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Natura 2016 Annual Report 2016 Annual Report Natura 2016 Annual Report 2016 ANNUAL REPORT Contents 3 Introduction 4 Message from the founders 6 Message from the Executive Committee 8 We are Natura 8 Developments and Challenges 9 Map of Operations 11 Strategy 13 Integrated performance assessment 14 Business Model 19 International Operations 20 AESOP 22 Personnel Management 30 Corporate Governance 32 Risk management 35 Ethics and transparency 36 Our products and concepts 37 Innovation 39 Consumer safety 40 Natura multi-channel 41 Relationship selling 46 Digital channels 47 Natura in Retail 49 Our processes 50 Commitments to the future 54 The Amazon Program 61 Management of GHG emissions 64 Environmental accounting 64 Water management 66 Waste management 68 Relationship with suppliers 70 Developments in logistics 71 Local communities 73 The Natura Institute 75 Institutional marketing 77 About this report 80 GRI content summary 98 2050 Sustainability Vision 106 Appendices 107 Supplementary indicators 150 Letter of Assurance 2 2016 ANNUAL REPORT IntrodUction Communication focused on sharing The volume of information and data disclosed every year by Natura embodies our commitment to transparency. In this report alone, there are more than 150 indicators providing insight into the influence exerted by the different areas of our business. The 2016 Annual Report is part of Natura’s reporting process, which also includes a printed magazine, presenting the main highlights of the period covered, and the Management Report, published on February 23rd in the business newspaper Valor Econômico. Our Quarterly Performance Reports also serve to update the performance of the company’s main social and envi- ronmental indicators. The Natura 2016 Annual Report follows the guidelines established by the GRI (Global Reporting Initiative) for reporting sustainability performance, using the latest version, Standards, issued in 2016. Natura is a pioneer in the issuing of GRI-aligned reports – it was the first company in Latin America to adopt this practice, back in the year 2000. We also seek to be in line with the integrat- ed reporting principles set out by the IIRC (International Integrated Reporting Council). With each new issue, we strive to disclose our results in the clearest and most integrated way possible. For this reason, we have consolidated all indicators in this report. You should also pick up a copy of the 2016 Natura Report magazine. Written in true journalistic style, it highlights the main events of the year, illus- trating them with reports featuring some of the consultants that comprise our relationship network. Read more about this year’s developments in the next pages! Marcelo Bicalho Behar Corporate Affairs Director Learn more about the making of this report here. 3 2016 ANNUAL REPORT Message from THE foUnders Possibilities in liquid times Antonio Luiz da Cunha Seabra, Guilherme Peirão Leal and Pedro Luiz Barreiros Passos 102-14 Board OF Directors Uncertainty, and the insecurities it mitment that enables us to see the generates, are predominant features beauty in uncertainty. It offers us op- of the world in our times. Liquid times portunities for all kinds of innovation, – as the recently deceased Polish encompassing especially the social sociologist Zygmunt Bauman called realm. them – are characterized by a pro- Uncertainty also exercises a particu- cess of fragmentation of civilization lar power: it demands that each and and human life, which distances peo- every one of us – individuals and po- ple and countries. Universal fraternal litical, social, business, academic and feelings are weakened as distrust, cultural leaders – do their part. That individualism and egocentrism gain we participate in public life and in the weight. discussion about the future we want The overriding sensation is one of to build. Or that we be the change profound doubt about our individu- we want to see happen, as Mahat- al and collective destinations, which ma Gandhi or, more recently, Barack Antonio Luiz da Cunha Seabra provokes anxiety and anguish, a Obama put it. sense of frustration with politics and Companies, in turn, in defense of their grave tensions between nations. own interests, are able to and are Bleak scenarios evoke the reawaken- responsible for assuming the role of ing of nationalism, protectionist im- agents of social and environmental pulses, intolerance towards diversity transformation. They should under- and anything different, in addition to stand these two commitments as op- the risk of serious setbacks in terms portunities for disruptive innovation. of the environment and healthy, in- As discussed in the latest World Eco- clusive development. One of the is- nomic Forum in Davos, it is neces- sues that generates uncertainty on a sary to concretize the contribution global level is extreme social inequal- capitalism can make to reducing the ity, within countries and between pains caused by social inequality. them, an alarming situation for us all. We are part of this movement which, Guilherme Peirão Leal Given this panorama, it is necessary based on new paradigms, seeks to for us to seek the lights of our funda- generate development and prosper- mental principles and our origins in ity for all, especially those who have humanism and in respect for others. been left behind. Basic truths, such as awareness that we are all part of the chain of life on A NATURA the planet should fuel our thoughts Nourished by our experiences, beliefs and our resolve, and guide our ac- and knowledge, we are aware of the tions in the struggle for further ad- scale of the challenges we are fac- vances for mankind. ing. But we also know our vocation, We remain convinced that is only by competencies and qualities, which feeling and thinking systemically that have enabled us to build a company we will be able to commit to all the that has played a key social role in dimensions of life because of our love transforming the lives of hundreds of and respect for it. And it is this com- thousands of people over time. Mainly Pedro Luiz Barreiros Passos 4 2016 ANNUAL REPORT Board OF Directors by means of our Relationship Selling network. We experienced many transforma- tions during the course of 2016. Re- garding our main operation in Brazil, the planning which will enable us to improve our results from now on is clearly defined. In parallel, we intend to maintain the accelerated pace of growth in our International Opera- tions, identifying the best means of taking our value proposition to oth- er geographies. Here, particularly worthy of note is the performance of Aesop, the brand of Australian origin which is now an integral part of Natu- ra and is expanding globally. It is important to remember that 2016 was a year of transition also for Na- tura’s senior management: Roberto Giovanni Giovannelli Silvia Freire Dente da Silva Dias Lagnado Oliveira de Lima, whom we thank and wish all the best, concluded his term as CEO. The executive leadership of the company has now passed to João Paulo Ferreira, who initiates a new phase of his highly successful seven years with Natura. We are excited to have an experienced, cohesive group of high-performing leaders aligned with a future vision that has been es- tablished jointly. For our part, we con- tinue to engage in driving ever stron- ger governance for the company. Permanently aligned with our origins, at Natura we prioritize reverence for relations and systemic thinking, the foundations of our commitment to sustainability. It is this fundamental belief in the power of relations and empathy, and the wealth of diversity, Carla Schmitzberger Roberto de Oliveira Marques that guides us, strengthens us and il- luminates our journey into the future. And what is the future, if not the fruit of our actions today, in the present? Marcos de Barros Lisboa Plínio Villares Musetti 5 2016 ANNUAL REPORT Message from THE EXecUTIVE Committee From left to right: Agenor, Flavio, Josie, João Paulo, Robert, Lettiere, Andrea and Erasmo; in the back, Natura Relationship Man- agers gather during the 2017 Annual Meeting Prosperity, belonging and purpose João Paulo Ferreira, Chief Executive Officer, Agenor Leão, Andrea Alvares, Erasmo Toledo, Flavio Pesiguelo, José Roberto Lettiere, Josie Romero and Robert Chatwin 102-14 We are confident about the construc- personalized service that reinforces ation in Brazil and the exchange fluc- tion of the strategic foundations of their experience with our products, tuations throughout Latin America our new cycle of prosperity. A se- on the other, consultants will perceive ended up affecting Natura’s results. ries of advances in 2016 sustain our in Natura a growing environment Our consolidated net revenues to- confidence that we will be success- based on new forms of relationship taled R$ 7.9 billion, with Ebitda of R$ ful in turning our operation in Brazil with the company. 1.3 billion and net income of R$ 297 around. This will be done primarily We want to provide our 1.8 million million. The political and economic through the strategy of revitalizing consultants with more and more op- crisis in the country led to a reduction direct selling, our focus for 2017. We portunities for prosperity, sustained in spending on various categories of are launching a new value proposi- by the feeling of belonging to a com- cosmetics, fragrances and person- tion for our consultants which will en- munity united around the purpose al care products and the impover- able their professional development, of individual and collective enhance- ishment of the Brazilian consumers’ modernize their way of working and ment and the ideal of generating shopping basket. boost their earnings. If, on the one positive impacts in our society. Our International Operations also hand, our consumers receive more In 2016, the performance of our oper- faced a more complex business envi- 6 2016 ANNUAL REPORT João Paulo was one of the hosts of Natura’s 2017 Annual Meeting, which took place in the city of Atibaia, in São Paulo ronment.
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