1 natura report #11 FULL GRI VERSION natura report # 11 2 1. OUR ESSENCE 3 Reason for Being 3 Vision 3 Beliefs 4 Culture Drivers 2. WHERE WE ARE 4. WHO WE WORK WITH 5 Message from the Chairmen of the Board 31 Relationship quality 7 Message from the Executive Committee 33 Ombudsman’s Offi ce 9 Natura 35 Employees 10 Highlights of the year 47 Consultants and NCAs 10 Awards and Recognitions 53 Consumers 12 Our market 56 Suppliers 12 Progress in Our Commitments 58 Suppliers’ communities 62 Surrounding communities 14 Governance 65 Shareholders 14 Board of Directors 67 Government 16 Executive Governance 19 Risk Management 19 Internal Audit 5. WHAT FOOTPRINT WE LEAVE 19 Senior Management Compensation 22 Natura Management System 74 Natura Value Chain 75 Generating Environmental Value 75 Carbon Neutral 82 Solid Waste management 3. WHAT WE AIM FOR 83 Water and effl uents 23 Strategy and Prospects 86 Generating Social Value 24 Infrastructure to support growth 86 Instituto Natura 24 Managing sustainability 87 Support and sponsorship 25 Priority topics 90 Generating Economic Value 25 Water 25 Education 26 Sustainable entrepreneurship 93 Financial Statements 26 Climate change 126 About this Report 27 Relationship quality 127 Global Compact 27 Solid waste 128 Assurance Declaration 28 Sociobiodiversity 130 Remissive Index 29 Innovating innovation 134 Credits natura report # 11 3 1. our essence reason for being Our Reason for Being is to create and sell products and services that promote well-being/being well. WELL-BEING is the harmonious and pleasant relationship of a person with one’s body. BEING WELL is the empathetic, successful, and gratifying relationship of a person with others, with nature and with the whole. vision Because of its corporate behavior, the quality of the relationships it establishes, and the quality of its products and services, Natura will be an international brand, identifi ed with the community of people who are committed to beliefs building a better world, based on Life is a chain of relationships. Nothing better relationships with themselves, in the universe exists alone. Everything is with others, with nature of which they interdependent. are part, and with the whole. We believe that valuing relationships is the foundation of an enormous human revolution in the search for peace, solidarity, and life in all of its manifestations. Continuously striving for improvement develops individuals, organizations, and society. Commitment to the truth is the route to perfecting the quality of relationships. The greater the diversity, the greater the wealth and vitality of the whole system. The search for beauty, which is the genuine aspiration of every human being, must be free of preconceived ideas and manipulation. The company, a living organism, is a dynamic set of relationships. Its value and longevity are connected to its ability to contribute to the evolution of society and its sustainable development. natura report # 11 4 culture drivers THE CULTURE DRIVERS WERE CREATED CONTINUOUS IMPROVEMENT BASED ON OUR ESSENCE AS A GUIDE FOR Improving always, evolving in every dimension: OUR CHOICES AND MINDSETS. THEY ARE material, emotional, intellectual and spiritual. LIKE TRACKS SHOWING WHAT WE NEED TO Striving continuously for self-knowledge, PAY SPECIAL ATTENTION TO IN OUR DAILY recognizing our talents and our limitations. ROUTINES. Creating an environment that promotes learning, continuous improvement and recognition of high performance. THE CREATION OF THESE DRIVERS WAS THE RESULT OF A PROCESS THAT INVOLVED THE DOING THINGS WELL COMPANY FOUNDERS, MEMBERS OF THE Insisting on doing everything simply, but with EXECUTIVE COMMITTEE AND THE LEAD- beauty, quality and care of details. ERSHIP TEAM. WE ALSO DREW ON REFLEC- Discipline to honor what has been agreed upon. TIONS FROM THE CULTURE DIALOGUES HELD WITH 150 EMPLOYEES FROM ALL LEV- INNOVATION ELS OF THE ADMINISTRATIVE, OPERATIONAL AND SALES FORCES IN 2009. Be entrepreneurial, taking the lead, doing what has never been done and assuming the risks. Continuously scrutinize the ways things are done THEY ARE: and striving to fi nd new ways to do them. SUSTAINABLE DEVELOPMENT COMMITMENT TO THE TRUTH Consistently deliver superior results and relevant Being authentic and true, honoring our value in the economic, social and environmental commitments with others and our owns. fi elds. Defending what we believe in and doing what Manage the short term, with a commitment to we say we will. build the company’s future. CARING RELATIONS PLEASURE AND JOY Working together is better. Being generous, open Face daily challenges with optimism, lightheartedly and empathetic with others, creating a climate of and in a good mood. trust based on relationship quality. Celebrate achievements, fueling the enthusiasm Recognize that others are different from us, and energy that encourage us to grow and listen without judging, respecting their opinions continue to do more and to do it better. and incorporating differences to fi nd the best Find satisfaction at work, affi nity with our purpose solution for the whole. in life, giving meaning to everything we do. natura report # 11 5 2. where we are 2.1message from the chairmen 1.1; 1.2 THE ETHICAL CHALLENGE OF OUR TIMES In 2011, we witnessed the confi rmation that our world will be unsustainable, if current trends of production, global consumption and socio-environmental imbalances continue. The wave of events in recent years says a lot: in 2006, the awareness of global warming risks caused by man came into being; two years later, we lived through the hardships of an economic crisis, now deepening in the European Union. Lastly, since 2010, we have watched with bewilderment the social convulsions of the Arab Spring in their many forms, but which have one thing in common: the quest for a fairer and equalitarian society. We believe that only a deep transformation based on ethics of life, in which new development logics and revigorated global governance prevail over and above the interests of religions, countries, economic groups, will be a source of hope for future generations and for man to continue existing on Earth. If on the one hand this scenario is troubling, on the other hand it reasserts our determination to make our best emotional and intellectual efforts for Natura to act increasingly as agent of necessary social change, always managed in accordance with the principles of sustainability, in the search for the best results – in an integrated manner – in the economic, social and environmental dimensions. This corporate behavior which is in harmony with society’s aspirations, means we simply must take Natura and its proposed values to new heights and frontiers. natura report # 11 6 Today, Brazil and Latina America, our main operating markets, are in a privileged position. Though not immune to the effects of a tougher international environment, they are less likely to be adversely affected by global upheavals. The economic rise of an important section of the population – with women playing a particularly prominent role – seems to have a wingspan that will be able to foster a long and promising cycle of development, albeit far from a sustainable development, fostering full social inclusion, broadening distribution of wealth and mitigating environmental impacts. The signifi cant investments of large companies in products for grooming, perfumery and cosmetics in Latin America are evidence of this much more favorable scenario. In the near future, Brazil will be the world’s second largest market in this industry. We began our message with an excerpt from the recently-published book by Chris- topher Meyer, Harvard University professor, who inspiringly describes the way in which we seek to carry on our business. We are very grateful for his generous interpretation, which simultaneously highlights our distinctive traits and encour- “Natura may be the ages us to take part in a new and more community-oriented, fair and inclusive most evolved example capitalist project. We believe that our path to success lies in the historical we’ve seen thus far of a search for continuous improvement and innovative solutions for current and company managing its world future dilemmas, learning the “zeitgeist” and projecting it into the future. In this in full color and maximizing new frame of mind, our greatest challenge will be to put together the new value added to its technologies with hearts attuned to the same cause. Therefore, we envisage the ecology.” possibility of expanding the transformation power of our relationship network. The ever greater exercise of our raison d’être, which is to foster well-being, will lead us to improve and deepen the ties which unite us to our consultants, collaborators, business partners and consumers. Energized by the dreams and by the quest for professional and personal achievements, we are convinced that this group is determined to foster values such as solidarity, creativity and altruism, with respect and reverence to life. We therefore emphasize our historical commitment to stand by the side of all those who want to participate in this urgent collective construction of humanity. Friendly greetings from ANTONIO LUIZ DA CUNHA SEABRA PEDRO LUIZ BARREIROS PASSOS GUILHERME PEIRÃO LEAL Co-Chairmen of the Board of Directors Christopher Meyer, “Standing on the Sun: How explosion of capitalism abroad will change business everywhere.” natura report # 11 7 2.2 message from the executive committee 1.1; 1.2 THE BASIS FOR THE FUTURE OF NATURA In the last fi ve years we have spurted profound changes at Natura. The Company practically doubled in size between 2007 and 2011, and our results prove the consistency of our strategy: the number of Consultants increased from 718 thousand to 1.4 million, boosting product orders from 9 million to a telling 17 million a year; Ebitda rose from R$ 700 million to R$ 1.4 billion, with net revenue increasing from R$ 3 billion to R$ 5 billion.