Our first experiment was
initiated in September, in partnership with
stores in the Raia Drogasil chain in the
Campinas region of São Paulo.
Faced with this new reality, in 2015
Natura introduced its multichannel sales
model. We realized we had the major
The results confirmed the success
of the strategy, with sales volume higher
than expected in the first months. In the
29 stores participating in the pilot test,
the Sou brand became the best seller in
specific categories, such as bar soap. In
March 2016, the project was extended to
include the rest of the state of São Paulo
and is scheduled to go nationwide by July.
One of the company’s initial
concerns regarding the project was the
potential impact of commercializing Sou
in drugstores on Natura Consultant
(NC) sales. Surveys showed no significant
differences in business for consultants
in the Campinas region. “The survey
will be conducted on a monthly basis.
We do not want to create competition
between channels, but this new space is
further strengthening the brand, driving
sales across all channels”, says Herlan
Paiva, Natura New Businesses manager.
Additionally, local NCs claim that
advertising to promote the brand has
benefited them.
Support for NC
entrepreneurs
Márcia Carvalheira has been an NC
for some 20 years. A resident of the city
of Osasco in São Paulo, she started her
career selling door-to-door. Encouraged by
the good results, she saw an opportunity to
become an entrepreneur and expand her
23
23
HOW WE GENERATE VALUE
The Sou product line
passed the sales test
in Raia Drogasil stores
in São Paulo state.
On the opposite page,
a prototype of the
stores for shopping
malls
network. She put together a small stock for
off-the-shelf sales and opened a store on a
busy street in the city.
Some time ago, Natura recognized
that consultants like Márcia with an
aptitude for this business format could
represent an opportunity to drive
improved sales for both parties. The
company then developed a model to
leverage the productivity of consultants
with their own points of sale, most of
which are multibrand, in off-the-shelf
sales. In partnership with these NCs, the
company created a plan that encompasses
training, point of sale activation and
commercial management, achieving
impressive results with the first 100 sales
outlets in the states of São Paulo, Rio
de Janeiro and Paraná that had met the
required criteria in terms of business
maturity and sales volume.
To strengthen these small businesses,
Natura introduced its Vitrine (Showcase)
project, involving the revitalization of the
stores and the provision of support for
the NCs to enhance their businesses.
Márcia’s store was one of the first to
benefit from this initiative at the end
of 2014. Going beyond decoration, the
proposal incorporates a new architecture
for the Natura space in these outlets,
valuing company products and consumer
contact with the brand. As part of the
project, a sales supervisor accompanies the
consultant providing her with sales support
and communication materials.
The outlets receiving this support
have increased their average gross income
by around 18%. For Márcia, sales have
grown by 45%, “in spite of the tough
economic situation”, as she says. “The
most impor tant aspect of this project is
the relationship Natura has established
with me. I have learned a lot from the
supervisor. Thanks to her, I am now aware
of things that I used to do more intuitively,
such as choosing the products to display in
the shop window in accordance with the
season”, she explains. “The learning goes
both ways, because our teams are also
benefiting from their first experience in
retail, which will be invaluable for company
strategy”, adds Segments manager
Edimilson Miguel.
24
Natura stores are on their way
_
We also want to expand
communication of our value proposition
by means of company-owned Natura
stores in shopping malls, with inaugurations
beginning in 2016. In addition to increasing
opportunities for contact with customers
who do not usually buy via the direct sale
channel and to ensuring off-the-shelf product
delivery, these stores will help the company
to identify trends more efficiently and will
serve as an environment for experimenting
with products and services.
In 2015, we developed the store
format and tested the model in a temporary
initiative. During this time, the area was
presented to investors, consumers, NCs and
other groups, who were asked to assess two
architectural plans and the purchase model.
In these stores, which should carry part
of our portfolio (such as the best selling lines
and classic Natura products), the objective is
to provide the consumer with an enjoyable
shopping experience, to expand visibility and
to strengthen the brand, as well as to drive
increased sales.
“With the Natura stores, sales of the
Sou line in drugstores, the consultant run
points of sale and the Rede Natura, we
expect to make it easier for the consumer
to acquire our products, offering a true
omnichannel experience. We want to
be present in the most suitable location
and format for our consumers”, states
Roberto Lima. “We are sure that these new
opportunities to buy Natura products will
further strengthen the direct sale channel,
because they will boost the visibility of our
products, increasing consumer interest.”
HOW WE GENERATE VALUE
25
In channels
New
formats
for direct
selling
_
Technology is an ally for the
consultant, driving agility and
deeper relations, as well as
higher sales
Above, image from
the Você Conect@
launch campaign for
our consultants.
At the side, the app
that offers new means
of payment and
streamlines sales
HOW WE GENERATE VALUE
CURR ENTLY THE company
is supported by more than 1.37 million
Natura Consultants (NCs) in Brazil and over
505,000 in the International Operations,
who commercialize Natura products in an
independent, non-exclusive manner. We
envisage major opportunities to further
direct selling based on the advance of digital
technologies and have invested constantly in
transforming electronic tools into enablers
for the NCs’ businesses. “If the consumer has
changed her habits and is now to be found
everywhere, the NCs need to be prepared
to serve them via different purchasing
channels”, says Networks vice president, João
Paulo Ferreira.
Similarly, studies undertaken in
2015 also helped us gain more in-depth
understanding of the consultant profi les
in our network. We identifi ed consultants
who sell our products only as a means of
complementing their income, others who are
more entrepreneurial, some who specialize
in determined product categories, such as
hair or facial care, and ones who provide
more detailed consultancy, recommending
the most appropriate products according to
the specifi c characteristics of each client.
In the coming years we intend to
provide customized service, training and
communication in accordance with the
reality of each NC. In conjunction with
management by micro-region of the country,
this information will help enhance CRM
(customer relationship management) and
our relationship strategy with the sales
channel.
Connected consultants
Launched in August 2015, Você
Conect@ is a suite of digital tools including
26
HOW WE GENERATE VALUE
Rede Natura
a chip that offers exclusive benefi ts in data
use, an application for sending in orders and
a credit and debit card reader. These three
essential resources enable mobile sales for
the NCs at special internet access rates,
below market tariffs.
The service combo on offer provides
a series of additional benefi ts. There is no
charge for data sent to the Natura website,
for the order capture application, the card
reader and the social networks. The plan
adopted is the pay-as-you-go model, the
most affordable in the market.
The Você Conect@ suite was
developed to facilitate and speed up the sales
process, to boost connectivity and to further
consultant interaction with Natura and with
clients, in addition to offering consumers
a new means of payment. For Natura, the
project also enables easy, direct and speedy
communication with consultants. “The combo
is very affordable, reinforcing digital inclusion
by providing easy access to information and
to diverse services”, says vice president of
Digital Technology, Agenor Leão. Shortly, this
service developed in partnership with the
telecom operator Claro and the PagSeguro
network, will be extended to NCs in the
International Operations.
Rede Natura upgrades
technology and reaches
Chile
Our technology initiatives have
accelerated the consultants’ adaptation to
new consumer behavior, supporting them
in interactions in new environments and
generating synergies between face-to-face
and virtual relationship. In 2013, we launched
the Rede Natura (Natura Network) website,
a model unlike any other in the world in
which the Natura Consultant (NC) continues
to be the link between the company and the
end customer.
In 2015, Rede Natura coverage was
extended nationwide and was introduced
60,000
digital consultants
60% of the NCs
work on a hybrid basis,
combining sales in the
traditional environment and
in the virtual space
700,000 consumers
registered
in Chile. As part of our quest to integrate
and streamline operations throughout
Latin America, the launch of the platform
was brought forward. Initially scheduled
for 2016, it was possible to accelerate this
launch given the robustness of the Natura
Operations and Logistics infrastructure
following fi ve years of heavy investments
(read more on page 32).
Thus, the company has consolidated
digital cosmetics sales in an innovative
format. Using the Rede Natura, the
consultants commercialize the products
and relate to their customers via a digital
franchise system. In Brazil, Natura already
has 60,000 NCs registered on this platform,
with 60% of them working on a hybrid basis
– combining physical and internet sales and
leveraging the synergies between the two
channels.“Revenues already position us as
one of the leading cosmetics e-commerce
stores in Brazil. Moreover, the operation
reached break even just nine months after
implantation, proving that it is a resounding
success”, explains Rede Natura director
Murillo Boccia.
Enhancements were introduced in the
platform during 2015, such as the launch
of the Natura Sempre Presente application
at Christmas. Using a cell phone camera,
the app can identify photos of company
products and automatically add them to
the consumer’s shopping cart within the
Rede Natura.
2 7
Você
Conect@
–
Pay-as-you-go service package
and special rates for NCs using
mobile devices
90 ,000
chips distributed
200 ,000
downloads of the
application
7%
of the consultants’
orders already use
the new tool
45 ,000
card terminals
sold
Numbers for August to December 2015
Innovation
Expanding
frontiers
to innovate
_
We want a more global process
driving greater differentiation,
speed and relevance for the
consumer
HOW WE GENERATE VALUE
years – stood at 58.9%.
Because Natura products are
manufactured in different locations: in
Brazil, in the International Operations, and
by partners, the company created a group
dedicated to the transfer of technology
and knowledge. “We need to ensure that
innovation can be readily transferred to all of
these countries and leverage the use of local
inputs, reducing social and environmental
impacts, as well as production costs”, Gerson
explains.
Well-being as seen by
science
A strategic partnership with the
São Paulo research foundation Fapesp
(Fundação de Amparo à Pesquisa do
Estado de São Paulo) will result in the
Center for Research into Well-Being. The
goal is to develop a sound knowledge
NAT UR A’S VOCATION for
innovation enables the company to promote
advances in processes and in its portfolio,
making them more and more global. We
invest in areas of research which, when
interconnected and combined, generate,
expand and disseminate knowledge, delivering
benefits for our entire relationship network.
The innovation structure comprises
centers in São Paulo and in the Amazon
region, a hub for capturing trends and forming
partnerships in the United States, as well as
the Aesop innovation unit in Australia. This
structure is leveraged by a global network
consisting of more than 200 researchers and
institutions (including the MIT in Boston, the
Federal University of Amazonas in Manaus
and the University of São Paulo).
In 2015, Natura maintained its
investments in innovation, channeling 3%
of the company’s net revenues or R$ 221
million to this area. These funds support a
broad spectrum of initiatives, ranging from
gaining greater insight into consumers,
their preferences and the active principles
that scientifically fulfill their demands, to
strengthening the partner network to drive a
global innovation process.
Measures include connection via digital
technology as a means of expanding the
boundaries of cosmetics and the quality of
the consumer experience, for example, by
offering applications that help consumers
base through the integration of
diverse areas such as neuroscience,
positive and social psychology, and
applied health, human and social
sciences.
The project has been under
development for three years. The
scientific proposal incorporates
the technical experience of an
acclaimed group of more than 40
scientists and their teams. Planned
as a joint investment with Fapesp
until 2026, the Center will be
launched in 2016. The partnership
will include the University of São
Paulo (USP), where the project will
be housed,the Federal University
of São Paulo (Unifesp) and the
Mackenzie Presbyterian University.
The collaboration entails a shared
governance model. Investment will total R$
40 million, divided among all the partners.
“It is a unique model for an integrated
center involving a Brazilian company, in
an unprecedented field of research in the
academic world”, says Luciana Hashiba,
director of Innovation Networks at Natura.
Ucuuba is our new jewel
Innovation
Indicators
2015
2014
2013
221
216
239
220
207
179
67.9
63.4
58.9
Investment in
innovation
(R$ million)
Number of
products
launched1
Innovation
Rate
(%)2
diagnose the needs of their skin or hair.“We
are pursuing greater differentiation, greater
speed and greater relevance, within a more
global approach”, states Natura vice president
of Innovation Gerson Pinto.
All company efforts are channeled
into achieving this differentiation in terms of
shorter time-to-market for the consumer
and greater internationalization in the
entire innovation process. As a result of this
readjustment, the company launched fewer
products 2015 (220 compared with 239 in
2014), and the innovation rate – that is the
percentage of revenues obtained from the
sale of products launched in the last two
28
company’s pursuit of innovative ways
of doing business, allying technological
research and dialogue with supplier
communities in the Amazon region.
The line, comprising moisturizing
products, has been developed based on the
fruit of the ucuuba tree. In cosmetic terms,
the tree is a true jewel of the Amazon
region. The butter extracted from the seed
contains a combination of fatty acids such
as trimyristin (a compound rarely found in
nature, but present in large quantities in
the ucuuba), responsible for its lightness
and smoothness, providing prolonged and
heightened moisturizing, together with
velvety, dry-touch textures. The body
care products both nourish the skin while
forming a film that protects it.
Research and development for the
product took three years. Normally, the
greater the moisturizing power of products
in this category, the heavier their texture
and greasiness to the touch. Natura Ekos
Ucuuba restorative butter for the body
and dry skin ruptures this paradigm by
delivering prolonged moisturizing for up to
48 hours together with a light texture. This
feature is captured in the product’s main
slogan – the light butter from the Amazon.
The product also drives social and
environmental benefits. Commercialization
of the ucuuba seeds is essential for
reducing degradation of the species. The
ucuuba tree is threatened with extinction
due to increased exploitation for timber
over the last 30 years. The wood is used
to make stakes, broom handles, door
frames and roofing. We believe that
the new Ekos Ucuuba line presents an
opportunity to reverse this predatory cycle
by redefining the value of this asset and
its role in the production chain, generating
income based on a forestry rather than
a timber product: the seed. By doing so,
the conscious harvesting of the seed will
enable sustainable stewardship of the
species while keeping the forest standing,
thus benefiting 15 communities comprising
some 600 families.
1Includes only products that represent a new value
proposition for the consumer. It does not include product
combinations in kits that receive new sales codes or
Believing is Seeing (Crer para Ver) products, accessories and
NC support materials. 2 The innovation rate is the total
The launch of the Ekos Ucuuba line
last year is the most recent result of the
contribution to annual gross revenue of products launched in
the last two years. The result only takes Brazil into account.
New products
in the market
–
Natura’s main product
launches in 2015
Amis
New line
of women’s
fragrances for
pre-teens.
Natura Homem
Relaunch of the sub-
brand colognes, with a
new fragrance based
on woody notes.
Ekos Ucuuba
and Murumuru
Two new active
principles, the
former never used
before in cosmetics.
Esta Flor
Two fragrances based on
the aroma of fl owers, the
proposition being to develop
a monothematic collection of
aromas, unique in Brazil.
Una
The new items in the
line are a deodorant
oil for the body and a
moisturizer.
Tez
New line for women who
appreciate practicality. It
comprises moisturizers, soap
and multipurpose wipes
(clean, exfoliate, tonify, remove
make up and moisturize).
29
Faces
New items for the collection, including a
blue lipstick. In addition to a new tone, the
lipstick may be mixed with others in the
line to make completely different colors.
A win-win
cycle for all
_
Ekos Ucuuba is the most recent
example of our efforts to deliver
functional attributes, reduce social
and environmental impacts and
boost value generation for all our
stakeholder groups
The Natura Consultant
and sales
Our NC network is an ally in transmitting
our product values and concepts.
The consultants receive training in product
attributes and the benefi ts of using them,
so that they are better prepared to provide
orientation for consumers.
Product conception
Transforming social and environmental
challenges into innovative business,
combining technology and dialogue
with partners, is part of the company’s
innovation strategy.
Eco-efficient
packaging
Composition of bottle:
50% green PET,
made from renewable
plant-based material
50% post-consumer
recycled PET
One out of every
two packs produced
returns to the cycle
40% of the cartons
are made from post-consumer
recycled paper
The role played
by cooperatives
Working with cooperatives is
essential to ensure the volume
and quality of recycled material
necessary for production.
Currently, we are testing a pilot
initiative to implement logistics for
the return of packaging after use
by the consumer, promoting the
expansion of this production chain.
Product usage
The product line includes
moisturizer for the body,
a hand butter and moisturizing
body deodorant.
Recycling
By means of product communication
and orientation provided by the Natura
Consultants, we encourage consumers
to recycle. We provide refi lls for a large
part of our portfolio, and we support
communication measures aimed at
conscious resource consumption.
Suppliers receive
benefits
15 communities
in Amazonas and Pará
600 families
Income is 3 times higher
for the communities in which
the ucuuba tree is preserved.
Traditional
Knowledge
The riverside communities in
the Amazon use the ucuuba to
make medicinal teas, candles,
incense, as well as in preparations
to restore the skin. Combining
traditional knowledge with
technology derived from
research and development, the
company discovered that the
butter extracted from the seeds
is a powerful moisturizer
Natura
performance
in the Amazon
_
Cumulative business volume in the
Amazon region (R$ million)1
752
385
582
2013
2014
2015
Purchase of Amazonian inputs (%)2
13.4
13.3
12.3
2013
2014
2015
Communities with which Natura
maintains relations
32
33
30
2013
2014
2015
Families benefi ting3
3,117
3,121
2,251
2013
2014
2015
Direct income per family
(R$ thousand)
6.6
3.0
2.3
2013
2014
2015
1Cumulative value since 2012. 2 Percentage of Pan-Amazonian raw
materials purchased in relation to total Natura raw material purchases.
3In addition to a reduction in the number of supplier communities from
33 to 30, there was a change in the methodology for counting the
number of families. Previously the number of associated and partnering
suppliers was monitored. With the introduction of the tracing system,
since 2015 all the families have been registered and georeferenced,
ensuring greater control over this number.
Keeping the forest
standing is a good deal
By purchasing the fruit to produce cosmetics,
Natura creates the possibility of reversing
the predatory cycle threatening the species,
generating income based on a non-timber
forestry product. Community members
are instructed to harvest only 50% of the
fruit. The remainder falls in the water and is
carried away, ensuring the continuity of the
germination process
The species
The ucuuba tree grows in
waterlogged and fl ooded areas and
is threatened with extinction due
to increased exploitation for timber
over the last 30 years.
HOW WE GENERATE VALUE
Operations and logistics
The best service
_
Our vocation to serve gained
recognition for Natura as the best
in customer service in the country
The Itupeva
Hub facility in
São Paulo
IN 2015, NATURA WAS considered the best
company in customer service in Brazil in a survey conducted
by Exame magazine in par tnership with the IBRC, (the Brazilian
Customer Relationship Institute or Instituto Brasileiro de
Relacionamento com o Cliente). The survey was conducted
among some 5 thousand people in 143 cities.
Since 2011, a series of measures have been implanted
to enhance relations with the Natura Consultants (NCs) and
consumers. For example, a basket of more than 70 indicators
has been created to monitor the quality of services for NCs.
Information on factors such as delivery time, product non-
availability and billing errors is monitored during each sales
cycle (which lasts on average 21 days) and used to enhance
management.
Last year, the company star ted to incentivize managers
throughout the company to gain first hand-experience of
these challenges. In the new leadership development program,
managers are required to accompany and par ticipate in key
activities throughout the Natura production process, right down
to delivery of the product to the home of the consultant or
end consumer. “We are working on continuously improving our
customer service culture, discussing how we relate to customers
and the impact our activities and practices have on satisfaction
and loyalty both inside and outside the company”, says Josie
Romero, vice president of Operations and Logistics.
Technology boosts logistics
efficiency
Ser vice excellence is also a reflex of the logistics
investments the company has under taken in recent years. In
May of last year, we inaugurated the hub in Itupeva (São Paulo),
a warehouse for the products that leave the company plants in
Cajamar and those manufactured by par tners installed in the
region - our main suppliers are located within a 40-kilometer
32
HOW WE GENERATE VALUE
“We are working on continuously
improving our customer service
culture, discussing how we relate
to customers and the impact our
activities and practices have on
satisfaction and loyalty both inside
and outside the company”
Josie Romero, vice president of Operations and Logistics
Service levels in Brazil (%)
2015
2014
2013
97
95.5
84
6.8
4.5
4.2
73
71
42
38
15
On-time
deliveries
Deliveries in up
to 48 hours
Customer
service index1
Average delivery
time (days)
1Index comprising 52 service indicators for consultants and the end consumer, such as registration, exchange and services. The methodology was
changed in 2014 to generate greater insight into impacts on the customer. We do not have a 2013 index covering the same scope.
radius of the facility. The hub supplies Natura distribution centers
in Brazil and in the International Operations. Close to Viracopos
airport and the São Paulo Rodoanel ring road, the facility enables
rapid connection with a number of key highways, the port of
Santos and the São Paulo distribution center (Natura’s largest,
which began operating at full capacity in the beginning of 2016).
A new link in the logistics chain, the hub is the most modern
of its kind in the Americas. It is highly automated, with technologies
that are in use in only two other facilities worldwide. Operated by
robots, products are stored both in boxes and pallets. The 35,000
m2 of built area comprises 90,000 pallet and 35,000 box positions.
The system is organized around triangulation between the
plants in Cajamar, the Itupeva warehouse and the São Paulo
distribution center, in a highly agile closed loop. Trailers equipped
with automatic platforms designed especially by Natura permit
loading and unloading in a question of minutes, halving the number
of trucks required for the logistics operations between the plants,
the hub and the São Paulo distribution center.
For the more distant distribution centers, such as Salvador
(Bahia), Jaboatão dos Guararapes (Pernambuco) and Castanhal
(Pará), the hub is able to ship cargo in bulk (without pallets, the
cartons are stacked and receive special protection). This means
these long distances may be covered using a third fewer truck
trailers: today two trailers transport the same volume of cargo as
three under the old system, representing a significant reduction in
CO2 emissions.
The new processes reduce inventories and improve
operating costs (estimated monthly savings in logistics costs are
R$ 1 million). Investments in the equipment and systems installed
at the Itupeva hub totaled R$ 73 million. “We are preparing the
company for the forthcoming growth in sales and are learning
how to manage inventories and logistics for the company’s
evolving requirements, including supplying the Natura Consultant
points of sale, the drugstores commercializing the Sou product
line and our own stores”, comments Angel Medeiros, director of
Logistics Innovation.
33
HOW WE GENERATE VALUE
In our processes
The measure of
sustainability
_
By mapping and disclosing
environmental externalities
throughout its value chain, Natura
takes a major step towards
building the new capitalism
The use of
biodiversity assets
in our products
is an incentive to
conserve forests
and promote
sustainable
stewardship
OVE R THE PAST 50 YEARS,
the wear on ecosystems has occurred more
rapidly than at any other time in world
history. Consumption of the Earth’s resources
has generated unprecedented advances in
prosperity for mankind, but the price has
been high: atmospheric concentrations of
greenhouse gases (GHG) are reaching very
dangerous levels, with the potential to raise
the planet’s average temperature between
4°C and 6°C by the end of the century,
which could be catastrophic.
Faced with this situation, companies
have a key role to play by reducing the
environmental degradation caused by their
activities and helping to contain the threat
to conditions for life on the planet. To be
able to plan this reduction more effectively,
corporations need to find ways to take
natural capital into account throughout
their business value chains. Having access to
reliable numbers makes it easier to reduce
negative impacts and to leverage positive
ones (for example, by innovating in materials
and production processes).
When a company is able to map its
environmental externalities and disclose
this information, it creates a degree of
transparency which is extremely important
for its stakeholders. Investors can take
decisions based on the environmental risks
and the opportunities for innovation a
company presents. Similarly, customers have
the chance to select products and services
based on the environmental footprint
the company discloses. In this regard, the
valuation of impacts generates the possibility
of modifying consumer preferences and
attracting investment to companies that are
engaged in building a new, more responsible
and more sustainable capitalism.
In 2015, Natura endeavored to
measure its impacts on the environment.
To better understand our current situation
and provide a basis for future decision
making, the company undertook a study to
calculate the financial cost of the business’s
impacts and the ultimate consequences of
these for society. The study was based on
factors such as GHG emissions, water, waste
and land use and occupation. This is known
as Environmental Profit and Loss or EP&L
Accounting. For some time, the company has
been implanting environmentally conscious
decisions, including the use of organic alcohol
in all of its production (alcohol is one of the
main ingredients in perfumery) and replacing
fossil-based ingredients with plant-based
substitutes (83% of our formulations come
from renewable sources).
The EP&L will drive learning that will
enable us to reexamine our innovation,
distribution and production processes,
among others. This in turn will ensure greater
quality in strategic decision making at Natura,
helping the company to achieve its 2050
Sustainability Vision.
The weight of emissions
GHG emissions represent the greatest
impact among all the factors measured and
are distributed along the length of the value
chain. As far back as 2007, aware of the
need to combat and prevent climate change,
the company created the Natura Carbon
Neutral Program to drive a significant ongoing
reduction in GHG emissions, from the
extraction of raw materials to the destination
of post-consumer packaging.
Natura is a Carbon Neutral company
– that is, it offsets all its emissions, taking
into account both its own processes and
others throughout the production chain.
This compensation involves the purchase
of carbon credits (investment in projects
promoting reforestation, waste treatment or
the substitution of fossil fuels with renewable
or more efficient ones). In parallel with
this offsetting, we will continue to pursue
significant reductions in our relative carbon
emissions throughout the value chain. Our
ambition is to achieve a 33% reduction in
relative carbon emissions by 2020 against base
year 2012.
The main positive highlight in the EP&L is
the biodiversity assets the company uses in its
products. They promote the conservation of
forests and sustainable stewardship practices,
which in turn contribute towards regulating
the climate, for example through controlling
atmospheric pollution and maintaining the
water balance. Other benefits are also made
clear in the EP&L statement, such as those
derived from the use of organic alcohol.
In 2013 alone, the positive value
generated by the company’s sustainable
practices was in excess of 900 thousand reais.
And EP&L accounting has also proven to be
a powerful internal management tool for our
business units.
34
HOW WE GENERATE VALUE
Innovations in
methodology
The valuation of externalities is a new
model applied by few companies in the
world. With support from the consultancy
PwC, Natura is the first company in Latin
America to conduct an in-depth EP&L
assessment of its businesses.
Since this is an emerging methodology,
a number of metrics still need to be
improved or adapted for different realities.
This is the case, for example, with the
impacts caused by the use of products
during showering and bathing, which
involves heating the water (normally done
using electricity) and the generation of
waste which frequently ends up not being
disposed of properly, polluting rivers and
oceans. We continue to work on measuring
this type of impact, so that our methods will
reflect all the environmental ramifications of
our operations.
The assessment of the impact
of biodiversity assets on land use and
occupation also required methodological
innovations. The inputs for this indicator
included factors such as the wealth of
species and vegetation coverage existent
before cultivation of the raw materials
used by Natura was initiated. From the
standpoint of preserving the forests, the
results have been positive. “When we
started buying inputs such as fruits and nuts,
we generated economic value for the local
communities and provided an incentive
for keeping the forest standing”, explains
Luciana Villa Nova, Sustainability manager
at Natura.
Global movement
We believe companies must go beyond
merely reducing or attenuating their impacts:
they need to drive the improvement of
the environment and the society around
them. Based on this understanding, we got
together with a group of organizations
and other global companies to develop
a protocol for the valuation of positive
and negative environmental impacts. The
Natural Capital Protocol is a movement
led by the World Business Council for
Sustainable Development (WBCSD)
comprising environmental organizations,
representatives from the academic world
and companies operating in different
Meeting with Natura shareholders: financial, social and environmental results
segments. It is sponsored by: the Gordon and
Betty Moore Foundation, the Swiss Ministry
of the Economy and the Dutch Ministry
of International Relations, by means of the
World Bank.
Natura and another nine companies
(including Kering, Roche, Nestlé, Shell
and Holcim) are conducting pilot tests
which will help to adapt the protocol for
application in different economic sectors.
Additionally, we are members of the B-Team,
another participant in the coalition for
the construction of the protocol, which
is striving to expand the concept of
corporate responsibility beyond financial
gains to encompass both negative and
positive contributions to the economy, the
environment and society.
We intend to share this learning with
other Brazilian companies. “We do not
want to restrict this knowledge to our
own business. Valuation is an extremely
new question. We would like to be able to
discuss the dilemmas and challenges involved
with a network of other companies”,
Natura’s director of Sustainability Marcelo
Alonso states.
In Brazil, our goal is to mobilize a
network of entrepreneurs to discuss what
we have learned from our first environmental
profit and loss assessment. Together with
other companies interested in this question, it
would be possible to drive improvements in
the metrics for our specific local context.
Factors such as the positive effects
of the sustainable stewardship of social
biodiversity are still difficult to calculate
in financial terms. It is also necessary to
take into account challenges such as waste
management in a local context when there
is no accurate information about the final
destination of packaging and products
– which can, for example impact water
resources. “We want to get the discussion
started in Brazil, which is where our main
operations are, but with time, also expand it
to our international operations”, Luciana Villa
Nova concludes.
In our Sustainability Vision, we
assumed the commitment of integrating
environmental and social effects into
Natura’s economic results by 2020.
Attributing a value to these non-financial
aspects will enable comparison with the
wealth that we produce and distribute and
represents a decisive step towards drafting
the actions that will bring us to an even
more ambitious target. By 2050, we intend
to be a company that generates a positive
total impact in all its dimensions of activity:
economic, environmental, social and cultural.
Thus, the next step will be the valuation
of the impacts and the benefits generated
by the business for the social development
of communities, incentives for employment
and enterprise, through the construction of a
SP&L (Social Profit and Loss) assessment for
the company.
35
HOW WE GENERATE VALUE
Social biodiversity
Valuing the
Amazon
_
Development in the region
must go beyond generating
income for families
We engage riverside
communities to
identify the real
impact on the region
FOR SOME 15 YEARS we
have been acquiring plant-based assets
from communities in the Amazon region.
This partnership involves approximately
2,000 families and is aimed at developing
sustainable production chains in a standing
forest economy – one in which the trees are
worth more alive than felled. Despite having
strengthened local leadership, generated work
and boosted family incomes, we realized
that this was not enough to impact social
development in the region at scale.
“The communities in the Amazon
face many challenges. This was why we felt
we needed to go further. To not just measure
how much income we generated for the
region, but to understand how we could truly
improve people’s quality of life”, says Renata
Puchala, Sustainability manager at Natura.
In 2015, we established an unprecedented
partnership. Together with the communities,
public partners, NGOs and local companies,
we developed the Community Social Progress
Index (IPS in the Portuguese acronym). This
was used to measure quality of life and well-
being in the riverside communities along the
Juruá River in Carauari (Amazonas). As the
basis for the index we used the principles
of the global Social Progress Index which is
applied in more than 150 countries. This index
was developed by Michael Porter and utilizes
52 social and environmental indicators.
The Communities Social Progress Index
influenced the activities of the Mid-Juruá
Territorial Development Forum – a multisector
body that fosters development in the region.
2015 saw some important achievements:
remodeling of an oilseed mill, driving a 25%
gain in efficiency, the construction of a pier
more than 1 km long to facilitate product
flow, as well as access to basic sanitation and
treated water for more than 50% of the
region’s families. In the education area, we
offered vocational programs, courses in forestry
and sustainable development, in addition to a
sustainable fishery stewardship project for the
pirarucu species.
Our activities in the Amazon also include
institutional partnerships for the donation of
computers, benefiting more than 600 families
(in Amapá, Amazonas, Pará and Rondônia).
Moreover, we provided support for the
Associação Regional das Casas Familiares
Rurais do Pará, which runs 30 community
schools in the state, providing secondary
technical education for 2,300 young people.
We also work with the Rede de Apoio à
Educação in 27 municipal districts in the
Baixo Tocantins region in northeastern Pará,
in partnership with the Instituto Natura –
whose programs to improve teaching quality
have impacted 2,340 schools in the area,
benefiting 476,000 students. These initiatives
are coordinated by the Amazônia Program,
created by Natura in 2011 with the objective
of promoting a new development model for
the region.
Surrounding
communities
Generating a positive impact for the
people living in the areas surrounding Natura
facilities is one of the directives in the 2050
Sustainability Vision. Currently, priority is being
given to the municipalities of Benevides (Pará)
and Cajamar (São Paulo), where we have
plants, as well as the Jaguara district in the city
of São Paulo, where the São Paulo distribution
center is located. In 2015, we established
partnerships with other companies, the local
communities, NGOs and civil society and
drafted a Local Development Plan for each of
these locations.
Among the main achievements, worthy
of note was social mobilization in the form
of movements like “Comunidade Viva” in
Jaguara, and “Inova Cajamar”. In the former,
improvements were made in public cultural and
leisure areas, with the revitalization of squares
and the organization of workshops; in the
latter, the focus was on improving the quality
of basic education for 18 schools and 6,500
students, as well as the creation of a Citizen
Observatory, based on the Sustainable Cities
program, which enables greater community
participation in public affairs. In Benevides, the
educational improvement projects involved 31
schools and 8,000 students. In partnership with
SENAI and SEBRAE, the company was involved
in programs to promote vocational training
and foster the development of local micro and
small companies.
36
HOW WE GENERATE VALUE
Our
version
of the HDI
_
Information gathering
system tracks indicators
on consultants’ health,
knowledge and standard
of living
Valéria Borsoni,
NC, Mara Menezes,
Relationship
Manager, and Nice
Soares, NCA: en
route to human
development
DOES WORKING AS A NATURA Consultant
make a difference to people’s human development? We
used this question as a star ting point to gain more in-depth
understanding about the influence our commercial model has
on improving quality of life for the NC network.
Inspired by Human Development Index (HDI)
methodology, we created a model to sur vey a series of data
and establish the current standards of living of the NCs and
monitor their evolution on an annual basis. This is in effect the
first corporate human development index in the world, tailored
in accordance with the reality at Natura.
“Because it is the company’s own indicator, the HDI-
NC assesses Natura’s social investment in the NCs and
their families. As such, the methodology not only measures
the results of our actions but also ser ves as a management
instrument, within a differentiated model of social action”,
explains Cida Franco, Relationship director.
The challenge with the HDI-NC was to create the company’s
knowledge in areas such as financial literacy, digital inclusion and
civic awareness. Use of money, knowing the annual inflation rate,
and patterns of computer and internet use were some of the
questions surveyed.
The first year was instituted as the baseline for monitoring
evolution. Between 2014 and 2015, we recorded 7.3% growth
in the development of the consultants, from 0.550 to 0.590.
Although it is impossible to compare the HDI-NC with the
national HDI because of methodological differences, it is
possible to draw some conclusions in comparison with
cer tain national indicators. The percentage of NCs who smoke
(around 4%), for example, is lower than the national average
of women smokers (9%). Understanding mathematical
calculations with percentages is a common difficulty for
beginning NCs, but as the consultant gains experience in the
activity, her dexterity grows (37% of the NCs have difficulties
with this type of calculation compared with two thirds of
women in the national average).
own information gathering system. Like the HDI for countries,
the Natura study takes three dimensions into account: health,
knowledge and standard of living. But in our case the information
was customized in accordance with the reality of the consultants.
In terms of knowledge, for example, instead of using traditional
metrics for schooling, we opted to assess the quality of the NCs’
The HDI-NC will be monitored on an annual basis and
will enable the company to produce and fine tune management
and corporate social investments intrinsically linked with the
business as a means of influencing and improving quality of life
for the NCs. Our target is to reach the top of the HDI-NC
scale, with a score of 1, between 2027 and 2032.
37
HOW WE GENERATE VALUE
Education
Transforming
the Brazilian
reality
_
For two decades, the
Believing is Seeing
line has been funding
improvements in teaching
quality at public shcools
OUR I NVOLVEM ENT with
education goes back to the 1990s, based
on Natura’s perception that it had a social
commitment beyond its business activities
and that it would be possible to engage a
large network in building a fairer and more
supportive society.
Thus, in 1995, the Natura Believing
aimed at enhancing public education. Like
Natura, the consultants forgo their profit
from the sale of these products and act
as promoters of the cause of education.
Consumers demonstrate their support by
acquiring the products. And Natura provides
support with its operating infrastructure,
managing and investing these funds.
is Seeing (Crer para Ver) product line was
created with the intention of mobilizing all
our employees, Natura Consultants (NCs)
and partners around the cause of education.
The income from the sale of these products
(such as returnable bags, exercise and
notebooks and pencils) is invested in projects
In 2010, the company took a further
key step with the creation of the Instituto
Natura, a not-for-profit public interest civil
society (Oscip in the Portuguese acronym),
with the goal of increasing its contribution to
quality public education in Brazil and in the
Latin American countries in which it operates.
The Instituto Natura assumed responsibility
for managing and investing the funds raised
from the sale of the Believing is Seeing line,
which in 2015 totaled a record of R$ 19.5
million in Brazil, and R$ 10.5 million in the
International Operations. In Brazil, more than
1.1 million consultants contributed to the
cause by selling at least one item from the
line during the course of the year.
Based on the vision of “creating a
foundation upon which people may develop
a learning community”, the Instituto Natura
believes in the transformational power of
education as the key to the development of
a more cohesive and less unequal society.
It values lifelong learning, believing that
we all learn, we all teach and we are all
responsible.
“The work the institute does helps to
strengthen the people and the organizations
involved in education. The aim is to
combine the strengths and potential of each
individual to form a large, collaborative
community capable of promoting more
effective transformational processes and
environments”, says David Saad, president of
the Instituto Natura. “This is the dream that
began 20 years ago with the Natura Believing
is Seeing line and continues at the core of the
Instituto Natura’s commitment today.”
38
HOW WE GENERATE VALUE
Students at the
Prof.ª Judith
Siqueira Weber
school in Potim
(São Paulo),
beneficiaries of
the Digital School
project. Below,
Believing is Seeing
products, that
generate funds in
support of Instituto
Natura actions
39
Believing is Seeing
line Funds 1
2015
2014
2013
19.5
18.8
17.1
10.5
6.7
4.8
Believing is Seeing line
funding in Brazil
(R$ million )
Believing is Seeing line
funding in the International
Operations (R$ million)
1Refers to income before income tax for the Natura Believing is Seeing Fund.
New steps, the
same direction
_
In 2015, the Instituto Natura reflected on its vision, initiatives and
projects based on its learning in five years of activities. During the
year, Pedro Villares migrated from the position of president to
chairman of the Instituto Natura Board of Directors. To assume
executive management and proceed with our dream of offering
children and young people an effective transformational education
characterized by social cohesion and equality, we invited David Saad, a
specialist with vast experience in this area. Further information about
these and other Instituto Natura highlights can be found at www.
institutonatura.org.br (only available in Portuguese).
HOW WE GENERATE VALUE
Natura Musical
All the tones
of Brazil
_
Established artists, new talents
and training and legacy
projects make up the repertoire
of ten years of support for
Brazilian music
Various trends in
evidence at the
Natura Musical
10th anniversary
celebration
NEY MATOGROSSO, Luiz
Melodia, Carlinhos Brown, Chico César, Elza
Soares, Nação Zumbi and Arnaldo Antunes
are some of the hundreds of artists receiving
support from the Natura Musical program,
which commemorated ten years of investing
in valuing Brazilian music. The celebration
took place in November 2015, in a special
edition of the Natura Musical Festival held
on Copacabana beach in Rio de Janeiro.
Sponsored artists, such as Emicida and
Tulipa Ruiz took their turns on the stage,
culminating in an historical presentation by
Gal Costa and Milton Nascimento, who had
not performed together for 30 years. This
was the festival’s fifth consecutive year, the
four previous ones having been held in Belo
Horizonte (Minas Gerais).
As has been the case since 2005, in
2015 the program supported new works –
for established artists and emerging talents –
and training and heritage projects.”The album
A Mulher do Fim do Mundo was an amazing
present the universe sent me. I am extremely
happy about everyone who took part in the
project, and I am very proud of the result”,
says Elza Soares about the work launched
with sponsorship from Natura Musical.
“Spending the last six years of my
life in Paraíba, the place where I was born
and lived until I was 20, heightened my
perception of the glaring contradictions
between the wealth of creativity and
the relative poverty of the means of
production”, said the singer and composer
Chico César. The result is this Estado de
Poesia, selected in the Natura Musical
National Tender – undoubtedly an
outstanding and successful case of innovation
in relations between private initiative and
musical production in Brazil. This drives the
reinvention of people, societies, ways of
making music, listening to music and loving.”
Natura Musical is preparing a number
of novelties for music fans for the coming
years. With inauguration scheduled for
2017, the Museu da Imagem e do Som
(MIS) in Copacabana, Rio de Janeiro,
will have a complete floor dedicated to
music sponsored by Natura Musical. The
auditorium, to be named after the Natura
program, will have programming devoted to
Brazilian music.
You can hear all the music and
find out more about Natura Musical at
www.naturamusical.com.br.
40
Sustainability Vision
Not initiated
At planning phase
Under implementation
In Execution
AMBITIONS
Brands and Products
Our Network
Dimension
2020 Ambition
2015 Performance
Status*
Dimension
2020 Ambition
2015 Performance
Status*
Packaging
Use at least 1% post-consumer
Natura used 2.9% post-consumer
Communities
To develop a strategy for the
Consolidation of the territorial
recycled material in the total mass
recycled material in the total mass of
of Natura Brazil packaging
its packaging
1.4%
2013
2020
10%
Achieved in 2015
17%
social biodiversity territories in the
development arrangement in the
Pan-Amazon region and for the
mid-Juruá region in partnership
communities around our main facilities
with other companies, communities,
in Brazil, based on dialogue and joint
NGOs and civil society, achieving
construction with local populations
significant progress in the areas of
In execution
Climate change
Reduce Natura brand relative
5.8% growth in relative GHG
and actors
greenhouse gas emissions
emissions. The indicator is directly
(scopes 1, 2 and 3) by 33%
linked with business performance;
however, the reduction compared
with 2012 was -1.4%
Social biodiversity
Reach R$ 1 billion in business
The cumulative volume of business
volume in the Pan-Amazon region
generated in the region corresponds
to R$ 752 million
0%
2012
2020
-33%
Achieved in 2015
4.2%
R$
millions
89
2010
2020
1,000
Achieved in 2015
73%
Waste
Collect and channel for recycling
Natura began a pilot initiative in
50% of the waste generated by
partnership with five cooperatives in
Natura product packaging in Brazil
Greater São Paulo. 306 metric tons of
(in t equivalent)
waste collected
In execution
Water
For the Natura brand in Brazil,
The study for the calculation of the
implement an impact reduction
water footprint throughout the value
and neutralization strategy based
chain was concluded
on measuring the water footprint
throughout the value chain
Supply chains
To ensure traceability of 100%
All the manufacturers in the 1st link of
of the inputs produced by direct
the raw material, packaging material
manufacturers (last link) by 2015
and finished product value chains
and implement a traceability
identified.
program for the other links in the
Natura brand value chain by 2020
At planning phase
In execution
education, infrastructure, sanitation
and production chains in the region.
Implementation of the digital inclusion
program in the Amazon region,
benefiting 600 families. Execution of
projects to improve education in the
Amazon, reaching more than 400,000
students
Management and Organization
Dimension
2020 Ambition
2015 Performance
Status*
Management
For the Natura brand, implement the
The valuation of environmental
model
valuation of social and environmental
externalities was undertaken for
externalities, taking into account
the first time in 2015, monetizing
the positive and negative impacts
the impacts of the business in areas
of the extended value chain (from
such as GHG emissions, water, waste
raw material extraction to product
and land use and occupation. The
Under
implementation
disposal)
calculation took into account the full
Natura product portfolio throughout
the value chain. In 2016, preparations
will begin for an unprecedented study
for the valuation of social impacts
Ethics and
transparency
For the Natura brand, implant full
The company undertook the
transparency in the provision of
collaborative design of the
information about products and the
architecture for communicating
development status of the company’s
sustainability, organizing product
Under
implementation
sustainability vision
information in accordance with the
consumer’s level of interest
Our Network
Dimension
2020 Ambition
2015 Performance
Status*
sustainability
comprising external specialists to
Board of Directors for the creation of
Governance of
Implant a Consulting Council
Strategic alignment with the Natura
Natura
Consultants
Promote interest in ongoing learning
The company developed and
and provide a broad educational offer
tested projects to improve the
that meets consultants’ needs
education of willing consultants for
implementation on a large scale
Under
implementation
Employees
To reach a 50% rate of leadership
During the year, the company
positions (director level and above)
reached a 25% rate of leadership
occupied by women for Natura
positions occupied by women.
The company reviewed its internal
processes for selecting, attracting
and developing women leaders
as of 2016
29%
50%
2013
2020
Achieved in 2015
-14%
assess the company’s progress and
a consulting network to support the
to further develop strategy
generation of creative and innovative
At planning phase
solutions and the formulation of
guidelines for the development of
company strategy
*Refers to the extent to which the ambition was achieved in 2015 in relation to 2020 and the base. year stipulated.
The full list of Natura’s 2020 ambitions and commitments may be consulted in the complete version of the Annual Report:
www.natura.com.br/relatorio-anual
41
Credits
_
Cor pora te Affairs
Marcelo Bicalho Behar
Institutional Communications Manager
Newton Branda
Coordination of the Annual Report
Fábio Peixoto and Thiago Freitas
Editorial project and art direction
Thiago Freitas
Copy a nd sustainability consultin g
Report Sustentabilidade
Editing
Álvaro Almeida (MTb 45.384/RS) and Michele Silva (MTb 11.829/RS)
Reporting
Renata Costa
Project and relationship management
Ana Souza
GRI Consulting
Victor Netto, Cristiane Garcia and Fabíola Nascimento
Tran sla tion to Englis h
Raymond Maddock
Pho tog raphy
Marlos Bakker, Marcos Suguio, Eduardo Delfim, João Avila, Andreas
Heiniger, Cacaio, Arnaldo Pappalardo, Milton Carelo, Touché and Acervo
Natura
Executive producer
Carol Gariani
Beauty
Hailton Hesse (Agência First)
Illus tr ation
A Barca Estúdio
Fina nce a nd Institutional Relatio ns
Financial information
Márcio Bologna, Marcel Goya, Enzo Russo and Leandro Grellet Galvão
Market relations
Fabio Cefaly and Luiz Palhares
Sus taina bility
Marcelo Alonso, Luciana Villa Nova, Renata Puchala, Keyvan Macedo,
Andreza Souza and Pedro Gattás
Print ing
Stilgraf
42
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92150
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Tel. +33 1 53 64 21 00