natura annual report 2013

Transcription

natura annual report 2013
full version
GRI
Summary
Our Essence
03 Reason for Being
03 Vision
03 Beliefs
04 Message from the founders
05 Message from the Executive Committee
Profile
06 Who we are
08 Sustainability performance
10 Business model
12 Awards and recognitions
Strategy
15 Strategy and outlook
16 New Natura sustainability vision
Business conduct
18 Corporate governance
24 Risk management
30 Natura management system
31 Triple bottom line management
32 Engagement with government and society 35 Influence in public policy
Brands and Products
41 Innovation
45 Generating environmental value
46 Climate change
51 Energy
54 Social biodiversity
61 Waste
64 Water
68 Product life cycle
Relationship Network
71 Quality of relationships
74 Employees
94 Consultants and NCAs
101 Sustainable entrepreneurism
103 Consumers
108 Suppliers
112 Supplier communities
119 Surrounding communities
122 Shareholders
126 About the report
131 Global Compact
132 Remissive Index
145 Financial Statements
172 Assurance Declaration
174 Editorial Team
natura annual report 2013 / full GRI version
2
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 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
GRI G4-56
Because of its corporate behavior, the quality of
its relationships, and the quality of its products
and services, Natura is bound to become an
international brand, identified
with the community of people who are
committed to building a better world, based on
better relationships with themselves, with other
people, with the nature they are part of, and
with the whole.
Beliefs
GRI G4-56
Life is a chain of relationships.
Nothing in the universe stands alone. Everything is
interdependent.
Natura believes that valuing relationships is the
foundation of the great human revolution in the
search for peace, solidarity, and life in all of its
manifestations.
Continuously striving for improvement develops
individuals, organizations, and society.
Commitment to the truth is the route to enhance
quality of relationships.
The greater the individual diversity, the greater the
wealth and vitality of the whole system.
The search for beauty, a genuine aspiration of every
human being, should be free of preconceived ideas
and manipulation.
The company, a living organism, is a dynamic set of
relationships. Its value and longevity are connected
to its ability to contribute towards the evolution of
society and its sustainable development.
3
message from the founders
Commitment to that
which is essential
GRI G4-1/2
“The growth of equality demands something more than economic growth, even though it presupposes it.
It demands first of all ‘a transcendent vision of the person’... I am convinced that from such an openness to
the transcendent a new political and business mentality can take shape, one capable of guiding all economic
and financial activity within the horizon of an ethical approach which is truly humane. I ask you to ensure
that humanity is served by wealth and not ruled by it”.
Excerpt from Pope Francis’ message to the World Economic Forum, January 17, 2014.
In Brazil and worldwide, we are experiencing a growing desire
for change. Amidst the absence of global leaders capable of
offering viable alternatives to address the uncertainties our
society faces, the words and presence of Pope Francis are
emblematic. Irrespective of creed, the stance adopted by the
first Latin American pope rapidly attracted global attention
with its simplicity, its advocacy of essential issues and a quest for
common good. It is significant that his historical reminder to the
leaders of the world’s major economies that our civilization is
locked in a production model insensitive to fundamental societal
questions demanding responsible solutions should have come
from a spiritual leader.
Pope Francis’ unexpected and transformational strength
brings to mind the famous phrase of the French thinker
André Malraux: “The 21st century will be spiritual or will
not be”. Irrespective of the interpretations religiousness or
spirituality may inspire, it seems clear that a transcendent
vision of mankind is linked fundamentally with the renewal
of ethical principles. A much needed mindset that guides
individual, social, business and government actions in the light
of altruism. And that revives hope, driving an effective quest
for new, more humane and supportive forms of managing
public and private activities.
As an organization that has always been committed to
life, Natura identifies with this yearning for transformation,
enabling forms of development capable of addressing our
current economic, social and environmental challenges.
Our governance model has evolved, enabling us to face the
future with greater confidence. Our contribution is reflected
not only in our business conduct, but also in the concepts
behind our products. In this context, innovation has been, is
and will continue to be key to our strategy. The expression
of Natura’s identity, it drives evolution in every aspect of
the company’s activities. This is evident in the company’s
new research center in New York, complementing the
existing centers in Cajamar (São Paulo) and in the Amazon
region. Natura is also commemorating the first year of
the integration of the Australian brand Aesop, which has
blended perfectly into our culture, introducing new creative
approaches to the Natura universe and boosting our
potential to impact new audiences and geographies.
It has become increasingly evident that we have an enormous
opportunity to take our value proposition to new geographies.
The significant results and the recognition our operations have
gained in Latin America are encouraging, but we are aware that
our continued success will depend on the development of new
capabilities throughout the decade.
In Brazil, we undertook major investments to prepare
Natura for a further cycle of business evolution, with the
inauguration of new facilities in São Paulo and the Ecoparque,
an industrial park located in Pará, aimed at attracting
companies interested in developing sustainable businesses, as
well as fomenting local enterprise.
Based on our results and our promising initiatives in 2013,
we reaffirm our conviction that Natura will continue to seek
responses to the concerns which drive our commitment to well
being well. We wish to join forces with all those who share these
same ideals so we may build a world in which quality of life is
simply essential.
Antonio Luiz da Cunha Seabra
Pedro Luiz Barreiros Passos
Guilherme Peirão Leal
Founding partners
4
message from the executive committee
Ever
more Natura
GRI G4-1/2
Our results in 2013 strengthened our conviction that Natura
should extend its frontiers far beyond its current operations.
Our value proposition, based on promoting well being well,
on relationship selling and on business conduct aligned with
sustainable development, has more than shown its potential for
conquering new markets and consumers, be it in the countries
in which we already have a presence, be it in others. The
robust results in our Latin American operations reinforce this
perception. By the end of 2013, these accounted for 14% of
our business, growing at over 30% annually in recent years, and
now showing a significant increase in profitability. In Mexico, we
reached the landmark of 100 thousand consultants in January,
confirming the power of our brands in these markets.
In Brazil, 2013 was a year of recovery, with a slow start and
a resumption in growth from the second half. Increased
productivity in our network will be driven by growth in purchase
frequency and in the number of categories consumers acquire.
This will be supported by a series of initiatives implanted in
recent years: the redesign of the company’s production and
distribution capacity and investments in marketing and innovation
capacity, among other factors. Faced with ever growing
competition, we are confident we have laid the foundations
upon which our consultants will increase their business volume
with Natura. Here a fundamental element is the quality of the
service Natura provides, with new records in order fulfillment
and delivery times in 2013.
We ended 2013 with net revenues of R$ 7.01 billion, R$ 1.61
billion in Ebitda, and a net profit of R$ 842.6 million – results
which were obtained amidst a vigorous cycle of investment
in our operations, in our logistics model and, increasingly,
in information technology. In this respect, 2013 will also be
remembered for the birth of the Natura Network, employing
digital technologies and connectivity as levers for direct selling.
Tested successfully in São Paulo state, the Network will be
expanded to other regions in Brazil throughout 2014. This is one
of the first results of a strategy in which we envision a Natura
that serves consumers through different media and categories. A
Natura that extends beyond cosmetics, fragrances and hygiene
products, beyond the borders of Latin America, with brands
occupying spaces in distinct markets – as is the case with Aesop,
an Australian company acquired at the beginning of 2013 which
proposes a new dimension in urban beauty, operating in market
spaces which are new for us.
Similarly, Natura reaffirms the importance of sustainability
as a driver of innovation and new business. The company
retains its focus on a sustainable development model with
key targets, initiated in 2007 with the decision to reduce
greenhouse gas emissions by 33%, a landmark that was
reached in December 2013.
To capture new opportunities in the market and in its
relationship network, Natura implanted a new organizational
design and expanded the executive group, advances that
coincided with the best result ever in the organizational climate
survey since its inception in 1994.
Natura also recognizes that the transformations occurring in
society affect the world of work, accelerating the quest for
new forms of relationship between people and companies and
promoting an indispensable indispensible alignment between
societal zeitgeist and well being well. Even against this backdrop
of constant change, which by its very nature generates a high
degree of uncertainty, we believe that every day the company
is growing in the knowledge and in the competencies that that
will help it achieve its ambitions. We look forward to being
part of the germination of a new cycle of development in
which, paradoxically, the company will be substantially different
in the coming years in order that, above all, it may be ever
more Natura.
Alessandro Carlucci
President
5
profile
Who
we are
GRI G4-3/4/5/6/8/9/13
Since its foundation in 1969, Natura has been driven by its passion
for cosmetics, relationships and the ongoing promotion of well
being well, quality in relationships and sustainable development.The
business is based on a direct selling model, which currently involves
more than 1.6 million Natura consultants (NCs) in Brazil and in its
International Operations.
housing a new administrative unit and a modern distribution center,
responsible for deliveries to São Paulo state. With the opening of the
new DC, the Cajamar distribution center was deactivated. At the
beginning of 2014, we concluded expansion work on the Cajamar
manufacturing unit, where production of five new Sou and Tododia
brand product lines will be concentrated.
We also have approximately 7 thousand employees in Brazil and
in the International Operations (IOs), and partner with more than
5 thousand suppliers and outsourced suppliers (companies that
manufacture finished products in Natura’s name), as well as 32
supplier communities and 3,100 families, who extract the social
biodiversity ingredients used in our portfolio.
Company activities in Latin America are concentrated in Argentina
(where the regional office is based), Chile, Colombia, Mexico
and Peru. Each country has a distribution center supporting the
respective operation. The brand is also commercialized in Bolivia
through local distributors. The model used in France is different,
combining product sales with research in partnership with
institutions of reference.
Our head office is located in Cajamar (São Paulo), where we also
have three factories and our Global Innovation Center, recognized
as the largest cosmetics development laboratory in Latin America.
In Benevides (Pará), we have a soap factory, which at the beginning
of 2014 moved to the Ecoparque, a Natura-led industrial complex
which will enable us to expand production and attract other
companies interested in sustainable business development. Benevides
also hosts a Natura science and technology center. In Manaus
(Amazonas), the company maintains Nina (the Natura Amazônia
Innovation Center).
In 2013, Natura inaugurated a new innovation center in New
York (United States), designed to drive an increasingly global
innovation process. The year also saw the first anniversary of
the acquisition of Aesop, an Australian brand focused on the
premium cosmetics segment, with products commercialized
in Oceania, Asia, Europe and North America. The company
expects to open is first Aesop store in Brazil in 2014.
Management of Natura and Aesop remain independent, but the
economic-financial results of both companies are consolidated
in this report.
The company has four commercial offices, in Salvador (Bahia),
Alphaville (São Paulo), Rio de Janeiro (Rio de Janeiro) and Porto
Alegre (Rio Grande do Sul), and eight distribution centers in
the country. In 2013, Natura São Paulo (Nasp) was inaugurated,
Results
Total annual revenues
(in R$ MM)
Net Revenues IOs1
(in R$ MM)
2013
2013
7,010.3
+13%
p.a.
2009
4,242.1
Dividends
1,130.1
2013
+40%
p.a.
2009
292
Number of NCs
(in R$ per share)
(in 000s)
2013 1,656.5
1.99
+10%
p.a.
2009
1.37
Relative CO2 emissions
(kg CO2e/kg product)
2013
+12%
p.a.
2009
1,038.9
2.79
-6%
p.a.
2009
3.55
1. International Operations. The 2013 figure includes Aesop.
6
profile
Performance
The year saw the maintenance of the pace of expansion in our
International Operations and a resumption of growth in the
Brazilian market from the second half of 2013.
Aesop also returned robust results aligned with its 2013 strategic
plan. The number of new stores opened was 28. Currently,
Aesop has 80 stores in 10 countries.
The robust results in Brazil from July on were driven by
investments in boosting production and distribution capacity, in
marketing, in the launch of the Sou product line, as well as the
success of our strategy for special dates, among other factors.
These initiatives contributed to the recovery in sales and the
1.4% increase in the productivity rate of our consultants in the
country – in the fourth quarter alone, productivity grew by 6.2%.
In Brazil, net revenue totaled R$ 5,880.2 million, an increase of
4.8% over 2012.
In the consolidated figures for Brazil and the IOs, net revenues
increased by 10.5%, totaling R$ 7.01 billion. Ebitda (earnings
before interest, taxes, depreciation and amortization) was R$
1.61 billion, with net profit at R$ 842.6 million, a retraction of
3.6% compared with 2012.
Worthy of note in the year was the maintenance of the strong
growth rate in our International Operations. At the end of
2013, these accounted for 14.4% of sales, a record share since
expansion in Latin America was stepped up from 2010. Net
revenue for the group under consolidation, comprising Argentina,
Chile and Peru, grew 34.3% (in local currency), while the
operations being implanted – Mexico and Colombia – posted a
24.5% increase in net revenue.
Specifically regarding sustainability-related investments and
measures, total spending in 2013 was R$ 127.7 million. The
significant growth over the previous year was due to new
projects, such as the Sou line, classified under research into
new technologies, and other initiatives that were reassessed
and included in the company’s sustainability investment
matrix. GRI G4-EN31
We continue to increase value generation for Natura’s main
stakeholders, as shown in our business model on page 10
(see ahead).
GRI G4-EN31
Sustainability Investment Matrix 1
Socio-environmental projects and programs
Promoting dialog channels³
Education and training4
Research into sustainable technologies5
Management expenditures6
Certifications7
Clean technologies8
Wastewater treatment and solid waste disposal9
Unit
2
Total
R$MM
2011
2012
2013
8.2
2.0
21.3
0.4
32.6
0.1
0.6
5.7
9.2
1.5
19.1
0.6
37.6
0.2
0.1
5.0
17.3
2.4
14.4
1.2
60.0
0.1
23.9
8.5
70.9
73.2
127.7
1 In 2013, projects developed in the year and others aligned with the Natura Sustainability Investment Matrix but initiated in previous years were included. 2
This refers to spending and investment in projects and programs related to priority topics: social biodiversity, climate change, water and solid waste.The most
significant increase is due mainly to the inclusion of investment in sponsorship and associations for sustainability. Another increase was the development of new
projects for the Amazon region, focused on the company’s innovation strategy. 3 The increase in the amount was due to the inclusion of the Co-creating
Project in the category in 2013. 4 The reduction was due to cost optimization in training, principally in teaching materials, program modernization, and the
organization of virtual meetings etc. 5 The increase in investment was due to new research projects into sustainable technologies, developed in accordance
with company innovation strategy. 6 The increase was due to the 2013 inclusion of private social investment, recognition of NCs and NCAs, integrated
management, the NINA and the Radical Transparency projects, among others. 7 The reduction in investment in the ISO 9000 and ISO 14000 certification
processes was due to the fact that, given their level of maturity, Natura processes were audited internally, whereas in 2012 the audits were external. 8 The
increase was due mainly to the inclusion of investment in technologies for the development of the Sou line. 9 The increase in effluent treatment was due to
the growth in spending on transporting and treating wastewater externally, due to increased demand, the replacement of the filter membranes in the treatment
system and the purchase of drinking water for the Cajamar plant.The increased investment in waste disposal was caused by the startup of Nasp operations,
transportation costs for finished product waste (due to risk control requirements) and the increased volume of finished product waste from production losses.
7
profile
Sustainability
performance
See the company’s sustainability targets
for 2013 and respective results:
2013 Target
2013 Performance
WATER
Consume 0.39 liter of water/unit produced in Brazil.
NOT ACHIEVED
Natura consumed 0.40 liter of water/unit produced in Brazil.
EDUCATION
Colaboradores
ACHIEVED
Average of 83.2 hours training per employee, throughout
Natura achieved an average of 90.3 hours training per employee,
Natura.
beating the target by 9%.
Consultants and NCAs
ACHIEVED
Train 1,152 thousand consultants per topic in Brazil.
Natura trained 1,348,000 NCs per topic in Brazil.
Raise R$ 14 million from sale of Believing is Seeing
PARTIALLY ACHIEVED
products in Brazil and R$ 5.06 million in the International
Natura raised R$ 17.1 million in Brazil and R$ 4.8 million in the IOs.
Operations.
ACHIEVED
Reach 14% NC penetration in the Natura Brazil
We beat the target for the year by 18%, achieving 16.5%
Movement.
penetration.
Reach 14% consultant penetration in the Believing is
PARTIALLY ACHIEVED
Seeing program in Brazil and 18.9% in the International
We achieved 15.1% penetration in Brazil and 17.6% in the IOs.
Operations.
CLIMATE CHANGE
ACHIEVED
Reduce GHG emissions by 33% by 2013, based on the
By the end of 2013 relative GHG emissions had been reduced by
2006 inventory.
33.2%.
NOT ACHIEVED
Reach 5,511 tCO2e, reducing absolute scope 1 and 2
emissions by 12.4%.
Scope 1 and 2 emissions were 6,491 tCO2e, an increase of 5.7%.
Reach an eco-efficient packaging rate of 16.5%, including
refills.
QUALITY Of RELATIONSHIPS
Employees
Reach 31% loyalty for employees in Brazil.
Reach a 73% favorability rate in the Natura climate
survey.
ACHIEVED
The rate achieved was 21.5%, beating the target by 30%.
NOT ACHIEVED
Employee loyalty in Brazil was 30%.
ACHIEVED
We reached a 78% favorability rate throughout the company.
8
profile
2013 Target
2013 Performance
Record 25% loyalty among consultants in Brazil and
39.2% in the International Operations.
Reach 39% loyalty among NCAs in Brazil and 49.1% in
the IOs.
Consumer
NOT ACHIEVED
We reached 22.7% loyalty in Brazil and 38.1% in the IOs.
NOT ACHIEVED
We recorded 38.3% loyalty in Brazil and 47.4% in the IOs.
Reach 54% consumer loyalty in Brazil.
NOT ACHIEVED
We recorded 51.6% consumer loyalty in Brazil.
Suppliers
Reach 28% loyalty among Natura suppliers.
ACHIEVED
We achieved 29.7% loyalty among suppliers.
Supplier communities
Reach 28% loyalty among supplier communities.
Reach average score of 3.89 in BioQlicar.
ACHIEVED
We reached 28% loyalty among supplier communities.
NOT ACHIEVED
The average score in BioQlicar was 3.76.
WASTE
Generate 24.7 grams of waste/unit produced in Brazil.
ACHIEVED
We generated 21.7 grams of waste/unit produced in Brazil.
SOCIAL BIODIVERSITY
Amazon
Generate R$ 190 million in business volume in the
Amazon region, including Natura and partners.
Reach a rate of 13.2% consumption of inputs from
the Amazon, with 1.85%2 consisting exclusively of
biodiversity assets.
Distribute R$ 13.6 million in funds for supplier
communities.
ACHIEVED
The target was exceeded, with R$ 201.5 million in business
generated in the region.
PARTIALLY ACHIEVED
The rate was 13.4%, of which 1.82% were exclusively biodiversity
assets.
NOT ACHIEVED
Funding of R$ 11.2 million provided for supplier communities.
1 From 2014, Natura will no longer disclose annual commitments. These will be replaced with its 2020 ambitions, linked with the company’s 2020
Sustainability Vision (read more on page 16, Natura Sustainability Vision). 2 Target reformulated based on reevaluation of stocks of ingredients at our
suppliers.
9
Business
model
Our purpose of promoting well being
well guides the way in which the company
operates, its commercial model, product
and concept development, and the way it
relates to its stakeholders. There follows
how
Environmental
2011 20122013
Relative GHG gas emissions
3.12 2.992.79
(kg CO2e/kg product invoiced)1 2
Absolute GHG
gas emissions (000’s of metric t)2 265 280313
Water consumption (l/unit produced)0.40 0.40 0.40
Waste generation
(g/unit produced)
20 2622
value and
impacts
generated
a description of the main resources used,
Economic (R$ MM)
201120122013
natura adds value
operating differentials and value created.
Consolidated net revenue 5,591.46,345.7 7,010.3
Business conduct
Consolidated Ebitda 1,425.01,511,9 1,609.0
• Actions related to priority sustainability topConsolidated net profit
830.9874.4 842.6
ics: quality of relationships; climate change; so964.01,018.9 1,102.3
Internal cash generation3
cial biodiversity; solid waste; water; sustainable
Free cash generation
410.4878.8 378.1
enterprise; and education.
43.754.3 61.1
Daily share trading volume4
• Natura Management System, which incorNatura’s main
porates Natura’s main differentials into comResources for supplier
pany processes and routines.
communities
10.012.1 11.2
resources:
Business volume in Amazon region5 n/a 121.8 201.5
• economic:
Product concepts and
human
IO revenue as a percentage
innovation
• a publicly-traded company listed on capital:
9.011.614.4
of total revenue (%)6
BM&FBovespa, with 59.83% of company
• A view of innovation that encompasses
•
more
than
7
Wealth distribution (R$ million)10
shares held by the controlling group, thousand employall aspects of the business: product and
Shareholders7
763855 856
39.10% outstanding and 1.07% held by ees: Brazil (80%),
concept development, commercial model
managers and the treasury.
and quest for new businesses.
Consultants
2,9063,211 3,390
Argentina, Chile, Peru,
• strong cash generation and low Mexico,
• Open innovation platform with a network
Colombia,
Employees
634803 917
net indebtedness, corresponding France and New York*.
of around 180 partners.
Suppliers
4,3634,837 5,425
to 0.73 times Ebitda.
• Research and development centers in
Government
1,4721,743 1,804
• net revenue of 7.01 billion intellectual
Cajamar (São Paulo) and Benevides (Pará),
(+10.5% compared with capital:
Total
10,13811,449 12,392
knowledge center in Manaus (Amazonas)
BUSINESS
• innovation rate of 63%
2012).
and an innovation center in New York
CONDUCT
(USA).
• Capex of R$ 553.9 (share in sales of products
oriented to sustainable
launched within last two years.
development
Social
2011 20122013
million.
• R$ 181 million invested in inValue
Climate survey –
novation (3% of net revenue).
Relationship network
70 7278
Employee Favorability8
• NC and NCA development programs,
19 2423
NC Loyalty Brazil9
our relationships:
ranging from digital inclusion to sustain24 4038
NCA Loyalty Brazil9
• network of more than 1.6
able entrepreneurship in relationship
million NCs in Brazil, other
27 2330
Supplier Loyalty Brazil9
networks.
Latin American countries and
66 5152
Consumer Loyalty Brazil9
• Company-developed relationship
France.
and benefit sharing policy with comBelieving is Seeing revenue
• 100 million consumers**.
munities supplying social biodiverBrazil (R$ MM)
8.4 12.8 17.1
• almost 5 thousand supplisity ingredients.
ers.
• Leadership development pro• 32 communities and
Others
20112012 2013
gram completed by 57% of com3,100 families (expany
managers.
Number of NCs 1,4211,573 1,657
tracting social bio• Supplier development program
Innovation Rate 64.867.2 63.4
diversity
inputs).
based
on
environmental,
social
• communities surEmployee
and financial criteria with trackrounding
our
Training (hrs/empl.)
8588 90
ing
of
indicators
such
as
CO
2
operations.
Overall evaluation of brand
emissions, water consumption
7379 78
image in Brazil survey10
and investments in employee
education.
• infrastructure:
proposition
• Eight distribution
essence
centers in Brazil.
• Factories in Cajamar
(São Paulo) and Benevides (Pará), as well
PRODUCTS
as third-party producRELATIONSHIP AND CONCEPTS
tion in Brazil, Argentina,
innovators who
NETWORK
Mexico and Colombia.
promote well
through which we
• The company also owns
being well
commercialize
the Australian brand Aesop,
our products
commercialized in Oceania,
Asia, Europe and North America.
• environmental
resources: • biodiversity inputs, an
innovation platform for Natura products and
a major brand differential.
• water, used in the production process and in
product use and disposal by the consumer.
GRI G4-EC1
10
profile
Notes (Business model)
Market context
Does not include Aesop.
Estimated for Brazil based on indicator for penetration of Brazilian
households.
Our sector remains competitive in Brazil, having grown 8.1%
between January and October 2013, according to Sipatesp/
Abihpec. Less sensitive to economic fluctuations, the sector is
more associated with consumers’ disposable income, which
continues to grow, but at a slower pace than in previous years.
*
**
1 CO2e (or CO2 equivalent): measure used to express greenhouse
gas emissions, based on each one’s global warming potential. The 2012
result was restated due to changes in the Brazilian electrical energy
emission factor.
2 Includes GHG Protocol scopes 1, 2 and 3.
3 It represents operating cash generation before the effects of changes
in working capital and Capex.
4 Source: Bloomberg
5 Considers Natura and partners.
6 Including Aesop, the share of the IOs in 2013 was 16.1%
7 The amounts represent the dividends and interest on own equity
effectively paid out to shareholders.
8 Climate survey: Hay Group
9 Loyalty survey: Instituto Ipsos.
10 Brand Essence Survey: Ipsos Institute
During the year, Natura’s market share in Brazil saw a retraction
of 1.2 p.p. up to October, with a trend towards recovery
in the second half of the year. The loss in market share was
concentrated in cosmetics, with maintenance of share in the
personal hygiene categories, driven mainly by the launch of the
Sou sub-brand. Results for the last two months of the year have
not yet been released.
In Latin America, the market continues to grow at rates above
the global average. Natura, with growth exceeding 30% per year,
continues to gain share and brand preference in all the countries
in which it operates.
The company is also the leader in the direct sales segment in
Brazil, the fourth largest market worldwide, accounting for 9%
of global door-to-door sales volume. According to ABEVD, the
Brazilian direct sales association, the model grew 5.9% in the
country during the first half of 2013. In the other countries
in Latin America, the direct sales model is at different levels
of maturity, with average growth in our network of 24% per
year since 2009, a demonstration of adherence to our value
proposition.
11
profile
Awards and
recognitions in 2013
Yet again, our commitment to sustainable development and the
way we run our business were recognized in numerous awards
and rankings in Brazil and abroad during the period.
In 2013, we were elected one of the most ethical companies in the
world in the Ethisphere World’s Most Ethical Company award, a
recognition that was repeated in the 2014 ranking, released in March.
Regarding innovation capacity, Forbes magazine once again
considered Natura one of the ten most innovative companies
in the world. We also came in first place in the large company
category in the Finep Innovation Award.
In Brazil, Natura was recognized as the most sustainable
company in the consumer goods sector by Exame magazine’s
Exame Sustainability Guide. Company president Alessandro
Carlucci was elected the 6th most admired leader in the country
in the Most Admired Companies in Brazil ranking published by
the magazine Carta Capital.
The main recognitions in 2013 are listed in the table below.
Communication
Recognition
Organization
Award category
2013
Aberje Award
Brazilian business
communication association
(Aberje)
Press Communication and Relations category
with 5 Senses Dinner – North and Northeast
Region
1st
Recognition
Organization
Award category
2013
The Best - Dinheiro
Isto É Dinheiro magazine
Agência Estado Companies
Ranking
Agência Estado (Estado group)
and Economática
Valor 1000
Valor Econômico Newspaper
Finance
Best company in the Pharmaceutical, Hygiene
1st
and Cleaning sector
Overall ranking of the ten best companies listed nd
2
on Bovespa
Best Pharmaceutical and Cosmetics Company
2nd
Overall ranking
54th
Award category
2013
Global
Recognition
Organization
Alessandro Carlucci was recognized as the
best CEO of the year in the Best Supplier
Engagement category, with the case “TBL
strategic sourcing”
Health and Beauty category with the product
Natura Humor
Responsible Business Awards
Ethical Corporation
The WorldStar Packaging Awards
WorldStar Packaging
Top 50 Cosmetics Brands 2013
Brand Finance
Overall ranking
World’s Most Ethical Companies
EthiSphere
One of the most ethical companies in the world
in the Health and Beauty category, and the only Brazilian company in the ranking.
AméricaEconomia Magazine
Overall ranking
185th
Direct Selling News
Global ranking of Biggest Direct Selling companies
5th
The 500 Biggest Companies in
Latin America
DSN Global 100: The Top Direct
Selling Companies in the World
1st
–
20th
12
profile
The Boston Consulting Group
Natura is one of the 13 Brazilian companies in
the ranking
-
Organization
Award category
2013
Apertura Magazine
Overall ranking
24th
Image Ranking – The 100 Best –
Argentina
Forbes magazine
The most innovative companies in the world
(Natura is the only Brazilian company in the
ranking)
10th
IF Design Award
IF Design
Hair and body care category / Vôvó and Sou
1st
Global 100 Most Sustainable
Corporations in the World
Corporate Knights Inc
Overall ranking
2nd
Organization
Award category
2013
BCG Global Challenger
Global
Recognition
Image Ranking – The 100 Best –
Argentina
Institucional
Recognition
Beleza Brasil
The Most Admired Companies in
Brazil
Abihpec
Carta Capital magazine
Company of the Year: The Amazônia Program
Company: Natura Internationalization
Skin/body care: Sou moisturizer
Skin/facial care: Natura Chronos 70+
Soaps category: Natura Ekos line of special
refreshing soaps (Ekos Communities)
Most admired leader in the country –
Alessandro Carlucci
Most admired company in the Hygiene,
Cosmetics and Perfumery sector
Most admired company in Brazil 2013
Most admired company in the Cosmetics,
Hygiene and Cleaning category
Best business reputation; Alessandro Carlucci
was recognized as one of the leaders with the
best reputation
1st
6th
1st
1st
DCI – Companies of the Year
DCI – Diário do Comércio
newspaper
Business Reputation Ranking
Exame magazine
Biggest and Best
Exame magazine
Best Consumer Goods sector company
8th
National Innovation Award
CNI
Business Model Category with the Triple
Bottom Line Strategic Sourcing project
1st
Finep Innovation Award
Finep
Large Company
1st
Organization
Award category
2013
15th
1st
1st
Brand
Recognition
Ranking of the 100 Most Valuable
Brands in Brazil
The Most Valuable Brands in
Brazil
Brand Finance Brasil
Overall ranking
BrandAnalytics, Millward Brown
and IstoÉ Dinheiro magazine
Most Valuable Brands
Trustworthy Brands
Seleções magazine
Ranking of the 50 Most Valuable
Latin Brands
Brandz, WPP and Millward
Brown
Padrão Group and Consumidor
Moderno magazine
The most aware brands in Brazil
6th
Skin creams
1st
Socially responsible brand
1st
Overall ranking
12th
The most aware brand in Brazil
1st
13
profile
Top of Mind
Datafolha and Folha de S.Paulo
Environmental preservation
1st
Award category
2013
Marketing, product and packaging
Recognition
ABRE Brazilian Packaging Award
Organization
Brazilian Packaging Association
(Abre)
Sustainability and Packaging Cosmetics and
Personal Care – Sou
Perfume packaging/Natura Una DeoParfum and
product family/Natura Aquarela
Structural design/form – Sou
1st
2nd
2nd
Sustainability /Natura Plant and Graphic Design rd
3
/Natura Plant
Human Resources
Recognition
Organization
Award category
2013
Best Companies for Leadership
– Brazil
Hay Group
Overall ranking
5th
Executives’ Dream Company
DMRH e Nextview People
Overall ranking
2nd
Recognition
Organization
Award category
2013
Best in socio-environmental sustainability
1st
IR Magazine BrazilAwards
IR Magazine, PR Newswire, RI
magazine and Brazilian Investor
Relations Institute (Ibri)
Best companies for shareholders
Capital Aberto
Distinction in Non-cyclical Consumption sector
prize
Companies with assets between R$ 5 billion
and R$ 15 billion
2nd
Recognition
Organization
Award category
2013
Época Green Companies
Época Negócios magazine
Natura is recognized as one of the 20
companies with the best environmental
practices
-
Época 360º Business Annual
Época Negócios magazine,
Fundação Dom Cabral, Aberje
and Economática
Innovation in the Hygiene and Beauty
1st
Exame Sustainability Guide
Exame magazine
The Most Sustainable Company in the
consumer goods sector
1st
Ranking of the Most Sustainable
Companies according to the
Media
Mídia B and Portal Imprensa
Overall ranking
1st
Investor Relations
Sustainability
14
strategy
Strategy and
outlook
Natura has undergone major transformation in recent years.
We finalized an important cycle of capacity building and
investment in logistics infrastructure which resulted in a
significant increase in service quality for NCs and the reduction
of order delivery times from 5.1 to 4.5 days, with 35% of
orders delivered in up to 48 hours.
to the evolution and sustainable development of society, Natura
understands that it needs to do even more.
This concerted effort also involved the new administrative
and distribution center in São Paulo (São Paulo), the
Ecoparque industrial complex in Benevides (Pará),
inaugurated in March 2014, and expanded production
capacity in Cajamar (São Paulo).
This new vision expresses Natura’s wish to go beyond
simply reducing or offsetting the effects of its activities on the
environment. The intention is to ensure the company generates a
positive impact on society and on the planet.
This transformation prepares us to strengthen the business and
meet the demands of the Brazilian market, both in the short
term, in function of growing competition, as well as in the future.
For Brazil, the company expects to expand the operation
and maintain its market share based on increased consultant
productivity, which will require further improvements in
service levels, product and concept innovation, segmentation
of relations with NCs and consumers and the evolution of the
commercial model.
The strategy to accelerate growth includes the introduction of
new product categories from 2014, expanding the well being
well proposition and opening new channels to reach consumers,
offering them ever greater satisfaction through the ongoing
differentiation of our brand.
For this reason, we have developed a new vision of sustainability
for our businesses, defining where we want to get to and what
kind of impact we seek to generate in the coming decades.
The vision is based on internal analysis, the review of global
trends in sustainability and numerous dialogs with Natura
stakeholders over recent years.
Organized in three pillars (Our Brands and Products, Our
Network and Our Management and Organization), the vision sets
forth guidelines for the construction of positive impacts in 2050.
It also includes public ambitions for 2020, which will challenge the
company and provide a roadmap for the journey (see below).
From the launch of this strategy in 2014, we will engage our
relationship network in a process of ongoing transparent dialog,
essential for managing and constantly driving improvement
throughout the company, as well as for the evolution of the
materiality matrix based on the strategic choices made.
One example is the Natura Network, which permits NCs to sell
products via their internet pages. With greater information and
productivity, the objective is to leverage sales via relationships –
the company’s major asset. The project was tested in two regions
last year and expansion will begin in 2014.
In the quest for new geographies, we have obtained strong
growth in our International Operations over recent years.
Centered on Latin America, these units grew on average over
30%. To maintain these levels, we continue to focus on the
NC network, which already totals 366,5oo consultants. This
will enable us to continue to build the brand with ongoing
enhancement of service levels and profitability. From 2013,
Natura also included the Australian-based Aesop operation.
However, to ensure the business continues to grow in an ever
more sustainable manner, allied with the belief that the value and
longevity of a company are linked with its capacity to contribute
15
strategy
Natura
Sustainability Vision
We will generate positive social, environmental and economic impacts, delivering
value for our entire relationship network, through all our businesses and brands and in
all the geographies in which we operate, by means of our products, services and sales
channels.
The expression of our brands will drive the emergence of new values and the behaviors necessary to build
a more sustainable world; the brands will be a reference in cutting edge innovation based on sustainable
technologies.
We will work through an eco-effective1 production and distribution model focused on local development and the
generation of positive socio-environmental value throughout our value chain.
We will make a positive contribution to the human development of our relationship network and will foment
entrepreneurship through collaborative platforms.
We will integrate Triple Bottom Line (TBL)2 management into all company processes, with innovative, leading
edge business practices that inspire others, making Natura a role model in business conduct.
Ambitions for 2020
Our Brands and Products
Formulation
Waste
> 30% of Natura’s inputs in value will come from the Pan
Amazonian region
>the company will implant a reverse logistics system that
enables the collection of 50% of the waste generated by its
packaging (in metric tons equivalent)
Packaging
Social biodiversity
>product packaging will be at least 75% recyclable*
>reach 10 thousand families in the Pan-Amazonian production
chains
>reach a business volume4 of R$ 1 billion in the Amazon (from
2010 to 2020)
>there will be at least 10% post-consumption recycled material
in the total mass of our packaging
>40% of the Natura units invoiced will have eco-efficient packs3
Carbon
>the company will reduce relative carbon emissions by 33%
(2020 x 2012)
Water
>implement a strategy to reduce and neutralize the impact on
water consumption based on measuring the company’s water
footprint throughout the value chain
Energy
>implement a strategy to increase consumption of renewable
energy
16
strategy
Our Network
Our Management and
Organization
Consultants
>increase NC and NCA real average income significantly*
>stimulate interest in ongoing learning and provide a broad
educational offering that meets the needs of this stakeholder
group
>create an indicator to measure the human development
of Natura consultants and build a strategy to improve this
significantly
Employees
>have women occupying 50% of leadership positions (director
level and above)
>have a work force in which 8% have some kind of disability
>leverage employee potential for achievement and enterprise
through engagement in company culture
Community
>evolve community human development indices and build a
plan to bring about significant improvements in this reality
>develop a strategy for the social biodiversity territories in
the Pan-Amazonian region and the communities surrounding
our main operations by means of dialog and collaborative
construction with local populations and actors
Suppliers
>ensure the traceability of 100% of the inputs produced by
direct manufacturers (last link in the manufacturing chain) by
2015, and implement a traceability5 program for the remaining
links in the chain by 2020
>implement the valuation of socio-environmental externalities,
considering the positive and negative impacts of our entire
production chain to drive improvement in TBL management
>institutionalize a governance model with external engagement,
ensuring our stakeholders have a permanent voice in the
evolution of management and strategy
>support public discussion and debate of questions that are
important for the common good of society and its sustainable
development, driving solutions and alternatives in the markets
in which we operate
>implement radical transparency in the supply of product
information and in the implantation and evolution of the
Sustainability Vision
1 Eco-effectiveness is an approach aimed not only at minimizing
environmental impact but also seeking to reuse all the materials
consumed in manufacturing a product in its own production process.
This methodology addresses not only environmental impacts, but also
social and economic impacts linked with the value chain.
2 The Triple Bottom Line (TBL) concept was created by John Elkington
in 1994. It represents the expansion of the traditional business model
to a new one which takes a company’s environmental and social
performance into account as well as its financial indicators.
3 Eco-efficient packs: for Natura, eco-efficient packs are those that
represent a reduction of at least 50% in weight compared with a
similar regular pack; or which consist of 50% post-consumption
recycled material and/or renewable material, as long as there is no
increase in mass.
4 Business volume in the Amazon region: these are resources employed
by Natura in the Amazon region in local community development
(benefit sharing, image rights, training), institutional articulation (support
and sponsorship, media, institutional reinforcement), purchase of raw
materials produced in the region, investments in scientific, technological,
innovation projects, local infrastructure for production chains and
environmental projects (carbon compensation).
5 Traceability plan with scope to be defined.
* The ambitions were corrected and updated in August 2014.
17
business conduct
CORPORATE
GOVERNANCE
It is our ambition to consolidate an increasingly representative,
transparent corporate governance system aligned with best
market practice. A publicly traded company since 2004, Natura
has a historic commitment to best governance practice,
initiated 16 years ago when the company voluntarily instituted
its Board of Directors, six years before going public. GRI G4-7
We are in BM&FBovespa’s Novo Mercado, a special listing
of publicly traded companies with the highest levels
of corporate governance, as well as being part of the
Company Circle of Latin American Corporate Governance,
a group of Latin American companies selected by the
World Bank’s International Finance Corporation for their
governance practices.
In 2013, we took another step towards the professionalization
and institutionalization of the Board of Directors, substituting
the co-chairmen model, exercised historically by the
controlling shareholders, for one chaired by a professional
external board member with intense dedication to the
function. Elected in the Annual General Meeting, Plínio Villares
Musetti has been a Natura Board member since 2012. Prior to
this, he was the president of Elevadores Atlas Schindler and of
Satipel Industrial, a partner at JP Morgan Partners, and served
on the boards of several publicly traded companies in Brazil
and abroad. GRI G4-39
Antônio Luiz Seabra, Guilherme Peirão Leal and Pedro Passos,
our founders and controlling shareholders, remain on the
board. Their focus now, however, is on overseeing the evolution
of the organization, with support for the development of new
executive leaders, aimed at consolidating a vibrant corporate
culture that will perpetuate the company’s values and inspire its
strategic vision.
The Natura Board of Directors has nine members. In addition
to the three representatives of the controlling group, there
are six external members, three of whom are independent,
ensuring balance and transparency in strategic decision
making. None of them hold executive positions at Natura.
GRI G4-34/38/40
The nomination of these members is based on their
qualifications, their executive experience, and identification with
Natura’s principles of business conduct, as well as an absence
of conflicts of interest. The mandate is for one year, renewable
upon approval by the General Meeting. GRI G4–34/38/40
In addition to the governance practices in place, members of
the Board of Directors do not vote on an issue when a conflict
of interest is identified. GRI G4-41
During 2013, the board met seven times, with two of the
meetings taking place outside of São Paulo, as part of the
strategy to forge closer links between board members and
company managers. One meeting was held in Porto Alegre
(RS) and the other in Bogotá (Colombia). These moments are
important for driving team integration, furthering knowledge of
each operation and fostering the motivation and participation
of leaders. GRI G4-43
We also maintained our commitment to developing closer
relations with shareholders, in particular minority ones. In the
Ordinary General Meeting and Extraordinary General Meeting
held in April 2013, some 450 people were present at Cajamar
(São Paulo). These investors were able to watch a broadcast of
the meetings held in the Natura office in Itapecerica da Serra
(São Paulo) and talk to the founders and senior managers
of the company. In parallel, a public meeting was organized
through Apimec-SP (Association of capital market analysts and
investment professionals), with the participation of guests and
market analysts. GRI G4-49
A permanent channel through which shareholders may
dialog and address questions to the company is the
Investor Relations team, which deals with both institutional
and individual investors. During the ordinary and
extraordinary general meetings a spot is reserved for a
question and answer session with the Natura controllers,
during which shareholders may make comments and
criticisms and ask questions (read more on page 122,
Shareholders). GRI G4-49/50
More information on the Natura board members and senior
executives at http://natura.infoinvest.com.br/.
18
business conduct
Members of the
Board of Directors
PLÍNIO VILLARES MUSETTI
chairman of the Board of Directors
> Participants: Marcos de Barros Lisboa (president), Luiz Ernesto
Gemignani and Roberto Oliveira de Lima
Members:
> Frequency of meetings: monthly (eight meetings in 2013)
ANTONIO LUIZ DA CUNHA SEABRA
People and Organization Committee: this is responsible for
supporting the board in decisions related to Human Resources
strategies, policies and rules for organizational and people
development, planning, executive compensation and benefits,
as well as monitoring and overseeing the Natura Management
System.
GUILHERME PEIRÃO LEAL
PEDRO LUIZ BARREIROS PASSOS
MARCOS DE BARROS LISBOA
JULIO MOURA NETO
LUIZ ERNESTO GEMIGNANI
RAUL GABRIEL BEER ROTH
ROBERTO OLIVEIRA DE LIMA
Support committees GRI G4-34/37/38/49
To support its decisions, the board is assisted by four
committees, which meet at pre-defined intervals to discuss and
study proposals and make recommendations to the board. Good
practices include participation of only external members on the
Audit Committee, rotation of the members on the People and
Strategic committees and participation of the founders on the
Corporate Governance committee.
THE COMMITTEES AND THEIR
FUNCTIONS GRI G4-34/38/45
Audit, Risk Management and Finance Committee: its mission
is to ensure the operation of internal and external audit
processes, risk management mechanisms and controls, and
the consistency of financial policies with strategic guidelines
and the risk profile of the business. The internal audit area
reports to this committee and is responsible for recommending
which external auditors should be contracted. The group is
supported by two external consultants who are specialists in
risk management and accounting.
> Participants: Luiz Ernesto Gemignani (president), Julio Moura
Neto, Fátima Raimondi, Roberto Oliveira de Lima and Raul
Gabriel Beer Roth
> Frequency of meetings: monthly (ten meetings in 2013)
Strategic Committee: the committee monitors and oversees
corporate strategy in line with directives approved by the board
of directors; it is also responsible for building an international
expansion plan. Other attributions are the dissemination of
company concepts, values and beliefs and ensuring the longevity
of the company.
> Participants: Plínio Villares Musetti (presidente), Luiz Ernesto
Gemignani, Marcos de Barros Lisboa and Roberto Oliveira da Lima
> Frequency of meetings: monthly (ten meetings in 2013)
Corporate Governance Committee: this is responsible for
monitoring the operation of the company’s entire corporate
governance system in the light of international best practice
and for suggesting adjustments and improvements to this
system whenever this is deemed necessary.
> Participants: Plínio Villares Musetti (president), Pedro Luiz
Barreiros Passos
> Frequency of meetings: every two weeks from April 2013
(19 meetings in 2013)
19
business conduct
Senior management assessment
and self-assessment GRI G4-44
The Board of Directors has the function of determining and
monitoring the implementation of company strategy and
assessing the performance of the CEO and the Executive
Committee on a periodic basis. The members analyze Natura’s
quarterly performance releases and annual management
report, which include the main socio-environmental indicators
considered important for the company (read more on page 126,
About the report). Other questions examined by the board
are the definition and review of strategic planning, expansion
projects and investment programs, risk management and
definition of the amount employees receive under the profit
share program. GRI G4-34/35/36/37/38/42/45
To monitor the quality of governance, a self-assessment process
is conducted periodically. This did not take place in 2013, due to
the changes made in the board structure. A new self-assessment
process should occur in 2014, appraising questions such as
meeting dynamics, information flow and the size of the Board of
Directors. In the future the intention is to extend this analysis to
include the viewpoints of executives. GRI G4-43/44
Brand and Business management, including product and concept
innovation. The second, a Networks nucleus, responsible for
our consultants’ relations with their customers in the diverse
geographies in which we operate. The third consists of the
company’s corporate areas, such as Finance, People, Operations
and Digital Technology.
As a consequence, Comex was expanded, incorporating new
functions and areas. Currently, Natura’s fundamental functions
are represented in Comex (Finance and Institutional Relations,
Innovation, People and Culture, Digital Technology, Operations
and Logistics), as well as business leadership (Natura Brazil,
International Operations and New Businesses).
We believe that this gives Comex the stature needed for the
dimension of Natura’s business, ensuring support for company
growth strategy over the coming years.
Executive governance GRI G4-34/38/45
The Executive Committee (Comex), comprising the president
and vice presidents, is responsible for managing business
performance, the development of what we call the well being
well Ecosystem (which includes our consultants, consumers,
suppliers and other stakeholders), brand management and the
preparation and execution of the strategic plan, monitoring any
strategic projects associated with the plan, as well as overseeing
leadership development.
The Executive Committee also tracks the evolution of priority
sustainability-related topics by means of the Socio-Environmental
Budget (OSA in the Portuguese acronym), a tool aligned with
the economic budget, used to define and monitor commitments
and targets for each of the priority topics. These targets are
determined jointly between the areas and senior management,
which monitors performance on a quarterly basis.
In summary, Comex is responsible for managing the business,
analyzing performance and results and taking decisions based on
pertinent economic, social and environmental aspects.
Product innovation
Brand architecture
Marketing
brands and
businesses
corporate
areas
New businesses
(brands and categories)
Product
availability
CRM
Natura Network
Logistics
networks
Innovation in
commercial model
Operation in
Brazilian regional
markets
Operation in international
markets
In 2013, organizational design evolved with even greater focus
on business strategy to drive results. The structure was reviewed,
based on three major nuclei. The first, which is focused on
20
business conduct
EXECUTIVE COMMITTEE (COMEX)
Expanded in 2013, Comex incorporated new functions and
competencies and now has ten members.
Alessandro Giuseppe Carlucci
CEO
José Vicente Marino
Vice President, Brands and Businesses
Agenor Leão de Almeida Junior
Vice President, Digital Technology
Josie Peressinoto Romero
Vice President, Operations and Logistics
Erasmo Toledo
Vice President, International Businesses
Lilian Ferezim Guimarães
Vice President, People and Culture
Gerson Valença Pinto
Vice President, Innovation
Robert Claus Chatwin
Vice President, New Businesses
João Paulo Ferreira
Vice President, Commercial
Roberto Pedote
Vice President, Finance, Legal Affairs and Institutional Relations
Comex Committees GRI G4-34/38
In 2013, the committees supporting Comex were also
reformulated, and the number was increased from three to eight:
New Businesses – Led by Alessandro Carlucci, the
committee is responsible for governance of new business
projects, constantly analyzing opportunities for partnerships
and alliances, as well as monitoring the progress of newly
incorporated businesses, such as Aesop. The committee
members are: João Paulo Ferreira, José Vicente Marino, Robert
Chatwin and Roberto Pedote.
Brand – The Brand Committee assesses the expressions and
languages of our brand and sub-brands, as well as marketing and
communication. It is headed by José Vicente Marino with the
participation of Robert Chatwin.
Commercial Innovation – This committee promotes
Networks – The committee is headed by João Paulo Ferreira
innovation in the company’s commercial model and in sales
channel operations, monitoring the implantation and the
results of strategic projects to drive growth. The committee
is led by João Paulo Ferreira, with support from Alessandro
Carlucci (CEO) and the vice presidents Erasmo Toledo and
Agenor Leão.
Brands and Businesses – Under the leadership of José
Vicente Marino, the committee is responsible for brand and
business management. It also oversees innovation and product
development, as well as managing the Natura product pipeline
and portfolio. This includes managing the business units and their
results. Committee members are the VPs Gerson Pinto and
Robert Chatwin.
Products – Led by the vice president of Brands and
Businesses, José Vicente Marino, the role of this committee
is to approve the stages in the Natura product innovation
process. In fortnightly meetings it evaluates the conception
and introduction of new products and sustainability initiatives.
It also oversees pipeline and portfolio management. Part of
its work is to assist in the creation of new concepts, at which
times the CEO, Alessandro Carlucci, and one of the company
founders, Luiz Seabra, are invited to participate to ensure a
diversity of viewpoints and to reinforce innovation. The vice
presidents Gerson Pinto and Josie Romero are also on the
committee.
and is responsible for operating and innovating in the Natura sales
channels, managing and monitoring the consultant network and
the end consumer. It also manages business results and questions
related to Natura’s leadership and succession. Members are the vice
presidents Agenor Leão and Erasmo Toledo.
Business Integration – This forum is the point of
intersection between the Brands and Businesses and Networks
nuclei in relation to questions such as product line up in sales
cycles. It manages performance and provides inputs for strategic
planning. The committee is led jointly by José Vicente Marino and
João Paulo Ferreira, supported by Josie Romero, Erasmo Toledo,
Robert Chatwin and Gerson Pinto.
Ethics – This body is charged with overseeing compliance with
the Natura Principles of Relationship and Code of Conduct and
determining any changes necessary. It also assesses and addresses
questions not aligned with company guidelines. It is headed
by Roberto Pedote, vice president of Finance and Institutional
Relations, with the participation of the vice president of People
and Culture, Lilian Guimarães.
21
business conduct
Executive Board
ALESSANDRO MENDES
Product Development Director
ELIZABETE FERNANDES VICENTINI
Consumer Safety Director
ALEXANDRE ALVES LEMOS
Managing Director Chile
FABIANA TOMAS PELLICCIARI
Sou Business Unit Director
ALEXANDRE CRESCENZI
Commercial Director
FÁBIO AUGUSTO KOREEDA
Infrastructure Director
ALEXANDRE NAKAMARU
Corporate Finance Director
FÁBIO BOUCINHAS¹
Digital Media Director
ANA LUIZA MACHADO ALVES
New Brand Director
FATIMA MEDEIROS PEREIRA BARATA ROSSETTO
People Management and Development Director
ANDRÉA MIRANDA CORREA EBOLI
Marketing Director
FLAVIO PESIGUELO
Commercial Operation and Relationship Director
ANGEL MEDEIROS
Logistics Innovation Director
HANS LUIS WERNER GUTIERREZ
Managing Director Peru
ANGELA CRISTINA PINHATTI
Operations and Logistics Director IOs
JOÃO CARLOS MOCELIN
Industrial Director
AXEL MORICZ DE TECSO
Managing Director Colombia
JORGE LUIS ROSOLINO
Central Region Director
DANIEL GEIGER ROCHA CAMPOS
Business Unit A Director
JOSÉ THOMAZ DEVECZ PENTEADO DE LUCA
Commercial Innovation and Management Director
DANIEL MADUREIRA GONZAGA
Science and Technology Director
LUCILENE SILVA PRADO
Legal Affairs Director
DANIEL LEVY
Southern Region Director
LUIS CARLOS DE LIMA
Finance Director Brazil²
DANIEL DE ALMEIDA GUSMÃO ALVES SILVEIRA
North-Northeastern Region Director
MARCEL GOYA
Finance, Legal, Strategic Planning and Management Systems
Director - International Operations²
DENISE LAFRAIA COUTINHO
Business Unit C Director
DENISE LYRA DE FIGUEIREDO
Brands and Consumer Director
DENISE REGINA DE OLIVEIRA ALVES
Sustainability Director
DIEGO FERNANDO DE LEONE
Marketing and Activation Director
MARCELO BICALHO BEHAR
Corporate Affairs Director
MÁRCIA ANDREA DE MATOS LEAL
Strategic Planning and Management Systems Director
MARCUS OLIVER RISSEL
São Paulo Region Director
22
business conduct
Executive Board (continuação)
MARIA APARECIDA ROSA FRANCO
Relationship Director
PEDRO CRUZ VILLARES
President of Instituto Natura
MARIA PAULA DA ASSUNÇÃO FONSECA
Natura Brand Internationalization Director
RENATO ABRAMOVICH
Managing Director Mexico
MARIO ESQUERDO
Digital Technologies IOs Director
RICARDO LOBATO FAUCON
Customer Services Director
MOACIR SALZSTEIN
Corporate Governance Director
RODRIGO OLIVEIRA BREA
Supply Director
MURILLO FEITOSA BOCCIA
CRM Director
TATIANA DE CARVALHO PICCOLI PIGNATARI
Business Unit B Director
NESTOR MARIANO FELPI
Product Availability Planning and Control Director
THIERRY AUBRY LECOMTE
Managing Director France
PEDRO ROBERTO GONZALES
Managing Director Argentina
1 He left Natura in March 2014. Mário Santiago assumes
the position of Digital Technology Applications Director.
2 He assumes his new position in April 2014.
23
business conduct
Risk
management
Risk management at Natura is an instrument incorporated into
the strategic planning cycle and encompasses economic, social
and environmental aspects of the business. Risks are divided into
two groups: strategic risks, that is, risks that could affect company
ambitions and continuity, and operational risks, related to internal
processes. GRI G4-2
Risk mapping encompasses a great number of information
sources and includes the company’s value chain (Natura
Management System), self-assessment of risks, loss and fraud
indicators, internal audit reports, SOX controls (read more below)
and reports received by the Ombudsman service, as well as
analysis of external factors and risks.
In 2013, we reviewed our risk dictionary and our matrix
of more critical questions, including strategic, regulatory,
financial and operational risks. Among other things, the risk
matrix covers our innovation capacity, commercial model,
tax questions, product quality, as well as socio-environmental
topics such as biodiversity. Therefore, even though we do not
have a specific analysis of the effects of climate change on
the risk management process, important socio-environmental
mitigation projects are aimed at the impacts the business
could generate and have become formal sub-processes in
the company, such as the Carbon Neutral Program (read
more on page 48) and the company’s sustainable use of social
biodiversity ingredients and associated traditional knowledge
(read more on page 54). GRI G4-2/EC2
This entire process is tied to risk mitigation action plans and is
monitored by the Executive Committee. Through its supporting
committees, the Board of Directors also accompanies the
evolution of all the company’s strategic risks (see table below).
GRI G4-46/47
24
business conduct
Governance for
risk management
Forums for validating risksi
Board of
Directors
Audit, Risk and Finance
Committee
COMEX
Very high risk
Other forums
for assessing
risk factors
Strategic risk
Vice
President
level
High risk
Board of Directors
COMEX
Board Committees
Risk
Self-Assessment
COMEX
Audit Committee
Moderate risk
Director
level
Losses Map and
Indicators
Performance Management
Audit Committee
SOX
Certification
Low risk
Management
level
President
Vice President
of Finance
Audit Committee
1 The potential consequences of risks are mapped based on the Natura Strategic Plan.
Even though the company is not listed on the New York Stock
Exchange, for the last four years it has complied voluntarily with
SOX certification standards, based on the North American
Sarbanes-Oxley law. This system entails the creation of reliable
audit and safety mechanisms in companies, including rules
for the formation of committees to supervise activities and
operations in order to mitigate business risks and prevent fraud
or to ensure that there are means in place to identify these
should they occur. The objective is to ensure transparency in
company management.
25
business conduct
Internal audit
Natura’s internal audit team reports to the Audit, Risk
Management and Finance Committee within a framework
that ensures the auditors’ independence to work with no
interference from other company areas.
The internal audit process includes tests and procedures that
assess the control environment, including measures to prevent
fraud and corruption. In 2013, there were nine reported
violations, compared with 15 the previous year. Of this total,
four proved to be grounded and resulted in the dismissal of 20
employees. The cases were primarily related to the unwarranted
use of company resources and misappropriation of assets; in
one case a supplier received favored treatment. GRI G4-SO5
During the year, 31 audits were conducted at Natura,
one more than in 2012. There was a focus on third-party
manufacturing processes (inside Brazil and overseas), company
distribution centers and relevant processes in Brazil, such as
commercialization and relationship.
There was also progress in fraud prevention processes, with the
intensification of a transparent and ethical working environment,
particularly due to the implementation of the Natura Code of
Conduct (read more on page 72, Ombudsman service).
Senior management
compensation GRI G4-51/52
Our compensation plan for senior management seeks to
balance short, medium and long-term earnings and to foster an
entrepreneurial spirit and engagement, driving growth and value
for the company.
In 2013, company remuneration policy was modified to make
it more attractive compared with market standards. Instead
of alignment with the market average, Natura salaries were
aligned with the third quartile of the market. In effect, Natura
was positioned among the 25% of companies paying the
highest remuneration to their employees, according to our
comparison panel.
For a group of executives that includes the CEO, vice presidents,
directors and senior managers, earnings are consistently linked
with commitment to our long-term project through the Stock
Subscription or Purchase Option Plan program. Since 2009, this
program has tied the option to the executive’s decision to invest
at least 50% of the net proceeds from the profit share plan in the
acquisition of Natura shares. The shares can only be exercised after
a vesting period of three years for 50% of the shares, subject to
forfeit of the remaining 50%, and a vesting period of four years for
100% of the shares.
The plan is valid for eight years and the shares are blocked until the
options are exercised in accordance with program rules. The model
establishes an annual grant limit of 0.75%, and a maximum of 4%.
In December 2013, the volume of options held by executives
corresponded to around 1.41% of Natura shares, compared with
1.39% in 2012. The number of Natura shares on December 31
2013 was 431,239,264. Since 2002, the company has granted
22,947,007 options, of which 24% were cancelled due to
executives leaving the company.
It should be noted that in the Annual General Meeting,
shareholders approve Natura management compensation and
may comment favorably or not on this subject. GRI G4-53
26
business conduct
Number of options¹
Plan
balance
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012²
2013
Total
Granted
Exercised Mature balance
Non-mature
balance
Cancelled
3,533,610
3,969,220
1,901,460
1,120,760
981,660
1,269,955
1,800,010
2,419,791
2,112,376
1,621,780
2,216,385
2,712,645
3,404,495
1,606,063
651,354
604,754
689,384
715,024
802,691
131,730
0
0
0
0
0
0
0
0
100,702
1,243,646
732,843
0
0
0
0
0
0
0
0
0
0
720,831
1,209,741
2,076,996
820,965
564,725
295,397
469,406
376,906
580,571
984,284
373,454
526,972
412,039
139,389
23%
14%
16%
42%
38%
46%
55%
15%
25%
25%
6.3%
22,947,007
11,318,140
2,077,191
4,007,568
5,544,108
24%
1 All employees in Brazil and in the International Operations.
2 No grant.
Maturity and validity of plans¹
Plan
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012²
2013
50%
mature
100%
mature
Validity
April 10
2005
April 10
2006
April 10
2007
March 16
2008
March 29
2009
April 25
2010
April 22
2011
April 22
2012
19 March
2013
23 March
2014
18 March
2016
April 10
2006
April 10
2007
April 10
2008
March 16
2009
March 29
2010
April 25
2011
April 22
2012
April 22
2013
19 March
2014
23 March
2015
18 March
2017
April 10
2008
April 10
2009
April 10
2010
March 16
2011
March 29
2012
April 25
2013
April 22
2014
April 22
2017
19 March
2018
23 March
2019
18 March
2021
1 All employees in Brazil and in the International Operations.
2 No grant.
27
business conduct
Variable compensation GRI G4-34/38
Variable compensation is intended to recognize and reward
Natura executives for their performance and results over
the year. The Profit Share System for management consists
of the payment of monthly salary multiples in accordance
with the executive’s position in the organizational structure
and is linked with the effective achievement of targets
and minimum growth levels established by management
for the year. Therefore, payment is contingent on Natura’s
performance reaching a stipulated minimum. The criteria for
determining achievement of targets involve performance
indicators set forth in the Strategic Plan encompassing the
company’s triple bottom line:
• Economic – consolidated ebitda for Brazil and international
operations;
Sociais – Organization climate survey for employees in the
Brazilian and international operations and loyalty rate for
Brazilian consultants;
2013
Board
Executive committee
Senior management and
directors
Middle management
Sales force
Sales force
Operational
Total 2013
• Environmental – Carbon emissions in Brazil and in the
international operations;
• Others – Non-Service Rate (NSR), which is the percentage of
products out of stock when orders are placed by consultants in
Brazil and in the international operations.
The total annual amount paid out in the profit share plan,
based on the long-term incentive program, may not exceed
10% of net profit. This limit provides Natura with a consistent
and well controlled system that prevents distortions between
compensation and company performance. The variable
component, both short and long-term, is proportionally larger
for senior executives than for other employees.
The table below shows the compensation for the main groups of
Natura employees:
Average
number
(of employees)
Total salary
(in millions)1
Total variable
component
(in millions)2
2013 Stock
Option Plan
(number of options)³
9
8
107
4.51
8.78
39.81
1.83
10.03
25.66
588,431
1,281,153
482
1,601
832
2,370
78.15
109.69
55.66
64.07
31.45
12.56
49.15
12.64
-
5,409
360.67
143.32
-
1 Total salary: takes into account average annual base salary, in 12 months (without charges), and overtime. 2 Total variable: Profit share and sales
bonus (with paid weekly rest) paid in year. 3 2013 Stock Options: number of options granted in 2013.
28
business conduct
2012
Board
Executive committee
directors
Middle management
Administrative
Sales force
Operational
Total 2012
Average
number of
employees
Total salary
(in millions)1
Total variable
component
(in millions)2
2012 Stock
Option Plan
8
7
105
4.33
6.13
33.33
-
-
441
1,523
848
2,386
60.26
88.95
52.83
43.63
2.36
9.38
43.78
11.37
-
5,317
289.46
66.89
-
1 Total salary: takes into account average annual base salary, in 12 months (without charges), and overtime. 2 Total variable: Profit share and
sales bonus (with paid weekly rest) paid in year. 3 2012 Stock Options: no grant.
2011
Board
Executive committee
directors
Middle management
Administrative
Sales force
Operational
Total 2011
Average
number of
employees
Total salary
(in millions)1
Total variable
component
(in millions)2
Stock Options
Plano de 2011
7
5
102
3.13
5.86
36.40
1.30
5.49
19.90
314,260
990,258
405
1,488
875
2,436
60.63
92.85
49.09
52.21
20.79
9.20
49.67
12.77
-
5,317
300.17
119.11
-
1 Total salary: takes into account average annual base salary, in 12 months (without charges), and overtime. 2 Total variable: Profit share and sales
bonus (with paid weekly rest) paid in year. 3 2011 Stock Options: number of options granted in 2011.
29
business conduct
Natura
Management System
Our Essence and our organizational culture are differentials
for the business and permeate everything we do. The Natura
Management System (SGN) is the way we ensure these
differentials are incorporated into company routines.
By establishing clear requirements to be applied in our
internal processes, projects and business behavior, the Natura
Management System enables us to be dynamic in the way we
do business and, more importantly, ensures that our models are
an expression of our Essence, bringing it alive and reinforcing it.
In 2013, we worked on reviewing priority processes, rituals,
governance and indicators to sustain the new organizational
model and the company’s growth plan for the coming years,
ensuring fluidity in operations both in Brazil and overseas
(read more about the organizational model on page 20, Executive
Governance).
In this way, we tightened our focus on productivity, driving
consistency and generating gains in efficiency on fronts and in
processes which will enable reinvestment in the business.
As a dynamic model, the Natura Management System provides
the flexibility to meet the specific demands of each operation,
enabling them to evolve to stay abreast of Natura strategy.
30
business conduct
Triple bottom line
management
Fully aware that our activities depend directly on nature
and on ecosystems, and based on our commitment to
a sustainable development model, we are engaged in a
series of studies to measure the impact of our activities.
Our medium term goal is the valuation of the negative and
positive social and environmental impacts or externalities
that all the Natura operations and their value chains
generate, factoring this analysis into business management.
This is so that in the future we may reach the stage where
the company is able to evaluate the true monetary value
of the services provided by ecosystems and by biodiversity
and of the impacts generated for society. This will permit
that the socio-environmental gains and losses associated
with a production activity be considered in risk analyses and
in the generation of new, more sustainable products and
businesses.
As part of this movement, we have developed socioenvironmental criteria that enable the effective analysis
of triple bottom line dimensions in the selection and
development of our suppliers in the Sustainable Supply
Chains project. With support from specialists, including
global sources such as TEEB (The Economics of Ecosystems
and Biodiversity), we selected the eight main social and
environmental externalities. The environmental externalities
identified are CO2 emissions, water consumption and solid
waste generation, while the social externalities are formal
education programs, employee training, workplace safety,
social inclusion (hiring employees with disabilities) and
direct investment in society. Based on the monitoring of
these indicators, we propose to stimulate each company to
improve its respective social and environmental practices.
With clear targets in terms of economic and socioenvironmental gains, the Sustainable Supply Chain project
is aimed at maximizing positive impacts and minimizing
negative impacts in the company’s supply chain.
Valuation projects
To further learning, in 2011 Natura sponsored the adaptation
for Brazil of the first and most complete study on the economic
costs of the loss of biodiversity and the degradation of
ecosystems associated with businesses, TEEB Brasil, a movement
coordinated by the NGO Conservation International.
initiative developed by Natura to research an alternative
model for palm oil production by means of agroforestry
systems which combine various vegetable species in the
same production unit. For purposes of comparison, palm oil
monoculture was also assessed.
Conducted by TEEB, the feasibility study for the alternative
for palm oil production will be concluded shortly. To date, the
study has shown that the total environmental value supplied
by the agroforestry system is three times greater than that
achieved under monoculture, considering a working life of 25
years for the planted area. The study also indicated that the
ecosystem services generated by the agroforestry system are
much more positive than those associated with monoculture
(provision of foods and wood, regulation of global climate,
water and soil fertility) and that the environmental impacts are
also lower, an example being a reduction in greenhouse gas
(GHG) emissions.
During 2013, we took part in the Pese (business program
for ecosystem services) program, focused on the application
of ESR (Ecosystems Services Review) methodology, which is
aimed at measuring organizations’ impact and dependence
on ecosystems. This initiative coordinated by the sustainable
development business council CEBDS (Conselho Empresarial
Brasileiro para o Desenvolvimento Sustentável), the
Fundação Getúlio Vargas Center of Studies in Sustainability
(FGV-Gvces) and the World Resources Institute (WRI) was
concluded in 2013.
We also participated in the Tese (Trends in ecosystem
services) program led by FGV-Gvces, the NGO Conservation
International Brazil and The Nature Conservancy (TNC), another
initiative to develop an assessment and valuation tool for
ecosystem services.
Based on all these experiences, in 2014 we will initiate a new
cycle to expand our knowledge in this area. We intend to
evaluate our externalities and those of our value chain, both in
environmental and social terms. In our pursuit of evolution in TBL
management, we want to implement the valuation of social and
environmental externalities in our decision making and risk and
opportunity assessment processes, from a systematic perspective
that will help us to define new strategic and business paths so
that the company may generate positive impacts.
Moreover, we joined a group which will coordinate international
discussions for the creation of a global protocol for the
calculation of externalities, coordinated by the World Business
Council for Sustainable Development (WBCSD). The group will
work with other organizations such as the B-Team to develop a
model for the valuation of social and environmental impacts.
The project chosen for testing TEEB methodology was an
31
business conduct
Engagement with
government and society
Of the three social topics in Natura’s materiality matrix,
investment in education is the one that permeates the most
areas of the company (read more about the other two, sustainable
entrepreneurship and quality in relationships on pages 101 and
71). It is our understanding that education is the driving force
for building a better, fairer and more sustainable world. For
this reason it is incorporated into the strategies for our main
stakeholder groups, including employees, consultants and NCAs
and suppliers. These range from private social investment
through the Instituto Natura, corporate education measures for
employees and education for sustainability, aimed at everyone.
region. Two of the main Instituto Natura projects are being
implemented in this region: Conviva Educação, a tool
providing support for municipal education departments, and
Trilhas de Leitura (Learning Trails), a literacy program for
early learners. The RAE network will organize the formation
of teams in the respective municipal departments, ensuring
the most efficient use of resources and monitoring their
performance, focused on the elaboration, review and
implementation of the Municipal Education Plans (PMEs). In
the course of 2014, the Education Support Network should
also be implanted in other regions of the country.
Created in 2010, the Institute has reinforced expression of the
company’s belief in the importance of education. A non-profit
institution, the organization consolidates and furthers the public
education improvement measures Natura has supported in
Brazil since the 1990s. Funding for the institute comes from
the Natura Believing is Seeing line of non-cosmetic products,
from which neither Natura nor consultants make a profit, with
the proceeds reverting fully to the institute. The company
also dedicates 0.5% of its net annual profit to maintaining the
Institute’s operations.
The Instituto Natura also supports the Pact for Education
in Pará, an initiative by the state education department
aimed at enhancing education in the state with a target of
improving performance in the Ideb (the Ministry of Education’s
basic education development index) by 30% in five years,
strengthening the competencies of education professionals,
improving school infrastructure and management practices in the
Education Department.
In 2013, the amount raised from the sale of Believing is Seeing
products in Brazil was a record – R$ 17 million – exceeding
our target of R$ 14 million for the period. In the International
Operations, the funds raised by the line were also a record,
reaching R$ 4.8 million. In these countries, Natura invests these
funds directly in educational actions (read more in box below).
The Instituto Natura works on three complementary fronts:
public administration of education, aimed at supporting the
redesign and transformation of educational management systems;
innovation in educational technologies to foment the creation
and diffusion of innovative teaching technologies; and educational
and social transformation, focused on educational projects
capable of transforming society.
Based on its accumulated learning and experience and
partnerships in the implementation of actions to support
municipal public policies, a highlight for the Instituto Natura in
2013 was the development of the Rede de Apoio à Educação
(RAE - Education Support Network). This network comprises
federal agencies, other institutes, governments, school principals,
coordinators and teachers who support the implementation of
the initiatives and help to leverage the results.
Through the RAE network, in 2014 the Instituto Natura
will develop its projects in a number of strategic regions, as
is the case with several municipal districts in the Amazon
Another project the institute supports is the formalization of
what are known as alternating schools, where the curriculum
is adapted to the local reality of students in rural areas of the
Amazon, enabling the student to spend part of the month in
school and the rest in his/her community, putting the learning
acquired into practice (read more on page 57).
In 2013, more than 3 million students benefited from Instituto
Natura programs. It should be noted that all investments are
approved by the organization’s board of directors. Read more
about the Instituto Natura in the institution’s 2013 annual report:
www.institutonatura.org.br. (Read more about education in the
chapters on our priority stakeholders, from page 74).
Investment in the International
Operations GRI G4-EC7/EC8
Due to the growth in funds raised by the sale of Believing is
Seeing products in our International Operations– the total
in 2013 was R$ 4.8 million –, the Instituto Natura is helping
the company to define an educational strategy for these
countries.
Seeking to align the actions in each country with the strategies
defined for Brazil and the IOs, a diagnosis was performed to
identify the main educational challenges in the region. Based on
the result, Natura established three priority areas
32
business conduct
in education for its operations in other countries in Latin
America: guarantee of quality and equality in teaching,
educational transformation and social mobilization.
In 2013, we started to implant the first project derived from
the educational transformation pillar. This is the Learning
Communities initiative in Peru and Mexico, the first stage of
which is centered on disseminating the concept and training the
persons who will execute it. At the same time, the company
maintained its support for local projects aligned with the
guidelines established for our new strategy.
During the year, the number of people benefiting directly
from the projects soared from 36 thousand to more than 92
thousand, due to the increase in funding from the Believing
is Seeing product line and the higher number of initiatives
supported.
Consultant
participation
As key Natura allies, our consultants actively disseminate and sell
the Natura Believing is Seeing product line. In 2013, Believing is
Seeing penetration – the percentage of all active Natura NCs
who sold items from the line – reached 15% in Brazil, 25% up on
2012. The results were impelled by the incentives developed by
the company sales force.
In the IOs, penetration among NCs was slightly down, from
18.1%, in 2012 to 17.6% in 2013. This reduction was due to
changes in the Believing is Seeing portfolio in these countries
during the year.
G4 EC7/EC8
Believing is Seeing Program in Brazil
Unit
2011
2012
2013
Net proceeds from Believing is Seeing program1
R$ 000’s
8,397
12,835
17,066
Believing is Seeing penetration2
(% cycle)
9.5
12
15
R$ 000s
5,838
15,361
16,566
345
3,300
4,653
4,943
72,000
73,707
18,471
140,000
143,062
922,028
3,000,000
3,095,982
Total municipal education departments4
n.a.
n.a.
3,860
Total state education departments4
n.a.
n.a.
27
Total value of projects developed and supported3
Municipalities served
Schools served
Participating teachers, coordinators and principals
Students benefiting
1Refers to profit channeled to Believing is Seeing program fund before income tax. 2 Percentage of NCs involved in Believing is Seeing (through
purchase of product line) among active NCs. 3 The amount of the investment consists of: projects (R$ 11,475.260); mobilization (R$ 2,055.080);
operating expenses (R$ 160.650); payroll – considering partial allocation of managing director and communication manager, previously allocated to
institute maintenance expenditures, and full allocation of education manager – (R$ 2,874.970). The total amount does not include investments in
the RAE project – Amazônia Program (R$ 214.850), since this amount was provided by Natura for investment and management of the institute
and does not come from Believing is Seeing sales. 4 The inclusion of the numbers of the state and municipal education departments is due to the
implementation of the State Education Department Governance Research and Conviva Educação projects, respectively.
33
business conduct
G4 EC7/EC8
Believing is Seeing Program in the International Operations
Unit
2011
2012
2013
R$ 000s
2,146
4,497
4,762
(% cycle)
18
18
17.6
R$ 000s
n.a.
3,243
4,696
Schools attended
n.a.
606
475
Participating teachers, coordinators and principals
n.a.
405
2,366
Students benefiting
n.a.
35,933
92,243
Net proceeds from Believing is Seeing program1
Believing is Seeing penetration2
Total value of projects developed and supported
1 Refers to profit channeled to Believing is Seeing program fund before income tax. Data from the previous years were restated to correct
inconsistencies. 2 Percentage of NCs involved in Believing is Seeing (through purchase of product line) among active NCs.
Support and sponsorship
As part of our Essence and with a view to promoting well being
well for more people, the company supports projects that value
Brazilian culture, entrepreneurship and help drive sustainable
development. Since 2012, efforts have been concentrated
on valuing Brazilian culture with a focus on music; sustainable
development; reinforcing civil society organizations; behavior
and attitude; and sports. In 2013, we provided support and
sponsorship totaling more than R$ 14 million, including funds
from incentives. This figure was 38% lower than the previous year
due to a 2013 budget directive.
Natura funding
Unit
Sustainable development
Valuing Brazilian culture: music
Behavior and attitude
Reinforcing civil society organizations
R$ 000s
Sports
Total Natura funding
Funding from incentives
Unit
Sustainable development
Valuing Brazilian culture: music
Reinforcing civil society organizations
Sports
Total funding from incentives
Total Natura and incentives
R$ 000s
2011
2012
2013
1,900
12,282
50
13,365
11,982
7,545
750
900
0
2,790
2,311
1,382
n.a
603
53
18,806
28,078
9,030
2011
2012
2013
80
n.a
0
4,853
4,617
5,272
610
400
0
n.a
455
100
5,543
5,472
5,372
24,349
33,550
14,402
34
business conduct
In the area of sustainable development, in 2013 Natura
sponsored the film Amazon: The Green Planet, a co-production
between Brazil and France. The film was released in Paris in 2013
and is scheduled for release in Brazil in the first half of 2014.
In the area of reinforcing civil society organizations, we
sponsored the first Brazilian Sustainable Brands conference,
which discussed concrete initiatives for transforming business
culture through clean technologies, innovation, organizational
culture, communication and consumer engagement, among
others.
In 2013, to further our strategy to promote sport, we
supported two projects backed by incentives from the federal
sport incentive law, in addition to renewing our sponsorship
of the Caminho da Paz project. During the year we did not
sponsor any projects related to behavior and attitude.
Natura Musical
In 2013, sponsorship activities prioritized Brazilian culture with a
focus on music through the Natura Musical program, which has
supported the diffusion of Brazilian music since 2005. In this time,
the platform has provided support for more than 200 projects in
18 states, directly impacting more than a million people.
Natura Musical selected the projects to be sponsored through
four calls for proposals, one on a national scale and the other
three at regional level, using funds from the federal incentive law
and from cultural incentive laws in Minas Gerais, Bahia and Pará.
In 2013, from the 3,493 projects submitted, a total of 23 were
selected (seven on a national level, four in Minas Gerais, five in
Bahia and seven in Pará) and will be executed in 2014. Selection
of the proposals is based on their fit with the underlying concept
of the Natura Musical program, their potential for generating
visibility and mobilizing audiences, open access, excellence,
innovation, and cost/benefit. The company also sponsored a
further 19 projects without calls for proposals.
Another novelty in 2013 was the Natura Musical web radio
station produced by Rádio Eldorado, which offers 24-hour
programming of Brazilian music, with exclusive new releases, new
and established artists, incursions into Brazilian musical history
and news about Natura Musical projects.
The company also promoted the third edition of the Natura
Musical Festival in Belo Horizonte (Minas Gerais). The attractions
included Caetano Veloso, Paralamas do Sucesso, Paulinho da
Viola and Marcelo Jeneci. The programming included a section
exclusively for children with presentations by the groups
Barbatuques and Curupaco. With stages set up in two city
squares, the free event was attended by 50,000 people.
Worthy of note among the projects sponsored in 2013 was
Ney Matogrosso’s album Atentos aos Sinais, and the DVD Uma
Travessia – 50 Anos de Carreira by Milton Nascimento. The
works of the artists receiving support are available for download
on the portal www.naturamusical.com.br
Influence in
public policy
Natura’s activities in different social, government and sector
organizations are guided by the belief that working with others
reinforces the company’s commitment and furthers social
development.
An example of this commitment is the work Natura has
done on approving the new biodiversity legal framework,
which governs access to Brazilian biological resources and the
traditional knowledge associated with them. We are part of a
business movement which proposes to improve this regulatory
framework and which delivered textual proposals to the
Ministry of the Environment in 2012 and 2013. The movement
is called the Coalizão Empresarial pela Biodiversidade (Business
Coalition for Biodiversity). It members include Abihpec
(Brazilian association of cosmetics, fragrances and toiletries
industry), Farma Brasil (the national pharmaceutical sector
association), CEBDS (Brazilian business council for sustainable
development), the Instituto Ethos and MEBB (business
movement for biodiversity).
Today, this area is still regulated by the provisory measure MP
no 2.186-16 passed in 2001, which has not fully achieved its
original objective of increasing the resources dedicated to
conserving Brazilian biodiversity and promoting development
and the distribution of wealth through the sustainable use
of such resources. The MP has proved to be restrictive. It
has not attracted university researchers, research centers
or companies and has limited innovation processes and
the country’s development. Impacting a number of sectors,
such as cosmetics, foods and pharmaceuticals, the provisory
measure requires that companies doing applied research or
scientists doing pure research get authorization from the
Ministry of the Environment’s CGen (Biological Resource
Council) prior to accessing biological resources before
they know whether the work will result in any practical
application. Requirements such as these impact research
times and the launch of new products, making the process
slow, bureaucratic and expensive.
35
business conduct
After a number of meetings involving different spheres of
government, industry associations, traditional communities,
universities and civil society representatives, a consensus
was reached and a proposal sent to the Chief of Staff of the
Presidency at the beginning of 2014. After analysis by the
Chief of Staff, the proposal should be discussed and approved
by the National Congress. A major victory was the request
to eliminate the mandatory prior authorization for access to
biodiversity, which will help to cut red tape and to foment
scientific and technological development.
In parallel, the company continued to work in accordance with
the legal framework in force. As a result, in December 2013,
Natura had 60% of all the authorizations for access issued by
CGen to private companies in Brazil.
interaction with public authorities, identifying all significant
corruption-related risks. The company has a number of
instruments to mitigate such risks, such as the new Code
of Conduct, an e-learning program for employees, the new
Integrity policy, the Ethics Committee, the Ombudsman
service, as well as the audits conducted on payments and
specific suppliers. GRI G4-SO3
In 2014, we reaffirmed our decision not to make financial
contributions to political parties or candidates in our
operations in Brazil and overseas. We believe that plurality
in political participation is a key driver of transformation for
society. As such, it is our understanding that it is not possible to
select which of these forces should be supported in detriment
of others. GRI G4-SO6
Another major company accomplishment in 2013 was obtaining
all the environmental and operational licenses necessary for
the operation of the Ecoparque in Benevides (Pará), which was
inaugurated in the first quarter of 2014 (read more about the
Ecoparque on page 56, Social Biodiversity).
Worthy of note is the fact that in 2013, we were not
involved in any legal actions related to unfair competition
or monopoly, neither did we record any significant
fines or non-monetary sanctions resulting from noncompliance with laws and regulations. Similarly, Natura
received no fines or sanctions resulting from noncompliance with environmental laws and regulations
during the year. GRI G4-SO7/SO8/EN29
New anticorruption law
Institutional relations
In August 2013, the new Brazilian anticorruption law was
sanctioned. This imposes more rigorous punishments for
private companies convicted of crimes involving corruption and
bribery. More than just increasing mechanisms for punishment,
the new law prioritizes the adoption of control procedures
by companies, such as incentives to report irregularities, the
creation of channels to clarify doubts and training. We see
approval of the law as a significant evolution in ethics and
integrity for the country’s business community. The new
legislation reflects Natura values, which uphold doing business in
an ethical, transparent fashion.
To contribute effectively to the demands of our industry and
promote its convergence with societal aspirations, we participate
actively in various industry associations. Our CEO, Alessandro
Carlucci, will be president of the World Federation of Direct
Selling Associations (WFDSA) until the end of 2014. This
organization represents 60 direct selling associations worldwide.
In addition to showing Brazil’s importance in the direct selling
market, his election for the period 2011-2014 is evidence of
Natura’s prominence in the organization. For the company, this
represents an opportunity to contribute to promoting the direct
selling sector worldwide.
Responsible for relations with public authorities, Natura’s
Government Relations area acts on the basis of clear, transparent
dialog, devoid of party bias, building positive relations and
positioning the company as an agent interested in transforming
Brazilian society within the word of the law. In 2013, the
company implemented its Code of Conduct and, at the
beginning of 2014, revised its Anticorruption and Bribery Policy.
The new Natura Integrity Policy established the company’s
standards of conduct for relationships with public authorities, in
alignment with the new anticorruption law.
In Brazil, Natura presides the ABEVD (Brazilian direct selling
association) and participates actively in Abihpec with six
representatives, some at board level. The company also presides
Iedi (institute for industrial development studies) is on the
board of Anpei (national association of research, development
and engineering for innovative companies) and on the steering
council of the Instituto Ethos.
To ensure adherence to the anticorruption law, the company
implemented a Compliance program in all Natura units
in Brazil and in its International Operations. This entailed
mapping the company’s critical areas based on their level of
Through our activities in Abihpec, ABEVD and other
organizations such as Iedi, Getap (applied tributary studies
group) and the Fundação Getúlio Vargas NEF (fiscal
studies center), we strive to dialog continually with public
authorities regarding the establishment of an adequate
tax load for our area of activity. Through Abihpec, we also
participate in a business coalition that is proposing an
36
business conduct
industry agreement to address the question of reverse
logistics for packaging in alignment with the national solid
waste policy introduced in 2010.
International Operations
With the expansion of our International Operations in Latin
America we have sought to learn about the particularities of
each country, supported by corporate directives in Brazil and in
conjunction with local authorities and industry associations.
In 2013, Natura continued to participate in discussions around
access to biological resources in Colombia, in an effort to
contribute to the formulation of local regulations that promote
the development and conservation of biodiversity in alignment
with the principles of the Convention on Biological Diversity
(CBD), an international treaty signed during Eco-92. In Argentina,
we maintained an intense agenda of political contact with
representatives of the Ministry of Internal Trade due to changes
to importation rules in that country.
Investments
GRI G4-EC4
In 2013, financing involving tax incentives and government
foment agencies totaled R$ 32 million. Part of these funds
came from Brazil’s Lei do Bem, which provides incentives for
companies developing technological innovations. In 2013, the
number of research and technological innovation projects
coming under the law was reduced, which impacted the total
amount of funds received compared with the previous year.
Natura also stopped receiving relief on ICMS (tax on the
interstate and inter-municipal circulation of merchandise and
transportation and communication services) taxes for our
Itapecerica da Serra (São Paulo) site, whose activities were
transfered to the new unit in the city of São Paulo in May 2013.
Financing for company innovation projects provided by the
foment institution BNDES (Banco Nacional de Desenvolvimento
Econômico e Social) totaled R$ 103.3 million. In 2013, we signed
a record 2-year contract worth R$ 205.7 million with the study
and project finance organization Finep (Financiadora de Estudos
e Projetos). However, the first disbursement (R$ 100 million) only
occurred in January 2014, and was not part of the total funds
received in 2013 (read more on page 42, Innovation).
In our investment-related negotiations with public authorities
we seek to obtain tax benefits. During the course of 2013, we
undertook significant investments in expanding the plant in
Cajamar (São Paulo), in initiating operations at the new distribution
center and administration unit in São Paulo (São Paulo), and in the
construction of the Ecoparque (Pará).
G4-EC4. Government funds¹
Unit
Tax incentives for support and sponsorship
2
Lei do Bem (Income tax and social contribution deductions of up to
twice the amount spent on research and technological innovation)3
ICMS tax relief Itapecerica da Serra
Others4
Total
R$
millions
2011
2012
2013
10
9
9
24
22
20
4
5
-
1.1
2.0
2
39
38
32
1 The government does not hold shares in the company. 2 Corporate income tax incentives related to the Federal Incentive law, Sports law,
Children›s and Adolescents› Rights Funds, worker meal program and ICMS tax incentives related to the Natura Musical projects.
3 The tax benefit related to the 2011 Lei do Bem was altered due to project review/audit. 4 Incentive related to the 2-month extension in
maternity leave, instituted by Decree 7052/2009. The expense is not deductible from actual profit and calculation of CSLL, but is fully deductible
from corporate income tax (IRPJ).
37
business conduct
Representation in trade/industry organizations and associations
Body/association
ABA – Associação Brasileira deAnunciantes
(Brazilian Advertisers Association)
Natura representative
GRI G4-16
Type of representation
Member of the National Board
Lucilene Prado
President
Luciano Pedregal
Member of Ethics Council
Kassia Reis
Representative on the Legal Affairs and
Government Relations Committee
Lucilene Prado
Board Member
Silene Moneta
Representative in Environment Group
Vanessa Sapiencia
Representative in Labor Group
ABEVD - Associação Brasileira de
Empresas de Vendas Diretas (Brazilian
Association of Direct Selling Companies)
Abihpec – Associação Brasileira da
Indústria de Higiene Pessoal, Perfumaria
e Cosméticos (Brazilian Association of
Cosmetics, Fragrances and Toiletries
Industry)
Elizabete Vicentini
Kassia Reis
Ricardo Bittencourt
Abipla – Associação Brasileira das
Indústrias de Produtos de Limpeza e
Afins (Brazilian Association of Cleaning
Products and Similar Industries)
ABNT – Associação Brasileira de
Normas Técnicas (Brazilian Technical
Standards Association)
ABPI – Associação Brasileira da
Propriedade Intelectual (Brazilian
Intellectual Property Association)
Abrasca – Associação Brasileira
das Companhias Abertas (Brazilian
Association of Listed Companies)
Acción ser
AMVD – Asociación Mexicana de Ventas
Directas (Mexican Direct Selling Association)
Anpei – Associação Nacional de
Pesquisa, Desenvolvimento e Engenharia
das Empresas Inovadoras (National
Association of Research, Development and
Engineering of Innovative Companies)
Asociación Civil Argentina de
Empresas Brasileñas (Argentine Civil
Association of Brazilian Companies)
Aspi – Associação Paulista de
Propriedade Intelectual (São Paulo
Intellectual Property Association)
Cámara de Comercio de Lima
(Lima Chamber of Commerce)
Cámara Industria Cosmética del Chile
(Chilean Cosmetics Industry Chamber)
Cámara Peruana de Venta Directa
(Peruvian Direct Selling Chamber)
Representative on the Technical and
Regulatory Committee
Representative in the Tax and Overseas
Trade Working Group
Representative in the Overseas Trade
Working Group
Isabel Fujimori
Representative on the
Regulatory Committee
Isabel Fujimori
Member
Lucilene Prado
Representative
Fabio Cefaly
Representative
Soledad García
Member
Arno Araujo
Secretary of the Steering Council
Luciana Hashiba
Director
Pedro Gonzalez
Representative
Lucilene Prado
Representative
Daniel Gonzaga
Representative
Alexandre Lemos
Member of Overseas Trade Commission
Hans Werner
President
38
business conduct
Body/association
Cambras – Cámara de Comercio
Argentino Brasileña (Argentina-Brazil
Chamber of Commerce)
Canipec – Cámara Nacional de la
Industria de Productos Cosméticos
(Mexican National Chamber of the
Perfumery, Cosmetics and Toiletry and
Hygiene Products Industry)
Sabina Zaffora
Vocal titular
Gabriela Ocampo
Representative
Pedro Gonzalez
Alternate Member of Accounts Review
Committee
Jelena Nadinic
Member of Technical Commission
Marisa Gueventer
Member of Environment Commission
Sofía Rey Petit
Member of Corporate Social
Responsibility Commission
Jimena Coppa
Representative of SER Commission
Patricio Duimich
Legal Representative
Dejan Joksimovic
Diretor
Daniel Gonzaga
Representative
Member of Decision-Making Council
Lucilene Prado
Alternate Member of Advisory Board
Almir Xavier
Representative of Integrity Working Group
Capa – Cámara Argentina de la
Indústria de Cosmética y Perfumeria
(Argentine Chamber of the Cosmetics
and Perfumery Industry)
Copecoh – Comité Peruano
de Cosmética e Higiene (Peruvian
Cosmetics and Hygiene Committee)
Capevedi – Cámara Peruana de Venta
Directa (Peruvian Chamber of Direct Sales)
Ethos – Instituto Ethos de Empresas e
Responsabilidade Social (Ethos Institute
of Companies and Social Responsibility)
Silene Moneta
Silene Moneta
FNQ – Fundação Nacional da
Qualidade (National Quality Foundation)
Representative of Solid Waste
Working Group
Member of MEBB –
Corporate Biodiversity Initiative
Vice Chairman of Board of Trustees
Fundação Dom Cabral
Board Member
Fundación Prohumana
Daniela Bertoglia
Member
Lucilene Prado
Member
President
Denise Alves
Member of Steering Committee
Roberto Pedote
Member of Stakeholder Council
Moacir Salztein
Representative
Fabio Cefaly
Representative
Getap (Grupo de Estudos Tributários
Aplicados) (Applied Tax Studies Group)
Fundação SOS Mata Atlântica (SOS
Atlantic Rainforest Foundation)
Global Compact – Caring for Climate
GRI – Global Reporting Initiative
IBGC – Instituto Brasileiro de
Governança Corporativa (Brazilian
Institute of Corporate Governance)
Ibri – Instituto Brasileiro de Relações
com Investidores (Brazilian Institute of
Investor Relations)
39
business conduct
Body/association
Iedi - Instituto de Estudos para o
Desenvolvimento Industria (Institute of
Studies for Industrial Development)
President of Board
Roberto Pedote
Member of Steering Committee
Jose Wanderley
Member of Technical Council
Member of Advisory Board
Board Member
Kassia Reis
Representative
Board Member
Isabel Fujimori
Member
Representative
Representative
Chairman of Board Sustainable
São Paulo Institute
Lucilene Prado
Partnership
Elizabete Vicentini
Associated member
Isabel Ferreira
Representative
Luara Maranhão
Representative
Sipatesp – Sindicato da Indústria de
Perfumaria e Artigos de Toucador do
Estado de São Paulo (Perfumery and
Beauty Products Industry Union of the
State of São Paulo)
Lucilene Prado
Director and member of Fiscal Council
UEBT – Union For Ethical Biotrade
Ricardo Faucon
Chairman of the Board
Ines Francke
Representative
Alessandro Carlucci
Board Member
Keyvan Macedo
Liaison Delegate
Alessandro Carlucci
President
Daniel Serra
Representative
Moacir Salztein
Alternate Treasurer
IIRC – International Integrated
Reporting Committee
Instituto Akatu pelo Consumo
Consciente (Akatu Institute for
Conscious Consumption)
Instituto Empreender Endeavor Brasil
(Endeavor Brazil Entrepreneur Institute)
Inta – International Trademark
Association
IPT – Instituto de Pesquisas Tecnológicas
(Institute of Technological Research)
ISO – International Organization for
Standardization
MBC – Movimento Brasil
Competitivo (Competitive Brazil
Initiative)
MEI – Mobilização Empresarial pela
Inovação (CNI) (Corporate Mobilization
for Innovation)
Movimento Nossa São Paulo (Our
São Paulo Movement)
NEF – Núcleo de Estudos Fiscais da
Escola de Direito da FGV (FGV Law
School Center of Tax Studies)
PCPC Council – Personal Care
Products Council
Rede América (America Network)
Water Footprint Network
WBCSD – World Business Council
for Sustainable Development
WFDSA – World Federation of
Direct Selling Associations
40
products and concepts
Innovation
Structured to ensure the achievement of our principal
objective – promoting well being well –, our innovation model
is not restricted to developing new products and concepts, but
permeates the entire organization transversally: it is present
in our commercial strategy, in the pursuit of new business
opportunities, in biodiversity input stewardship and extraction
techniques and in our industrial and logistics operations.
In 2013, we reviewed our understanding of how innovation may
contribute to the company’s sustainable growth, seeking to meet
the challenges and opportunities in our vision of the future. To
ensure focus, differentiation and agility in innovation, we want
to reduce the lead time between the birth of an idea and the
launch of the product – the time to market. We also intend
to increasingly engage cross-functional teams and prioritize
investments in key categories.
In the review, we established five drivers of innovation: strong
connection with Natura growth strategy; simplification of the
innovation structure and process; construction of a differentiated
innovation pipeline, integrating the short, medium and long
terms; increased synergies between the areas; and strengthened
global connection and activities.
To develop a differentiated innovation pipeline, we grouped our
programs in three major research and development fronts: Wellbeing and Relationships, Sustainable Technologies and Cosmetics
Technologies (see chart below).
Technology programs
> Well-being and Relationships: this integrates different scientific
fields to comprehend and create value based on well-being
and its correlations in all dimensions (physical, emotional, social,
cultural and spiritual).
> Proof of well-being
> Applied social research
> Sustainable Technologies: concepts and technologies to
promote the sustainable use of social biodiversity products
and services, including ecological production systems, packaging
materials and social technologies.
> Bioagriculture
> Cosmetics Technologies: research into biological and physicalchemical mechanisms and proof of effectiveness and safety to
develop new products and services with unprecedented benefits.
It also strives to understand how physiological mechanisms work
in producing sensations, perceptions and emotions to provide
the best possible consumer experience.
> Design of experiences
> Sensorial identity
> Formulation Technology
> Effectiveness and safety
> Biotechnology
> Ingredients
41
To stay abreast of and capture worldwide trends, we seek to
consolidate an increasingly global innovation process. In 2013,
Natura inaugurated the Innovation Hub in New York (USA)
which, together with our Innovation Center, seeks to ensure the
swift identification of relevant opportunities in different areas
(cosmetics, health, technology, design, fashion, behavior etc.).
institution Finep (Financiadora de Estudos e Projetos), which
will drive our innovation strategy over the next two years,
including research into bioagriculture techniques and the use
of Brazilian biodiversity ingredients, among other areas, as well
as open innovation initiatives, such as the Natura Campus and
Co-creating Natura (read more ahead).
Since 2012, we have been part of the Media Lab consortium, a
center of reference in innovation, design, science and technology
at MIT (Massachusetts Institute of Technology) in Boston. We also
maintain strategic partnerships in Europe, including one with the
University of Lyon in France, and in Australia, as a result of the
Aesop acquisition at the end of 2012.
The R$ 103.3 million in financing received from the
Banco Nacional de Desenvolvimento Econômico e Social
(BNDES) in 2013 was directed primarily at the new
Sou product line (read more on page 44), at the Natura
Network project (read more about the Natura Network on
page 96) and our new distribution center inaugurated in
the city of São Paulo in 2013. GRI G4-EC4
In Brazil, our Global Innovation Center, recognized as the largest
cosmetics development laboratory in Latin America, is located
in Cajamar. We also have a science and technology center in
Benevides, as well as Nina (Natura Amazônia Innovation Center)
in Manaus.
Annually, we invest from 2.5% to 3% of revenues in
innovation. The total in 2013 was R$ 181 million, an 18%
increase over the previous year. Natura also obtained record
financing of R$ 205.8 million from the study and finance
Innovation indicators
Unit
Investment in innovation
1
Percentage of net revenues invested in
innovation1
Number of products launched2
Innovation rate¹ (%)
2
Our innovation rate, which is the percentage of revenues from
products launched in the last two years, corresponded to
63.4% in 2013.
In recognition, we were elected one of the ten most innovative
companies in the world by Forbes magazine. In Brazil, we won
the Finep Innovation Award, in the Large Company category, and
the Época 360 award from the magazine Época Negócios, as the
most innovative company in the country.
2011
2012
2013
R$ million
147
154
181
%
2.7
2.6
2.9
Un.
168
104
179
%
64.8
67.2
63.4
1 The information does not include development activities in the International Operations, only development spending in Brazil. 2 The number of products
launched in 2011 was revised and corrected.
42
Networked innovation
We believe that in a network we can extend the reach
of our actions, focused on growth, differentiation and
sustainable development. Through the Natura Campus
open innovation program (www.naturacampus.com.br) we
connect with partnership, research and knowledge diffusion
proposals in conjunction with our innovation network,
comprising foment organizations, research institutions,
companies and Brazilian and international entrepreneurs
and laboratories.
In 2012, two calls for bids for the program were launched, one
specifically for institutions based in the Amazon region (read
more about the Natura Amazônia Campus on page 55, Social
Biodiversity), aimed at driving project development in the region.
Concluded in 2013, the call received a total of 327 proposals,
from which 13 projects were selected.
In 2013, we also launched the Natura Campus challenges, in
which we presented some of our innovation requirements to
the scientific community with a view to finding partners and
solutions. Those interested were able to submit their projects
via the Natura Campus portal. These were then analyzed based
on a series of criteria, such as lead times, vegetalization rates and
environmental impact.
One of the three editions involved the development of flexible
packaging for the Sou line, seeking a viable technical solution for
recycling the packs of the new products (read more on page 62,
Solid Waste).
The authors of the winning proposals were able to accompany
the complete project development process, visit Natura
plants and laboratories and those of our partners, as well as
participate in conferences in Brazil and overseas to expand their
competencies in the area.
Center of Applied Research
in Well-being
In 2013, we signed an unprecedented cooperation agreement
with Fapesp (Fundação de Amparo à Pesquisa do Estado de
São Paulo) for the creation of the Center of Applied Research
in Well-Being and Human Behavior, aimed at generating
knowledge and technologies for promoting well-being through
comprehension of its biological bases, as well as cultural and
human behavioral standards, involving the areas of neuroscience,
positive psychology, social psychology, neuroimaging,
neuropsychophysiology and psychometrics, among others.
With a scheduled investment of R$ 20 million over ten years
(R$ 2 million annually), divided equally between Natura and
Fapesp, in addition to contributing to innovative products for the
company, the results will be transferred to society, including the
business, non-governmental and public sectors.
The project will be managed by Natura, Fapesp and another
institution, which should host the new research center and
assume responsibility for the operational costs and payroll.
The tender for the selection of the partnering institution
was published at the end of 2013, and the process should be
concluded in the second half of 2014.
Other partnerships
Aligned with the concept of networked innovation, in 2013
Natura took part in a pilot initiative organized by Embrapii
(Brazilian industrial research and innovation company), a body
created by the Ministry of Science and Technology and the CNI
(National Confederation of Industry) to meet the demand for
innovation in the country’s industrial sector, debureaucratizing
processes and forging closer links between private initiative and
public research institutions. Based on this partnership and using
development funding from the federal government, we signed
research and development contracts with the IPT (Technological
Research Institute) in São Paulo on strategic terms for Natura.
The work underway in partnership with LNBio (National
Biosciences Laboratory) in the Bioessay Laboratory in Campinas
(São Paulo) was continued.
The company also took part in the Science without Frontiers
program, a federal government initiative to internationalize
Brazilian science, technology and innovation through the
concession of study grants in strategic areas in institutions of
excellence overseas. In 2013, we invested 40% of the funds
provided for in the partnership with the CNPq (National
Scientific and Technological Development Council). Among the
grants benefiting Natura staff, two employees are currently doing
post doctoral work in leading North American universities. In
addition to reinforcing company relations with international
research networks, the grantees will share their experience and
knowledge with Natura upon completion of their studies
Co-creating Natura
To expand our networked innovation, in 2013 we established
Co-creating Natura, an open network for everyone who
identifies with our brand – in particular consumers, employees
and Natura consultants – and who wishes to contribute with
ideas and perceptions to our concept and product development
process. Interaction is virtual, using the initiative’s own platform
(www.natura.com.br/cocriando) and via face-to-face meetings.
The contents generated in this interaction are considered and
factored into the Natura innovation process.
At the end, in addition to receiving a report on the findings, the
more active participants are invited to take part in a unique
learning experience based on the theme of the initiative.
The Co-creating Natura network already has more than 1,800
participants.
43
How the company innovated with Sou
Other launches during the year
The Sou sub-brand launched in 2013 is a practical example of
how we develop our products based on concepts that go far
beyond sensorial and technical quality. Development involved
a fully dedicated team of innovation professionals, as well as a
number of Natura suppliers, external researchers and employees
from diverse company areas in a totally integrated process.
> Natura Plant: with the learnings obtained from Sou, the
line refills were launched in pouch format, significantly
reducing consumption of plastic, waste generation and GHG
emissions. The Natura Plant packs also gained a product
description in Braille and incorporated green plastic, reducing
CO2, emissions by 27%.
Comprising shower, body and hair products, the new subbrand reaches our consumers as the result of an optimized
production process that generates minimal environmental
impact and marks the evolution of Natura’s commitment
to sustainable development by drawing attention to more
intelligent forms of consumption.
> Aquarela: the make up line was relaunched with a lighter
formulation, more agreeable textures and packaging
with a new optimized design that generates lower
environmental impact.
The line, which has a single olfactory signature developed by
our perfumists in partnership with international specialists,
contains fewer ingredients in its formulation, which is 80%
vegetalized and does not use coloring agents. Its unique pouch
format packaging uses 70% less plastic and generates 60%
fewer CO2 emissions than conventional products, and may be
used literally to the last drop.
To achieve this result, we reinvented the product development
cycle, acquired exclusive production equipment and managed to
reduce energy consumption, greenhouse gas (GHG) emissions
and waste generation at all stages of production. We also
obtained gains at the distribution stage since the single pack
permits storage of a larger number of units in the same space
–each one thousand empty Sou packs occupy the same space as
28 conventional packs.
> Natura UNA: a launch from Natura UNA BB multi-benefit
cream with SPF 30, which offers a uniform skin tone, controls
oiliness, moisturizes and protects the skin from the sun.
> Natura Ekos: the line launched four new products based on
açaí palm oil, two of which use buriti and one which uses yerba
mate leaves (a new ingredient in the Ekos portfolio), as well as
two new bath essences.
> Natura Homem, Naturé and Tododia: the three brands also
launched exclusive products for the summer.
Positioned in a new price range, the sub-brand is the
materialization of our strategy to occupy the so called blank
spaces, business opportunities in market segments in which our
brand was not yet present. Sou made a significant contribution
to company sales in the second half of 2013.
44
Generating
environmental
value
We seek to expand management of business impacts throughout
our value chain, from the supply of raw materials to the disposal
of our products, aimed at maximizing the value generated and
shared with our entire relationship network. In accordance with
the company’s materiality matrix, the priority material topics for
Natura are climate change and energy, social biodiversity, solid
waste and water.
Our strategy for managing greenhouse gas (GHG) emissions
incorporates the complete product lifestyle. For solid waste
generation, we have developed an inventory that takes into
account a large part of the chain (except raw material supplies).
Regarding water consumption, in 2013 we completed analysis
of a methodology for calculating our impact in terms of the full
product life cycle.
All these aspects are monitored on a periodic basis in diverse
company areas, including the commitments assumed and evolution
in each topic (see table on page 08). Natura is also seeking to
gradually incorporate the International Operations into these
indicators (see more on page 127, About the report).
45
Climate
change
Fully aware of our co-responsibility in the challenge of combating
and preventing climate change, Natura focused on developing
a management process for the entire company, in addition to
assuming public commitments to reduce impacts..
From 2007 to 2013 we reduced our relative greenhouse gas
(GHG) emissions by 33.2%, honoring the commitment made that
year to find alternatives to reduce our impact on climate change by
33%. This achievement is even more impressive given that it involves
our entire production chain, from the extraction of raw materials
to product disposal by the end consumer. This means that the
company reduced GHG emissions from 4.18 kg to 2.79 kg for each
kilogram of product invoiced.
The challenge of reducing these emissions drove numerous
innovations, a great deal of learning in the company and shows
how a socio-environmental challenge – incorporated into the
strategic planning and decision making process – can generate
innovation and positive results for the company, as well as
minimizing impacts on society.
Today, we have a management system that covers every stage
of the production process, encompassing product development,
manufacture, the order cycle and transportation. The tools
Natura has developed to help managers in this process include
the carbon calculator –now used also to calculate waste
generation –, which quantifies a product’s GHG emissions and
waste generation levels while it is still at the planning stage. For
products having a higher impact than the average for similar
products, the decision to maintain the project is only taken after
analysis by the Natura Products Committee, whose members
include the company CEO and a number of vice presidents
(read more on page 21).
Our leading suppliers, who are fundamental partners in emissions
reduction, also monitor and report on their GHG emissions
periodically. To conduct this mapping in the supply chain, we work
jointly with the Sustainable Supply Chains program, which tracks
a number of supplier indicators, including GHG emissions
(read more about the program on page 108).
Every year the company conducts its inventory to monitor direct
and indirect GHG emissions – from the extraction of raw materials
to final disposal of the product –, in accordance with Greenhouse
Gas Protocol Initiative (GHG Protocol) scopes 1, 2 and 3 and
ABNT NBR ISO 14064-1 standards. In 2013, the GHG inventory
was audited by Ernst & Young Auditores Independentes S.S.
46
Timeline
Main CO2e emissions reduction innovations:
-3.9%
• Carbon Neutral program, based on a complete plan, with three action fronts:
inventory, reduction and compensation, involving the compete production chain
• establishment of commitment to reduce relative emissions by 33% by 2011
• introduction of organic alcohol in perfumery
-8.6%
• Natura becomes carbon neutral by compensating all emissions that cannot be
avoided in the production process through the purchase of carbon credits
• increase in use of organic alcohol in formulations
• incentives for maritime product transportation
• stimulus to use ethanol in company sales force vehicle fleet
• optimization of packaging and increased use of recycled materials
-15.1%
• new target set: 10% reduction in absolute emissions (scopes 1 and 2) from 2008 to
2012
• construction of methodology to identify each product’s carbon footprint
• reduction in energy use with generators at Cajamar (São Paulo)
-21.2%
• revision of relative emissions reduction target from 2011 to 2013
• launch of Less Carbon, More Productivity program
• carbon calculator helps managers to estimate emissions before producing new product
• ruling that Product Committee launch decisions should prioritize lower or similar
impact to equivalent products
2011
-25.4%
• relaunch of Ekos line with reformulation of cartons and packs to reduce
environmental impact. GHG emissions from the line were reduced by 45%
compared with previous years
• creation of method for valuation of environmental impacts in the company’s supply
chain
• reduction of number of pages and change in format of Natura magazine
• use of smaller boxes to optimize deliveries to NCs
• substitution of LPG with ethanol in Cajamar boiler
• consolidation of revision of logistics network, with expansion of distribution
centers in Brazil and increase in overseas production, reducing international
product transportation
2012
-28.4%
• replacement of diesel powered boiler with biomass model at Benevides (Pará)
• fuel card for executives’ vehicles prioritizing use of ethanol
-33.2%
• launch of Sou line of skin and hair products with reduction of up to 60% in GHG
emissions
• relaunch of Aquarela make up line, with smaller packs
• relaunch of Plant hair line with green plastic packs
• use of ethanol-powered buses for employee transportation at Cajamar (São Paulo)
• operation of first two ethanol-powered truck trailers in Latin America
• beginning of tests with electric vehicles, including cars, tricycles and bicycles, for
logistics
2007
2008
2009
2010
2013
47
Natura Carbon Neutral Program
Since the creation of the Natura Carbon Neutral Program
in 2007, we have been promoting the ongoing reduction
of greenhouse gas emissions throughout every stage of
the production process. The program is divided into three
fronts: greenhouse gas inventory to measure and record
company emissions; reduction, covering our activities and
processes for decreasing them; and offsetting, through the
purchase of carbon credits from certified projects in the
voluntary market.
Based on a large number of data, the emissions inventory
is regularly updated in our monitoring system. We also
disclose our relative emissions performance every quarter
in our communications with the market.
GRI G4-EN15/EN16/EN18
Relative emissions (kg CO2e/kg
product invoiced) and emissions
intensity¹
2011
2012
2013
3.12
2.99²
2.79
1 The denominator used by the company is the mass of products
(content) invoiced in Brazil and in the International Operations. It is
calculated by multiplying the number of SKUs invoiced by the content
mass of each unit. 2 The relative emission for 2012 published in the last
annual report was 3.00 kg CO2e/kg of product invoiced. Due to the
alteration of the SIN (Sistema Interligado Nacional) emission factor in
November 2012 (from 0.1636 to 0.1247 tCO2e/MWh), this indicator
was revised and changed to 2.99 kg CO2e/kg of product invoiced.
GRI G4 EN15/EN16/EN17
emissions (by GHG Protocol scope)
Un.
Direct GHG emissions (scope 1)¹
Direct biogenic emissions (from burning or
biodegradation of biomass)
Indirect GHG and energy emissions (scope 2)²
t
Other indirect GHG emissions (scope 3)³
Indirect biogenic CO2 emissions in metric tons of CO2
Total
2011
2012
2013
6,062
3,435
2,164
3,512
6,762
9,318
1,865
3,426
5,374
257,089
273,170
305,580
5,344
8,387
10,389
265,015
280,031
4
313,119
1Source : Intergovernmental Panel on Climate Change (IPCC). 2 Source : Brazilian energy grid factor: Ministry of Science and Technology – and
IO countries’ electrical power grid factor: US Energy. 3 Source : Intergovernmental Panel on Climate Change (IPCC). 4 The absolute emission for
2012 published in the last annual report was 280,209 tCO2e. Due to the alteration of the SIN (Sistema Interligado Nacional) emission factor in
November 2012 (from 0.1636 to 0.1247 tCO2e/MWh), this indicator was altered to 280,031 tCO2e.
GRI G4 EN15/EN16
Emissions in the value chain
Un.
2011
2012
2013
117,276
123,768
128,735
21,299
22,478
34,346
24,731
20,395
24,522
Sale of products (transportation and distribution)
38,279
46,041
51,741
Product use and packaging disposal
63,431
67,349
73,774
265,015
280,031²
313,119
Extraction and transportation of raw materials and
packaging (process and transportation to direct suppliers)
Direct suppliers (process and transportation to Natura)
Industrial process and internal¹
Overall total (t)
t
1 Internal processes refer to fixed sources, exportation, business travel, wastewater treatment and International Operations.
2 The absolute emission for 2012 published in the last annual report was 280,209 tCO2e. Due to the alteration of the SIN (Sistema Interligado
Nacional) emission factor in November 2012 (from 0.1636 to 0.1247 tCO2e/MWh), this indicator was altered to 280,031 tCO2e.
48
GRI G4 EN30
CO2 emissions from transport in 2013 (t de CO2e)
2011
2012
2013
41,685
46,041
51,741
Product exports
8,867
6,957
9,163
Waste transport
204
162
184
Company buses
1,985
2,330
2,142
Sales force vehicles
2,071
733
686
734
612
575
Product transport
Logistics
Employee transportation
Executive vehicles
Main reduction initiatives GRI G4-EN19
Our relative emissions in 2013 dropped by 6.7% compared
with the previous year. The Sou line, which was launched in July,
had a positive effect on our emissions performance. This was
because the sub-brand was responsible for almost half of our
reductions in products during the year (read more about Sou
differentials on page 44).
The Natura Plant line was responsible for a 1,652.7 tCO2e reduction
in scope 3 emissions (read more on page 44). We also had gains
from the Aquarela make up line (759.9 tCO2e reduction in scope 3
emissions) due to the reformulation of packaging which prioritized
environmental impact reduction, and from the bar soaps, for which
the soap mass is manufactured in Benevides, where the bunker
oil-powered boiler was replaced with a biomass unit, contributing
to a 2,205 tCO2e reduction in scope 1 emissions. Moreover, as
part of company commercial strategy, the Tododia soap line was
repositioned in a more attractive price range, leading to a significant
increase in sales and, consequently, a rise in production.
There was also a significant reduction in emissions from
the International Operations, particularly worthy of note
being Argentina.
Electric vehicles tests
In 2013, we initiated a pilot project in conjunction with other
companies to test the feasibility of using electric vehicles for
product distribution in large urban centers. The first Brazilian
company to adopt electric vehicles for cargo transportation,
in the second half of 2013 we incorporated 15 electric
vehicles, including vans, tricycles and bicycles, into our fleet
in the cities of São Paulo, Campinas, Curitiba and Rio de
Janeiro. For purposes of comparison, three electric bicycles
or one electric tricycle emit 98% less CO2 than an ethanolpowered car consuming 200 liters of fuel per month.
Although still small, the number is significant because of the
potential these means of transportation represent. The
results achieved will serve as a basis for the company to
evaluate the economic and logistics feasibility of adopting
these vehicles. In addition to minimizing environmental
impacts, we believe that if this initiative is adopted on a large
scale it may contribute to improved mobility in large urban
centers. We expect to increase the size of the sustainable
vehicle fleet in the course of 2014.
How we offset gri G4-EN13/EN27
As a carbon neutral company, we offset all the emissions we
cannot avoid through the acquisition of carbon credits from
reforestation, energy efficiency, fuel substitution, waste treatment
and REDD+ (Reducing Emissions from Deforestation and
Degradation) projects. Coherent with our business conduct,
we prioritize projects which in addition to offsetting carbon,
generate other environmental (improvements in water quality,
erosion control and promotion of biodiversity) and social
benefits where they are in place.
Chosen by means of specific tenders, between 2007 and 2013
Natura contracted 1,875,087 tCO2e of carbon credits, of which
64% have already been generated and delivered to the company.
In 2013, we selected three new projects identified in the
previous tender (2011/2012), for which the technical and legal
assessments had not been completed.
It is our expectation to launch a new tender in the second half of
2014. At the moment we are adjusting the terms of the tender
to include more innovative projects and proposals from small
companies and non-governmental organizations, in particular
in the pan-Amazonian region. We also intend to conclude
negotiations for the purchase of credits from another project in
Latin America.
49
Offsetting
programs
2011–2013
4 – Improvements in treatment of pig
GRI G4-EN27
1– Suruí Forestry Carbon Project
In 2013, Natura became the first Brazilian company to purchase
indigenous carbon credits from the Suruí Forestry Carbon Project
developed by the Paiter Suruí people in the Sete de Setembro indigenous
region, located in the states of Rondônia and Mato Grosso. Unparalleled
worldwide, the project is an indigenous initiative based on forestry
conservation and the reclamation of deforested areas.
The project promotes the maintenance of the carbon stocks
standing in the forest. It is the first in the world to be classified as
REDD+ (Reducing Emissions from Deforestation and Degradation)
in indigenous territory and is validated by the international Verified
Carbon Standard (VCS) and Climate Community and Biodiversity
Standard (CCB) certifications.
In addition to protecting the forest, the work done by the indigenous
community, involving six associations that make up the Paiter Suruí
people, generates income for the communities from the sale of the
credits, as is the case with the current deal with Natura.
The company negotiated a total of 170,000 credits, of which 120,000
have already been delivered. The proceeds from the sale are being
invested in the territory’s 50 year management plan, which covers
248 thousand hectares of forest land. The plan is designed to improve
quality of life for the indigenous peoples and enhance forestry
stewardship and protection practices in the region.
breeding waste – (SC)
Waste treatment involving 12 small pig breeders which avoids methane
emissions through composting and produces quality compost for
agriculture.
Proponent: Sustainable Carbon
Type of project: methane avoidance
Credits contracted (tCO2e): 35,000
Credits delivered (tCO2e): 0
5 – Reclamation of degraded areas
with use of native species in Cáceres –
Colômbia
Proponent: Asorpar/South Pole
Type of project: forestry
Credits delivered (tCO2e): 29,000
6 – Carbon project in the Emas-Taquari
biodiversity corridor – (GO and MS)
Proponent: NGO Oréades Geoprocessing Center
Credits delivered (tCO2e): 0
Status Offsetting
programs
> Total credits
contracted: 1,875,087 tCO2e
> Total credits delivered: 64%
already generated
> Type of project:
energy projects (60%)
and forestry projects (40%)
To ensure understanding among the associations and guarantee
broad participation in the design and implementation of project
activities, a Free Prior and Informed Consent (FPIC) process was
conducted in the region. The proceeds from the sale of the carbon
credits are managed by the Suruí Fund, which seeks to ensure they
are distributed fairly. The project was monitored by Funai, Brazil’s
National Indian Foundation.
5
Proponent: Associação Metareilá
2 – Reclamation of degraded areas
using native species in Campo Verde,
Ucayali – Peru
A project that reclaimed 740 hectares of degraded pasture land
with native species, in addition to the development of a sustainable
stewardship plan for the timber industry which involved local
communities.
Proponent: BAM/South Pole
3 – Fuel replacement in ceramics manufacture –
(RJ, SE, PA, CE and PE)
3
3
2
3
1
3
1
6
6
3
4
Proponent: Sustainable Carbon
Type of project: energy
50
Energy
With the increase in production (17% growth in the volume
of units produced) in 2013 absolute energy consumption
grew by 5%, from 270.1 terajoules (TJ) to 284.2 TJ.However,
Natura obtained a reduction in relative energy consumption,
which considers energy expenditure per unit produced. During
the year, this indicator dropped 10%, from 436.4 kJ per unit
produced to 392.2 kJ /unit produced, demonstrating improved
eco-efficiency. GRI G4-EN3/EN5
Initiatives that drove this result included measures such
as replacing the lighting in the Cajamar plant with more
efficient LED bulbs. Factory operation was also reduced on
Sundays, with production concentrated on the other days
of the week, resulting in a decrease in energy costs, mainly
with refrigeration and steam generation. The company also
benefited from measures implanted in previous years. This
was the case of the biomass-powered boiler inaugurated
at Benevides in 2012, substituting bunker oil with wood
briquettes. GRI G4-EN6
The company also tracks the energy consumption of its
outsourced suppliers (those manufacturing products in Natura’s
name). In addition to monitoring the indicator, we conduct
periodic technical visits and encourage them to implement
efficiency projects. However, in 2013 these suppliers’ consumption
increased by 23%, due to the higher production volumes.
GRI G4-EN3
It should be noted also that Natura does not use ozone layer
depleting substances in its operations. Since the company uses
clean fuels (ethanol, LPG and briquettes) in its boilers, it does not
produce significant, measurable quantities of NOx and SOx.
GRI G4-EN20/EN21
The success of the project in our unit in Pará led to the
introduction of a second boiler in Cajamar, which is powered
by ethanol. Whereas in Benevides we stopped using oil derived
from petroleum, at Cajamar LPG was replaced by ethanol,
currently meeting all our steam generation needs.
The savings generated with all the company’s improvement
projects in 2013 totaled 0.07 TJ, a smaller reduction than in the
previous two years. The slower rate of reduction compared
with the previous years is due to greater accumulated ecoefficiency and to the fact that each project is only counted
once. GRI G4-EN6
Energy efficiency at Benevides
When planning its new soap factory in Benevides, part of
the Ecoparque (read more on page 56), Natura incorporated
the most modern energy efficient technologies compatible
with the venture and with the surrounding region. The
differentials in the architectural project include a geothermal
system which captures part of the air used in the air
conditioning system via underground piping. The air in these
pipes is colder than the air in the external environment,
making the air conditioning more efficient. The factory
building also has double walls which extract the hot air from
the building, reducing internal temperatures and decreasing
the need for air conditioning. Furthermore, the plant uses
natural lighting to decrease electricity consumption during
the daytime.
GRI G4-EN3
Direct and indirect energy consumption, by primary source¹
Type of Source
2011
2012
2013
Renewable
0.02
0.02
0.02
Diesel oil for generators
Non-renewable
6
5
7
LPG
Non-renewable
21
7
7
136
153
167
Solar energy
Un
TJ
Electricity
Renewable
Alcohol
Renewable
15
34
36
Non-renewable
19
18
-
Renewable
-
9
29
2
Bunker oil
Briquettes3
1 Consumption referring to Natura energy matrix: Cajamar, Benevides, distribution centers and Nasp administrative areas, Shared Service Center
and regional offices. 2 Renewable fuel used for steam production at Cajamar. 3 Complete substitution of bunker fuel boiler with biomass-powered
one at Benevides, as a fossil fuel consumption reduction measure.
51
GRI G4-EN3
2013 energy matrix (%)
12
Briquette
3
15
68
Alcohol
Diesel
Electricity
3
LPG
Bunker oil – 0
Solar energy – 0,01
1 The figures in the energy matrix differ from those reported in the carbon inventory because the figures for December
were updated. In the inventory projected data were used due to the base date for the report.
GRI G4-EN3
Total energy consumption, by source
Unit
Total consumption of non-renewable fuels
Total consumption of renewable fuels
TJ
Total fuel consumption
2011
2012
2013
46.6
29.7
14.02
151.2
196.5
232.6
197.7
226.3
246.6
2011
2012
2013
142.7
158.6
174.2
0.00
0.00
0.00
0.00
0.00
0.00
15.8
2.3
2.3
158.4
160.8
176.5
gri G4-EN3
Total energy consumption
Unit
Electricity
Heating
Refrigeration¹
Steam
Total energy
TJ
1 Electricity consumption for refrigeration is already included in total electricity consumption of the Cajamar site.
52
GRI G4-EN3
Total energy consumption
Unit
Cajamar and Benevides sites1
Other Natura spaces in Brazil
2
Natura outsourced suppliers’ energy
TJ
3
Total
2011
2012
2013
158
173
179
39
53
65
54
44
54
251
270
284
1 Energy consumption at Cajamar and Benevides corresponds to 73.5% of the total energy matrix for all Natura units. 2 Energy consumption in
other Natura spaces in Brazil, covering the Alphaville and Itapecerica units, the distribution centers and Nasp, corresponds to 26.5%. 3 Outsourced
suppliers are companies that manufacture finished products for Natura. They represent approximately 95% of the total units bought by Natura.
GRI G4-EN4
Energy consumed
outside the organization¹
Unit
2013
1. Acquired goods and services
TJ
513.3
4. Upstream transportation and distribution
TJ
37.2
5. Waste generated in operation
TJ
2.7
6.Business travel
TJ
0.07
7. Employee transportation
TJ
30.2
9. Downstream transportation and distribution
TJ
490.7
TJ
1,074.2
Total
1 Monitoring of indicator began in 2013.
GRI G4-EN5
Energy intensity¹
Unit
Energy consumption per unit produced
2011
2012
2013
409.8
436.4
392.2
Joules x 10
12
1 Calculation formula: sum of all Natura energy sources (Cajamar, Benevides, other spaces and outsourced suppliers) divided
by all the units produced.
GRI G4-EN6
Energy saved1 ²
Unit
Through efficiency projects
Through consumption of solar energy³
Joules x 1012
2011
2012
2013
1.8
0.9
0.07
0
0
0
1 Amounts corresponding to projects implemented at Cajamar site (theoretical amounts). 2 The amounts of energy saved are
projections based on the technical premises of each project supplied by the Project Engineering department. 3 The amounts
for 2011 and 2012 were reported incorrectly in the last report and have been adjusted.
53
Social Biodiversity
The experience gained after 14 years researching and
working with biodiversity inputs demonstrates the feasibility
of a sustainable production model in harmony with mankind
and nature. Since the launch of the Ekos line in 2000,
we have worked on building and strengthening Brazilian
social biodiversity production chains, including extractivist
communities and family smallholder producers. Our aim has
been to create a new economy based on an inclusive business
model aligned with the ethical bio-commerce principles set
forth in the Convention on Biological Diversity.
The Natura Policy for the Sustainable Use of Social Biodiversity
Products and Services is in constant evolution. It sets forth
how the company relates to these communities, including
its model for sharing the benefits from access to biological
resources and/or tradition knowledge and guidelines for the
purchase of such inputs, among other items. More than just a
commercial relationship, the policy expresses our desire to build
a relationship based on fair pricing and creating opportunities
for these communities to get organized, diversify their assets
and businesses, add value locally and promote the sustainable
development of their region.
The policy also covers technological development and research;
community relations, traditional and indigenous peoples;
product development and innovation; business, marketing and
communication; and education and governance.
To drive further synergy and positive impacts from the
program initiatives, we defined five priority areas of activity
which together cover 57 municipalities in the Amazon
region.
Program targets for 2020 include generating business worth
R$ 1 billion in the region; forming a network of one thousand
researchers to generate innovation and technology based on
biological resources; increasing the number of families involved
in the ingredient supply system to 10 thousand (currently
there are 2,100); and increasing consumption of inputs
produced in the region by 30% in value. In 2013, consumption
of raw materials from the Amazon, considering both Brazilian
biological resources and those from the Amazon palm grew
13.4%, a 15% increase over 2012.
Business in the region reached R$ 201.5 million, exceeding the
R$ 190 million target set for the year. This increase was due in
great part to investments in the Ecoparque (45% of the total).
Priority territories
North-South
Manaus
In 2013, we reviewed these guidelines, setting targets and
formulating guidelines aligned with the Amazônia Program.
Advances in
the Amazônia Program
Launched by Natura in 2011, the Amazônia Program sets forth
our commitment to helping the region to develop its enormous
potential in social biodiversity and drive the generation of
sustainable businesses as an economic alternative, involving local
inhabitants and ensuring the forest is kept standing. Rather than
simply acquiring biological inputs we want to help to develop the
region as a center of reference in sustainable technologies and
businesses capable of generating local value.
Northeastern
Pará
Juruá River
Acre-Perus
XinguTapajós
54
Amazônia Program
Consumption of raw materials from the Amazon
Unit
2011
2012
2013
% in relation to millions – R$ MM
11
11.4
13.4
R$ MM
64.8
121.8
201.5
Business volume in the Amazon region
The Amazônia program is divided into three work fronts: 1)
Science, Technology and Innovation; 2) Sustainable Supply Chains;
and 3) Institutional Reinforcement. In the course of 2013 we
developed a series of activities on each of these fronts. As a result
of this work Natura received the Professor Samuel Benchimol
award, an initiative by the Ministry of Development, Industry
and Foreign Trade and the Banco da Amazônia to recognize
organizations collaborating with the development of the Amazon
region. The advances on each of these fronts are described below:
1) Science, Technology and Innovation
2) Sustainable Production Chains
The Science, Technology and Innovation front is responsible for
generating and disseminating knowledge of global importance
“in”, “about” and “for” the region, activating and coordinating
local, national and international knowledge networks based
on Nina (Natura Amazônia Innovation Center), inaugurated in
Manaus (Amazonas) in 2012.
On the Sustainable Production Chains front, our goal is to build,
enhance and expand local chains, focused on social development,
fair distribution of wealth and gains in competitiveness. In
addition to the construction of the Ecoparque, the main initiative
in this front of the Amazônia program (read more in the box
below), throughout 2013 the company maintained relations with
25 communities (including communities supplying ingredients,
having access to traditional knowledge, and/or receiving
institutional support), totaling 3,117 families. This work is led by
Natura’s Social Biodiversity Relationship and Supply Chain area,
part of the company’s Supplies structure.
In August 2012, we launched the first Natura Amazônia Campus,
aimed at stimulating the development of projects in the region
and revealing co-development and cooperation opportunities
in diverse research projects in the Amazon. Concluded in 2013,
the call received 82 proposals for the region, of which six were
selected to receive support from Natura. The tender led to
partnerships with Ufam (Federal University of Amazonas), Inpa
(National Institute of Research in the Amazon), Embrapa and
CBA (Amazon Center of Biotechnology).
This experience led to the creation of the Conexão Natura
Campus (Natura Campus Connection), an encounter involving
business partners, representatives of foment agencies and
researchers in the region, held in Manaus in July 2013. Conceived
to develop new connections and collaborative projects, a
number of partnerships were formed and the results should
become evident in the medium to long term.
The activities undertaken in 2013 are related to the formation
and development of leaders; foment for cooperative work and
management training; best practices in fair pricing, contracts
and harvest monitoring; traceability and the implantation of
good production practices; investment in production efficiency
and productivity gains; and training and adding local value for
communities (read more on page 112).
Another Natura Campus initiative was the Amazon Vegetable
Ingredients Award, providing recognition for researchers in the region
who have contributed to scientific advance through the development
of vegetable ingredients from the Amazon biome.Thirty researchers
took part in the first edition, the winner receiving a prize of R$ 30
thousand (read more about the Natura Campus on page 43).
Nina also runs initiatives with the UFPA (Federal University of
Pará), UEPA (State University of Pará) and the Emilio Goeldi
Museum; it also has an agreement with Fapeam (State of
Amazonas Research Support Foundation) for scholarship
holders to participate in an internship program at Natura.
55
New fact0ry
Inaugurated in the first quarter of 2014, the Ecoparque in
Benevides (Pará) is an industrial park aimed at attracting
diverse partners who share Natura’s values and a common
objective: driving sustainable businesses in the Amazon
based on social biodiversity, leveraging the demand for forest
inputs and promoting local entrepreneurship.
The Ecoparque operations start with the Natura
manufacturing plant, which will have 240 direct employees,
with 100% of the operational team and 70% of the
administrative team drawn from the local population.
The first partner, Symrise, an international manufacturer
of fragrances and raw materials, will initiate activities in
2014. The plan is for other companies to participate in the
Ecoparque, enabling opportunities to exchange resources
and articulate joint alternatives to foment the creation of
sustainable businesses in the region.
With a total investment of R$ 217 million, by the end of
2015 the new plant is scheduled to produce approximately
80% of Natura’s soap portfolio, supplying company
distribution centers in Brazil and in the International
Operations. Hitherto, these items were finalized by
outsourced companies in Minas Gerais and São Paulo. In
2016, the plant’s production capacity is planned to reach 500
million bars of soap per year.
Using state-of-the-art production technology and ecoefficiency principles, the complex has a geothermal chilling
system and a rainwater harvesting and reuse system.
It employs natural ventilation and illumination in the
buildings, electric cars and bicycles, a road system designed
to guarantee the permeability of the soil and filtering
gardens for the treatment of wastewater (a technology
which dispenses the use of chemical products through
decomposition of pollutants by the action of bacteria in the
plant roots).
3) Institutional Reinforcement
Established as one of the areas of activity in this pillar, there were
significant advances in promoting education in 2013. Aimed at
enhancing the quality of basic education in the region, in 2013
we inaugurated the RAE PAM (Amazônia Educational Support
Network) in partnership with the education departments of
30 municipalities in the northeast of Pará and in the Rio Juruá/
Amazonas area.
In addition to training in the Trilhas de Leitura (Reading Trails)
and Conviva Educação programs for all the municipal education
departments, Natura distributed 2,177 Trilhas kits to all of the
schools in the municipalities in the network.
Trilhas, recognized as public policy by the Education Ministry
in 2012, provides support for children in the first year of basic
education through the distribution of materials to develop
reading, writing and speaking skills. The Conviva Educação
program is aimed at improving management efficiency in
education departments through a virtual platform designed to
promote preparation, training and experience sharing.
The company also concluded an analysis on education in each of
the municipalities and elaborated an educational development
plan specifically for Benevides, where the Ecoparque and the
new Natura plant were built.
These activities occur in a partnership with the Pacto pela
Educação do Pará (Pará Education Pact), a state government
initiative to improve the quality of education in the state. This
proximity between Natura and the state government helps
ensure that the reality of forest dwellers is taken into account
in the pact.
Also coming under the Institutional Reinforcement area, in
2013 we signed a cooperation protocol to strengthen nontimber related forestry production chains in the Tapajós region,
which includes the municipalities of Juruti and Santarém in
Pará. In partnership with Alcoa, the Fundo Juruti Sustentável
(Funjus), the Fundo Brasileiro para a Biodiversidade (Funbio)
and the NGO Projeto Saúde e Alegria, we initiated mapping of
native species and an analysis of the development potential of
local production chains. The next step will be technical studies
and training for the communities involved. Natura expects to
be able to include some of the communities qualified in the
sustainable supply of ingredients from the region on its list of
regular raw material suppliers.
There were also two meetings of the Amazônia Program
External Consulting Council, which was created in 2012 with the
mission of guiding Natura in the execution of the program plans
and targets.
56
Alternating schools
It is Natura’s understanding that there are different ways
of providing education while at the same time generating
local development. For this reason, in 2013 the company
developed the Alternating Model for Education project, a
partnership between the Instituto Natura and the NGO
Gestão de Interesses Públicos (GIP). This project is aimed
at improving the quality of secondary education in rural
regions, reinforcing alternating education and gaining
recognition of the model developed by 24 alternating
education institutions known as the Casas Familiares Rurais
do Pará (CFRs) by the Ministry of Education and the State
Education Council.
In this model, the student attends school for 15 days and
on the other 15 days of the month applies the knowledge
acquired in his/her local community. With the basic
curriculum adapted to the local reality, including contents on
agroforestry techniques, young people end their secondary
education qualified to work in the field, enabling them to
add value for their communities.
In 2013, the main advances in the project included the
enrollment of 2,300 students in the Ministry of Education’s
census, Educacenso, the development of the CFRs’
educational policy plan, the regularization of the fiscal status
of each of the Casas Familiares Rurais and the establishment
of Arcafar – the organization representing the CFRs –,
in Altamira (Pará). There were also training activities in
management, accounting, projects and tenders, as well as an
encounter for the young participants. These results made a
significant contribution to the establishment of agreements
and the release of funding from the Pará Education
department, essential to enable the CFRs to receive
Fundeb educational funding from 2014 and thus ensure the
sustainability of the model.
Activities in
protected areas G4-EN11/EN12/en13
Our main operations in Brazil are located on land owned by
Natura, which invests in the reclamation and conservation of
these areas in accordance with the environmental licenses
for each. The exception is Nasp, in São Paulo, an 111,700 m²
area which is leased. Nasp was inaugurated in February 2013
and is used for administrative and logistics activities, such as
warehousing and distribution.
In Cajamar (São Paulo), our head office is located in a
646,000 square meter plot in an Área de Proteção Ambiental
(Environmental Protection Area) on the Anhanguera highway.
The area houses the administrative office, the company’s
main industrial unit and, up until 2013, a warehousing and
distribution center. In 2012, we concluded the stewardship
plan for the site, which included the removal of exotic
species, forestry reclamation and the addition of local
biodiversity in a 13.3 hectare area. Since then the company
has invested in maintaining the area. It should be noted that
the environmental authority approved the stewardship plan
implemented by Natura.
In Benevides (Pará), in addition to the area in which our soap
mass factory was built, we concluded the construction of
the Ecoparque on a 172.9 hectare plot which is part of the
municipality’s Industrial and Commercial Expansion Zone. There
are two permanent protection areas in this location for which
the conservation measures stipulated in the environmental
licenses are under implementation. The construction is in
compliance with applicable environmental criteria and has an
environmental license.
In May 2013, the company discontinued operations in Itapecerica
da Serra (São Paulo), bordering on the Régis Bittencourt
highway, which was located in a Guarapiranga Water Basin
Protection and Reclamation area. Reclamation of this area was
concluded in 2008, when the company continued to maintain
the vegetation until the deactivation of the unit.
Natura also works with social biodiversity input suppliers
in a number of regions in the country. These include
communities in two areas protected by the National
Conservation Unit System: the Mid Juruá Extractivist
Reserve in Amazonas, and the Iratapuru State Sustainable
Development Reserve in Amapá.
In Mid Juruá, where the protected area contains 253 thousand
hectares, andiroba and murumuru palm stewardship activities
are conducted in less than 1% of the total reserve area. In 2011,
Natura obtained access to the traditional knowledge associated
with the andiroba through an unprecedented commercial
agreement with a community in an environmental conservation
area. The benefit sharing contract was monitored by ICMBio
(Chico Medes Institute of Preservation of Biodiversity) and
authorized by the federal government Genetic Heritage
Management Council (CGen).
Sustainable stewardship of the Brazil nut, copaiba and white
pitch occurs in an area of approximately 4,000 hectares on
the Iratapuru Reserve, less than 0.5% of the 842,000 hectares
the reserve occupies. All the activities are approved by the
management of these preservation units.
57
GRI G4-EN11
Location and size of areas owned, leased or administered within or
adjacent to protected areas, and high biodiversity areas outside
protected areas
Cajamar
Itapecerica
da Serra
Benevides
Ecoparque
(Benevides)
Nasp
(São Paulo)
Own area
Own area
Leased area
Own area
Leased area
Position in relation
to protected area
Occupied
area is an APA
(environmental
protection area)
Occupied area
is a water source
protection area
Area occupied
is an urban
industrial zone
Area includes
protected areas
Area occupied
is an urban
industrial zone
Type of operation
Administrative
and industrial
with cosmetics
production
Administrative
and industrial with
Administrative
production of
soap mass
Administrative
and industrial
with production
of soap mass and
soap
Administrative
and logistics
with cosmetics
warehousing and
distribution
Area
Size of operating unit
Biodiversity value ¹
646,000 m²²
96,500 m²²
51,800 m²
1,720,000 m²
111,7 mil m²
Not available
Not available
Not available
Not available
Not available
1 Takes into account attributes of protected area and area with high biodiversity rate outside protected area (terrestrial, freshwater or salt water
ecosystem) and classification by state of conservation (e.g.: IUCN category, Ramsar Convention, Brazilian legislation etc.).
Environmental certification GRI G4-EN27
To ensure social biodiversity ingredient extraction processes do
not exceed environmental capacity, the company provides an
incentive plan for suppliers to obtain certification of vegetable
raw materials. Conducted by independent certification bodies,
the process requirements include production traceability
whereby the producer documents and accounts for the origin of
all volumes produced.
A total of 44% of the biodiversity raw materials the company
uses have some kind of certification; this rate is a little under
the 47% recorded in 2012.The reduction is due mainly to the
discontinuation of three certified raw materials. Another three new
raw materials already certified in research were not included in the
total number of certifications because there was no supply in 2013.
During the year, the certification processes are monitored
via certification audits in the communities or groups of
producers. On occasion the company provides technical
assistance to groups, helping them to comply with
requirements, such as the documentation necessary to meet
standards, validation of certificates for suppliers involved in
the chain and monitoring of modifications and changes in
certification processes. Although there is still no certification
for organic cosmetics under Brazilian legislation, Natura
constantly seeks to be involved in technical discussion groups
to evaluate and contribute to the construction of a normative
framework for this area.
The certifications include family agricultural producers and
traditional communities, based on two categories: organic
(Instituto Biodinâmico, Ecocert, Organização Internacional
Agropecuária and Instituto de Mercado Ecológico) and forestry
(Forest Stewardship Council).
Among the inputs the company uses, three are developed
from species listed as threatened with extinction, in accordance
with the Ministry of the Environment and the International
Union for the Conservation of Nature and Natural Resources.
These are: Brazil nut (Bertholletia excelsa), listed as vulnerable,
yerba mate (Ilex paraguariensis), low risk, and ucuúba (Virola
surinamensis), which is threatened. The acquisition of these
raw materials follows the principle of the sustainable use of
biodiversity. GRI G4-EN14
58
gri G4-pr3
GRI G4-EN27
Origin of material and certification of
products
Certified ingredients ¹ 2
Unit 2011 2012 2013
Certified
ingredients
Percentage of
certified species
Un.
37
27
20
%
59
47
44
1Only plant inputs in the form of waxes, oils, extracts, essential or
unprocessed oils (cosmetics and teas) are considered. Certifications
considered: organic (IBD, Ecocert, OIA, IMO) and forest stewardship
(FSC). 2 In exceptional cases, additional volumes of raw materials may
be acquired from uncertified areas due to: increase in internal demand,
decreases in productivity in certified areas, lack of stocks at certified
suppliers.
Unit 2011 2012 2013
Renewable plant
material
Natural plant
material¹
Material with
certification of
origin²
%
81
82
82
%
9
8
7
%
12
15
13
1 The small reduction in the percentage of natural plant material is due
to a change in the product category mix in function of new launches.
2 The decrease in the percentage of material with certification of origin
is due to the perfume category’s lower share, in function of the growth
in share of the hair, body and soap categories after the Sou launch.
59
GRI G4-EN27
Number of ingredients certified and status of certification 1 2
Species –Ekos Line
Production system
Status (phase)
Certification
Açaí berry (Roraima) Euterpe precatória
Agroforestry
III III (final)
IBD
Açaí berry (Pará) Euterpe oleracea
Agroforestry
III III (final)
IMO
Andiroba (Amazonas/Pará) Carapa guianensis
Traditional
I
White pitch (Amazonas) Protium pallidum
Traditional
II
Agroforestry
III III (final)
IBD
Organic
III III (final)
Ecocert
Traditional
III III (final)
Agroforestry
III III (final)
Passion Fruit (Minas Gerais/Paraná/Pará)
Cultivation
I
Yerba Mate (Rio Grande do Sul) Ilex paraguaiensis
Traditional
III III (final)
Murumuru (AM/PA) Astrocaryum murumuru
Traditional
I
Cultivation and
organic stewardship
III III (final)
Ecocert
Organic cultivation
III III (final)
IBD
Production
system
Status (phase)
Certification
Organic cultivation
III (final)
Ecocert
Babassu (Maranhão) Orbgnya speciosa
Stewardship
I
Buriti palm (Minas Gerais) Mauritia flexuosa
Stewardship
I
Arabian Coffee (Minas Gerais) Coffea arábica
Organic cultivation
III (final)
IBD
Candeia (MG) Eremanthus erythropappus
Stewardship and
organic cultivation
III (final)
FSC
Brazilian wax palm (Ceará) Copernicea cerifera
Stewardship
III (final)
IBD
Copaíba (Amazonas) Copaifera spp
Stewardship
III (final)
Ecocert
Hoary Basil (Pará) Ocimum americanum
Organic cultivation
III (final)
IBD
Spilanthes (São Paulo) Spilanthes oleracea
Organic cultivation
III (final)
IBD
Palo santo (Ecuador) Bursera graveolens
Stewardship
III (final)
Ecocert
Paramela (Patagonia-Argentina) Adesmia buronioides
Stewardship
III (final)
OIA
Organic cultivation
III (final)
Ecocert
3
Cocoa (Bahia/Pará) Theobroma cacao
Lemongrass (São Paulo)
Brazil Nut (Mato Grosso /Roraima) Bertholletia excelsa
3
Cupuaçu (Roraima/Pará)
Surinam cherry (São Paulo) Eugenia uniflora
Piri Piri (Pará) Cyperus articulatus
Species – Other lines
Rosemary (Paraná) Rosmarinus officinalis L.
Poejo (Rio Grande do Sul) Cunilla gallioides
IBD
FSC
1Phase I: Internal process of identification and selection of a potential supplier area. This phase is characterized by the typology of producers, the
organization of the community and the existing type of stewardship (agricultural or forest); Phase II: Preparation of certification strategies, with
discussion of the processes with plant product suppliers, selection of the certifying body and preliminary analysis of the supplier area by this body
(when necessary); Phase III: Certification inspection in the supplier areas, implementation of the action plan to comply with the requirements of
the certifying bodies and opinion of the certifying body to obtain the seal. 2 In addition to the 19 ingredients described in the certification table,
there is another that was not listed because even though it has been certified, it is still at the research stage and may not be disclosed.
3 White pitch and the Brazil nut lost their FSC certification in the passage from phase III to phase II certification because some non-conformances
identified were not corrected.
60
Solid
waste
Natura has been working on a solid waste strategy from
a life cycle perspective that integrates the company’s
complete value chain. With this strategy, which incorporates
the requirements of Brazil’s national solid waste policy, the
company aims to increasingly reduce the generation of
solid waste and dejects throughout the chain and expand
the use of post-consumption recycled material in products.
The company also intends to contribute to the construction
of efficient and inclusive supply chains by stimulating the
participation of recyclable material scavenger collectives and
promoting fair pricing and traceability.
The formulation of this strategy is based on the waste
generation inventory the company developed to quantify the
volume of waste generated during the three main phases of
our chain: manufacturing processes (internal and outsourced);
product distribution; and use and disposal by consumers. The
inventory has been conducted for three years running and
since the beginning of 2013 has been updated on a quarterly
basis. The methodology identifies which type of waste is
generated in larger quantities at each stage and how it is
disposed of.
We begin by measuring the total waste from our processes
and units, that is all Natura’s direct generation. Currently, the
company manages to recycle around 93% of the volume
generated, reinserting it into Natura production processes or
those of other companies.
The inventory also includes the waste generated during
transportation and distribution, where two major sources are
the cardboard boxes used to ship product to consultants and
the magazine Natura. In 2013, we adopted new models of
boxes and reformulated the size of the publication to decrease
paper losses.
The final link in this chain, which is product use and
post-consumption disposal, is the biggest challenge for
any industry, precisely because it is the stage where the
most waste is generated. To address this, the company is
developing a reverse logistics plan, the main goal of which
is to develop a management model capable of transforming
waste into new business opportunities. We literally want
to close our product life cycle, ensuring that the waste
generated returns to the company chain or to another one
with the same or greater added value. The launch of this
program is scheduled for 2014.
The only materials not covered in the waste management
strategy are those generated by our direct and indirect raw
material and packaging suppliers – the first stage of the
production chain. The reason for this is the complexity of the
model and the premise of shared responsibility set forth in
national solid waste policy. Waste management at suppliers
is one of the items tracked in our supply chain development
program – Qlicar which, in the Portuguese acronym
stands for Quality, Logistics, Innovation, Competitiveness,
Environment, Social and Relationship. Our suppliers are
responsible for managing the quantity of the waste they
generate and for its disposal.
In addition to internal initiatives, Natura also supports actions
promoted by the industry association Abihpec to promote
compliance with Brazil’s national solid waste policy.
Policy for the use of recycled material
To drive the theme of waste throughout the company,
last year Natura launched its Sustainable Use of PostConsumption Recycled Material Policy, with guidelines for
the different company areas (Innovation, Marketing, Logistics
etc.) to boost the use of post-consumption materials in our
processes. The document also addresses the importance
of promoting the inclusion of recyclable material scavenger
cooperatives in our value chain as well as providing
information on fair pricing.
Indicators were also created to track the progress of Natura
initiatives towards achievement of long-term targets. One
of these is the indicator measuring the quantity of postconsumption recycled material (PCRM) used in our products
(gram of PCRM/gram of packaging), which currently stands at
approximately 1.43%.
This question is now discussed in different company areas to
improve monitoring and management. In 2014, the intention
is to conduct training on the PCRM indicator for employees
engaged in the product development process.
Integrated calculator
From a companywide perspective, in 2013 Natura
developed an integrated calculator to automatically
measure the potential greenhouse gas, waste and social
biodiversity impacts of any product under development
in the company. The idea is that the calculator will permit
comparison of the environmental impact of different
technologies and materials, helping the team involved to
improve decision making during the development process.
It is expected that this tool will be implemented at the
beginning of 2014.
61
Gains from Sou
The launch of the Sou line in 2013 resulted in the evolution
of the way in which we understand the product life cycle. In
addition to gains in the production and distribution stages, with
significant CO2 emission and waste generation reductions (read
more about Sou on page 44), the new line led the company
to seek solutions that would enable the pouch pack, made of
a mixture of plastics not readily acceptable in conventional
recycling chains, to be recycled.
During the year, we researched different technological
applications and identified a series of processes in which the
post-consumption pouch pack could be employed: automobile
bumpers, plastic pallets and blocks used in civil construction,
among others. The company is also studying the possibility
of incorporating other post-consumption materials, such as
glass and aluminum, into its products. The next step will be to
structure a supply chain for these materials in line with company
waste management strategy.
Efforts to drive recycling
in the IOs gri G4-EN28
Since 2010, we have been testing a recycling program among
our Colombian NCs in the cities of Bogota, Cali, Bucaramanga,
Barranquilla, Medellin and Siberia, with a total of 447 metric tons
of empty packaging collected in 2013, an increase of almost 13%
compared with 2012.
The program follows two formats: in the first, Natura forms
partnerships with local scavenger cooperatives which collect
the waste directly from the consultants’ homes. In the other
model, which has been showing growing effectiveness, the
NCs themselves create collection stations in the vicinity of
their homes, thereby also encouraging their neighbors to
recycle. There are currently 30 of these collection stations in
the country.
In 2013, the company also implanted a selective collection
system in the International Operations, including offices and
the Casas Natura (product showrooms in place in all the
countries in which we have operations except for Brazil).
Studies are also underway for the first waste inventory for the
Company performance GRI G4-EN23
We monitor waste generation at all our units and at
outsourced suppliers, partnering companies who manufacture
products in Natura’s name. In 2013, waste generation was
21.7 grams per unit produced, a 15% reduction compared
with the 25.56 grams per unit produced the previous year.
This enabled the company to exceed the target set for 2013,
which was 24.7 grams of waste for each unit. Throughout the
year, internal and outsourced industrial processes and stocks
were controlled more efficiently to prevent losses from the
scrapping of products.
The environment area is responsible for waste control and
disposal, which is in accordance with type. The sorting and
transportation phases are executed by a service provider, which
also disposes of the waste in accordance with legal requirements.
Waste generated per unit produced is reported in our quarterly
communications to the market.
GRI G4-EN23
Waste per unit produced1
Unit
Total waste per unit produced
g/un.
2011
2012
2013
20
26
21.7
1 The indicator waste/unit produced is the sum in grams of all Natura’s direct and indirect waste divided by the
total of units produced directly and indirectly.
62
GRI G4-EN23
Natura direct waste, by type and destination
Total
hazardous
waste
(class I)¹
Total nonhazardous
waste (class II
– A and B)
Unidade
2011
2012
2013
Recycled ²
%
97
98
98
Incinerated
%
2.7
1.7
1.9
Disposed of in landfills
%
0
0
0.2
Recycled ²
%
89
87
83
Incinerated
%
0.6
0.3
1.3
Disposed of in landfills
%
10
12
15.7
Overall total of Natura direct waste³
t
8,995
11,933
10,363
2011
2012
2013
1,691
2,230
3,552
1,589
1,498
2,299
3,280
3,728
5,851
Natura indirect waste (t) Waste from other Natura spaces4
Waste from Natura outsourced suppliers
Total indirect waste
t
5
1 Natura does not import, export or transport waste internationally.. GRI G4-EN25 2 Waste sent for composting, co-processing and
transformation is considered to be recycled. 3 This refers to Cajamar, Itapecerica da Serra, Alphaville, Benevides and Nasp. In this indicator, Natura
does not report on waste generated in civil construction work (rubble) on its premises.. 4 This refers to the distribution centers, advanced
centers, hub and shared service center. Monitoring of waste at these units was begun in 2010. 5 This refers to the ten largest outsourced suppliers
of Natura products, who represent approximately 95% of total outsourced production.
63
Water
Since 2010, Natura has intensified work on identifying the
real dimension of the impact our business causes on water
resources. As with the other priority topics, the company
wishes to include the complete product life cycle in this
analysis to build an efficient water management strategy.
In 2010, the first step in this challenge was the calculation
of the company’s water footprint, using Water Footprint
Network (WFN) methodology to map impacts, ranging
from the supply of inputs (extraction and production of raw
materials), through production and distribution to use and
disposal by the consumer. The study showed that our most
significant impact (45.9%) was precisely in the last stage,
disposal by the consumer.
From this point, we concentrated on finding a methodology
that would enable us to more accurately determine the impact
our products have on water consumption by the consumer.
It should be noted that existing methodologies, including
the one used to calculate our water footprint, are based on
international concepts that frequently do not apply to the
Brazilian context, such as unequal geographical distribution of
water (the most populous regions are far from the regions
where water is concentrated) and the lack of basic sanitation
in many regions.
We analyzed four methodologies which permitted a more
complete evaluation of the potential of our products to pollute
water resources, assessing the biodegradability levels and toxicity
of the portfolio. The aim was to test the sensitivity of the
methodologies and evaluate which could be replicated in the
different Natura product categories.
In 2013, we selected the methodology presented in the
study “A new water footprint calculation method integrating
consumptive and degradative water use into a single standalone weighted indicator”, published by Bradley G. Ridoutt
and Stephan Pfister in the The International Journal of Life
Cycle Assessment. We started to adapt it to the reality in the
company and in the country, testing it on two products, one
of which is a shower product. The methodology enabled us
to measure the impact of our product through to the final
stage, disposal in the effluent network. As such, we were able
to measure the product’s ecotoxicity, that is, the effects the
products discharged into the environment may have on living
organisms. In 2014, we started to extend this mapping to our
entire portfolio, structuring our water footprint in accordance
with this new methodology.
Our performance
Internally, we have tracked our performance in terms of water
consumption per unit produced in all the offices, distribution
centers, manufacturing units and outsourced suppliers
(partnering companies which produce finished products in
Natura’s name) in Brazil. The indicator is monitored on a monthly
basis by the technical area and is part of the company socioenvironmental process; it is also presented to the Executive
Board. Performance is reported in our quarterly results releases
to the market.
Currently our major challenge is to maintain relative water
consumption at the same levels as previous years, in spite
of the growth in operations and in production volume. In
2013, although we discontinued activities in Itapecerica da
Serra (São Paulo), we inaugurated a new distribution center
and administrative unit in São Paulo (Nasp), expanded the
Cajamar plant and constructed a new soap factory in the
Ecoparque in Benevides.
This challenge is reflected in our performance. Three years
ago eco-efficiency measures enabled us to maintain a relative
water consumption of 0.40 liter of water per unit produced.
However, the result was above the target volume of 0.39 liter
per unit produced due to the product mix manufactured,
which generated a greater demand for water in Cajamar and
an increase in the use of potable water due to problems with
the saturation of the wastewater treatment plant. Overall,
there was a 16% increase due to the growth in the number
of units produced and the concomitant demands in the
logistics chain. GRI G4-EN8
Among the initiatives in place to boost eco-efficiency is a
new wastewater reuse system which has increased the purity
of water and has led to a reduction of around 5% in water
consumption in the year it has been in operation. Although
the recycled water cannot return to the production lines,
it can be used in other industrial processes, such as in the
boilers used to generate steam. Prior to 2011, the company
only used wastewater in the irrigation system, in cleaning
processes and in toilets.
64
The Benevides filtering gardens
A highlight in eco-efficiency in the Ecoparque,
inaugurated in the city of Benevides at the beginning
of 2014, are the filtering gardens. In this process,
wastewater is treated in large pools with plants whose
roots have bacteria that promote the decomposition of
pollutants. The water in these pools is literally filtered
by the bacteria, improving its quality. The process, which
does not employ chemical products, also generates
sludge, which needs to be removed at five-year intervals
and sent for composting.
The recycled water may be used in irrigation systems and
in general cleaning services. In addition to the filtering
gardens, the Ecoparque has a rainwater harvesting and
reuse system.
Due to the lack of public supplies, the water used in
the operations in Cajamar, Itapecerica da Serra, which
was discontinued in May 2013, and Benevides comes
from semi-Artesian wells. In Cajamar and Itapecerica da
Serra the source of ground water is the water table of
the Guarani aquifer. Monitored on a daily basis, water
withdrawal is within the limits permitted by the respective
authorities. The new distribution center and administrative
unit inaugurated in São Paulo in February 2013 are
supplied by public utilities.
In 2013, there were no significant spillages or accidents
with products causing any kind of environmental impact.
We understand a significant spillage to be one that requires
specialized treatment of the affected areas (removal of soil
for treatment, neutralization etc.) and which would require
activation of the Natura Emergency Plan, in accordance with
internal procedure PR-0049, to contain and mitigate the
impact caused. GRI G4-EN24
In Cajamar, effluents are discharged into the Juqueri river, whose
characteristics depend greatly on the incidence of rainfall. Natura
constantly monitors the water body to ensure that company
discharges do not harm the river. In Itapecerica da Serra,
wastewater is discharged into a sinkhole, as stipulated in the
company’s environmental licenses. At the Benevides unit, effluent
is used for road cleaning and irrigation, with no discharge into
water bodies. GRI G4-EN26
GRI G4-EN8
Water consumption per unit produced
(liters/units produced)
2011
2012
2013
0.40
0.40
0.40
GRI G4-EN8
Water consumption by Source¹
Unit
Natura sites
1
Other spaces2
Natura outsourced suppliers
Total water consumption
4
3
m3
2011
2012
2013
127,870
132,572
148,267
51,624
55,780
59,695
68,454
61,825
82,897
247,948
250,177
290,859
1 Industrial sites: Cajamar and Benevides. 2 Administrative and logistics sites: Nasp, Itapecerica da Serra,
administrative support units, distribution centers and hub. 3 Suppliers manufacturing finished products in
Natura’s name. Water consumption control is in place at the main outsourced suppliers, who account for
95% of outsourced production.
65
GRI G4-EN8
Total water withdrawn by source1
Unit
2011
2012
2013
0
0
0
139,616
140,156
149,601
0
0
1,062
0
0
0
0
0
18,999
139,616
140,156
169,661
Surface water (rivers, lakes, wetlands, oceans)
Ground water
Rainwater harvested directly and stored by the organization ²
Effluents from other organization
m3
Public utility/supply company
Total
1 Taking into account the Cajamar, Benevides, Nasp, Itapecerica da Serra and administrative support units. It is not possible to report the sources
used in the distribution centers and outsourced manufacturers due to variations in withdrawal sources. 2 Rainwater is used in Benevides in
processes not requiring potable water.
GRI G4-EN10
Volume of water recycled and reused
Water recycled1 and reused
1
2
Water recycled as percentage of total water treated in
wastewater treatment plant3 4
Water recovered as percentage of total water withdrawn5
Unit
2011
2012
2013
m³
41,630
69,465
79,366
29
45
42
36
57
54
%
1 From sanitary and industrial effluents generated at the Cajamar site used for cleaning, gardening, toilets and utilities after physical-chemical and
biological treatment in the wastewater treatment plant. 2 Water returning from the Cajamar production process and used in the potable water
system. 3 The percentage refers to the water volume recycled from effluent treatment compared with the total volume of water treated in the
Cajamar and Benevides treatment plants. 4 In 2013, there was a reduction in the percentage of water recycled compared with the total water
treated due to a reduction in water consumption, impacted by the installation of a recycled water purification system in Cajamar and Benevides.
With this system, the number of times the water in the reflecting pools is changed was reduced, as was the cleaning of water tanks. 5 The reuse
and recycling data refer to the volume of water recycled and reused at Cajamar. Previously, this calculation included Itapecerica da Serra as well as
Cajamar. The historical data were recalculated using the same basis.
gri G4-EN22
Significant discharges into water bodies1
Total volume of treated effluent
Unit
2011
2012
2013
m³
100,747
134,568
134,529
1 Refers to Cajamar, Benevides, Itapecerica da Serra and Nasp sites.
66
Unit
Legal parameter
2011
2012
G4-EN22
Effluent treated at Cajamar
BOD
1
COD2
mg/l
Oils and grease
60
46
53
48
150
145
137
110
120
45
28
39
G4-EN22
Effluent treated at Itapecerica da Serra
BOD1
COD
2
mg/l
Oils and grease
60
31
34
35
150
59
86
75
120
26
25
17
G4-EN22
Effluent treated at Benevides³
BOD
1
COD
2
2013
mg/l
Oils and grease
60
n.d
19
206
150
n.d
70
312
120
n.d
2
9
1 BOD – biological oxygen demand. 2 COD – chemical oxygen demand. 3 The significant increase in organic load at Benevides was due to the
solution of a problem from 2012 related to rainwater in the wastewater treatment plant which increased the flow rate. In 2013, the problem was
solved, segregating these two flows with only the residual water being sent to the treatment plant. This generated an increase in organic load, since
this is measured in function of mass per flow.
GRI G4-EN22
Total water discharge by quality and destination1
Volume (m³)
Cajamar
Itapecerica da
Serra
Benevides2
Nasp3
Treatment
2011
2012
2013
2013
96,635
117,223
115,489
Yes
4,112
6,446
2,356
Yes
367
10,899
1,388
Yes
-
-
15,296
Yes
Water
Will it be
quality and
reused
Destination
treatment
by other
organization?
method
2013
2013
2013
Activated
sludge
Activated
sludge
Activated
sludge
Discharge
in river
No
Sinkhole
No
Internal use
No
Municipal
network
No
n.a
1 Indicator reported in this way for first time in 2013. 2 The decrease in total water discharge at Benevides was due to a problem related to the
influence of rainwater in the wastewater treatment plant, which increased the flow in 2012. The problem was solved in 2013. 3 O Nasp came into
operation in February 2013.
67
Product
life cycle
Natura invests continually in new technologies and ecodesign
solutions; we strive to boost the use of lower impact raw
materials and recycled and recyclable material, as well as to
decrease packaging mass. We use Life Cycle Assessment (LCA)
methodology to estimate and monitor the impact of packaging,
ranging from the extraction of raw materials and energy,
processing, transportation up to the post-consumption disposal
of the product. In 2013, we reduced our relative LCA indicator
by 10%, from 109 mPt/kg to 98 mPt/kg, due to an improved
packaging mass to product mass ratio.
In Brazil, in comparison with the previous year, the percentage of
eco-efficient packaging (including refills and lower environmental
impact packaging, such as the Sou pouch) grew by 37% in 2013.
This growth was driven by the launch of the Sou line, which
accounted for more than half this improvement. Worthy of note
is the fact that the pouch format Sou pack uses 70% less plastic.
The feasibility of the pouch pack was such that the company
extended its use to refills for the Natura Plant line.
In the International Operations, there was an increase in refill
sales in Argentina. To revert the downward trend in the other
countries, we developed an action plan that includes investment
in communication, promotions, training and incentives for the
sales force to increase the use of refills. In France, there was also
a decrease in sales of these items.
GRI G4-EN27
Natura eco-design program
Still incipient in the Brazilian academic and business
universes, ecodesign integrates environmental principles
into the product development process. Since the 1980’s we
have pioneered a number of innovations aimed at reducing
impacts, and from the year 2000, we started to incorporate
ecodesign principles, initially focused on packaging.
The company has an Ecodesign research and development
program to reinforce life cycle considerations in company
innovation processes. Program guidelines include the use
of lower impact packaging materials, controlled recycling
processes and chains and the implementation of new tools
to drive more effective and systematic eco-design practices.
In line with the principle of open innovation, the company
maintains a partnership with USP (University of São Paulo)
and collaborates with the most advanced institutions in this
area in Europe, such as the Technological Universities in
Delft, Holland, and in Denmark.
We believe that by continually increasing our understanding
of ecodesign and by driving environmental efficiency further
into our product development processes we will be able
translate Natura’s commitments to sustainability into
efficient and competitive products.
68
GRI G4-EN27
Environmental impact of packaging
by quantity of product1
Unit
mPt/kg
2011
2012²
2013
123
109
98
1Takes into account product packaging and support materials such
as shipping cartons and the magazine Natura. 2 The 2012 result was
recalculated, given that there was a divergence in the emission factors
for the components of Natura magazine. The value was changed from
125 mPt/kg to 109 mPt/kg.
GRI G4-EN27
Percentage of eco-efficient
packs vs. items invoiced1
Unit
2011
2012
2013
Brazil
17
13.4
21.7
Argentina
18
13
14.2
15
13
11.3
Colombia
15
15
14.1
Franca
10
11
10
Mexico
10
10
9.1
Peru
16
15
12.9
Chile
%
1 Corresponds to the sum of total refills invoiced and total items in Sou
line (pouch) invoiced divided by total number of items invoiced.
With respect to the rate of recycled post-consumption material incorporated into
packaging, there was a small reduction in the year, from 1.6% to 1.4%. This drop was
due to variations in the product mix commercialized, either through lower sales of
products with packs using this material or the through increased sales of products
that do not use recycled material in their packaging. In 2013, the packs of Sève body
oil started to incorporate a percentage of recycled material. This initiative, however,
was implanted at the end of the year and did not affect the indicator.
GRI G4-EN2
GRI G4-EN2
Post-consumption recycled material1
Unit
Post-consumption recycled material incorporated into finished
product packaging and supporting material¹
Post-consumption recycled material incorporated into finished
product packaging
2011
2012
2013
9.4
10.8
11.2
1.1
1.6
1.4
%
1 The indicator considers % of packaging materials and % of supporting materials, such as magazines, product shipping cartons and bags, derived
from post-consumption recycling.
69
GRI G4-EN2
Recyclable material¹
Unit
%
2011
2012
2013
84.2
83.7
81.6
1This corresponds to the percentage of recyclable material in finished product packaging.
Natura has been publishing an environmental table on its
products for eight years. This informs the origin of the raw
materials in the product composition. For products with reduced
packaging, there is an indication of the Natura website on which
these data are available.
With the launch of the new European regulations on
the inclusion of data about the composition of packaging
ingredients, we updated this data for the Natura France
portfolio. This update will be extended to Brazil, standardizing
information and packaging.
Natura product labels also provide information about how to
use the product, the existence of substances that may generate
socio-environmental impacts, proper disposal method for the
product, indication of the number of times a pack may be reused
and information on outsourced production. GRI G4-PR3
gri G4-EN1
Total use of materials, by type
(except water)
Unit
2011
2012
2013
Direct materials
t
22,170
22,540
23,069
Direct materials
m³
11,279
10,832
10,949
70
relationship network
Quality of
relationships
One of the company’s priority topics, the quality of relationships
is an important element of our Reason for Being, which is
promoting well being well. We believe we are part of an
ecosystem of relationships which, if maintained in balance, may
contribute to the evolution of society and drive sustainable
development. It is by means of this network that we develop
activities to stimulate education and sustainable entrepreneurship
– also priority topics for Natura – and enrich the quality of
relationship with our main stakeholders.
Since 2012, when we reviewed our stakeholder matrix, we
started to focus more strategically on five groups: Natura
consultants (NCs), Natura consultant advisors (NCAs),
consumers, employees and suppliers.
Every year, in partnership with different company areas, we
create a relationship plan with a strategic governance structure
for each. In 2013, by means of engagement activities, we carried
out a mapping exercise that identified each group’s vision of its
relationship with Natura. GRI G4-24/25
Strengthening our culture of dialog and co-creation, we
organized 16 face-to-face meetings with a total of 227
participants in the course of 2013. During these meetings,
subjects such as ethics, technology and relationships, as
well as the Code of Conduct, launched in 2013, were
discussed (read more ahead).
The company also promoted 88 virtual interactions via
webcasts, wikishops (virtual workshops) and our digital
platforms, involving 7,850 participations, including NCs,
NCAs, consumers and employees. In the virtual environment,
we addressed questions such as self-knowledge, change
management, strategic planning, ethics, commercial
management and communication. GRI G4-26/27
Ombudsman service
The Ombudsman service is a channel for dialog in which
employees and in-house outsourced workers in Brazil and in the
International Operations, suppliers and supplier communities
in Brazil can resolve doubts, make criticisms, praise or report
breaches of conduct to Natura. The contacts we receive via
the service are also important for the company to evolve in
its processes, policies and relationships. All cases are handled
confidentially and the individual may opt to be identified or to
remain anonymous. GRI G4-57/58
All cases involving ethical deviations are reported to the
Ethics Committee, made up of the vice presidents of Finance
and Institutional Relations, People and Culture and the
Ombudswoman. The CEO is a guest member and, when
necessary, the Internal Audit, Legal, Human Resources and Risk
areas are also involved. Although none were confirmed, the
Ombudsman service received six reports of discrimination in
2013, compared with only one the previous year. This increase
may be attributed to Natura’s actions during the year to
reinforce the question of ethics among stakeholders, such as
the Ombudsman department’s communication plan, which
publicized the dialog channels, as well as the launch of the Code
of Conduct (read more ahead). Worthy of note is the fact that no
reports of discrimination have ever proved grounded. However,
should this be the case, the company will take the applicable
measures. GRI G4-HR3
The company also has exclusive channels for the other
priority stakeholder groups: the Natura Call Center (CAN)
for consultants; the Advisor Call Center (ATO) for the
NCAs; and the Consumer Call Center (SNAC) for end
consumers. Complains from these groups are channeled to
the Ombudsman Service only when they involve consultant
conduct or are consumer contacts forwarded by the Press
Relations and Consumer Safety areas or contacts that are
not resolved by the abovementioned channels. In 2013, the
Ombudsman Service dealt with 794 NC contacts and 39
contacts from consumers. GRI G4-57/58.
71
Code of Conduct
GRI G4-56/HR9
With the growth of the company and the changes occurring
in society, Natura identified the need to express what it
expects from its relationships with stakeholders in a clearer,
more straightforward manner. For this reason, in 2013 the
company updated the Natura Principles of Relationship,
constituting the new Code of Conduct, which is valid for
all company operations in Brazil and overseas, with the
exception of France, where the Principles of Relationship
implemented in 2011 remain in force.
The new code provides more objective treatment for
recurring sensitive issues, such as the offer and receipt of
gifts and presents, contracting suppliers, questions involving
relatives and romantic relationships in the workplace.
To prepare the code, we listened to different stakeholder
groups and, based on the information collected, discussed
the points raised with more than one hundred employees
from different company areas. This ensured transparency in
the revision and a good reception for the new document in
the company.
After the launch, employees from areas considered critical
were given face-to-face training, while other employees
and in-house outsourced workers undertook an e-learning
course about the code. All new employees also receive
training in the Code of Conduct and are expected to
comply with it.
The launch of the Code of Conduct, together with the
institutional campaign on the role of the Ombudsman’s Office
and other initiatives, led to an increase in the number of
reports to the office in 2013. The number of contacts dealt
with grew from 656 to 1,253, an increase from 93% to 96%.
Of these, almost 90% were from employees and only 28%
were anonymous. The number of contacts related to behavior
remained stable in relation to previous years, corresponding to
28% of the total for 2013. GRI G4-HR12
Contacts related specifically to environmental impacts (problems
with water, sewage, vegetation and waste of natural resources)
totaled five in 2013, similar to previous years (four in 2011 and
five in 2012). The number of complaints about labor practices
(benefits, overtime, working hours, medical and dental assistance,
training, among others) refers only to the contacts dealt with,
since cases in which information is missing at the moment
the complaint is made are not counted. In 2013, there were
542 contacts – compared with 327 in 2012 and 209 in 2011.
We also recorded 837 contacts related to social impacts from
suppliers, supplier communities, NCs and consumers. This
number was lower than in recent years – 2,640 in 2012 and
4,133 in 2011. This reduction was due to the fact that from 2013,
the Ombudsman Service started to deal only with behavioral
questions related to NCs. All the cases related to environmental,
social and labor practices were addressed and resolved. GRI
G4-EN34/SO11/LA16
A reflection of the degree of trust employees place in the
Ombudsman Service, in 2013 the question about the area in the
climate survey (I trust the Ombudsman Service as a channel for
criticisms, reports, suggestions or praise) saw a 6 p.p. increase in
favorability, from 65% to 71%.
72
GRI G4-HR12
Total number of contacts received
via the Ombudsman channel1
Employees and in-house outsourced workers in Brazil
Employees and in-house outsourced workers in International Operations1
Suppliers Brazil
Supplier communities2
Total
2011
2012
2013
1,025
7
4
0
687
11
10
0
1,293
8
7
0
1,036
708
1,308
1 Since 2011, data has included employees in France. 2 Group served since June 2012.
GRI G4-HR12
Percentage of demands dealt with against total received (%)
% demands dealt with1
% demands forwarded2
2011
2012
2013
68
32
93
7
96
4
1 Contacts dealt with by the Ombudsman Service and the area responsible for the process mentioned. 2 Up until May 2011, the person making
the contact was advised to contact the area responsible regarding technical questions..
GRI G4-pr5
Satisfaction with the Ombudsman Service1
Internal Stakeholders Brazil
Unidade
%
2011
2012
2013²
98
92
92
1 The company considered the scores 4 and 5 for satisfaction with the service. 2 The base of respondents is equivalent to 29% of the total demands.
73
Employees
GRI G4-10
However, since November 2013 the line has been made by
outsourced suppliers, partners that manufacture products in
Natura’s name.
A major challenge for the company in function of its growth
strategy is to maintain its employees aligned, engaged and
integrated with processes and with the Natura Essence, to
ensure day-to-day routines are governed by our culture,
which values quality in relationships and well being well. This
means we need to make sure we acquire the competencies
needed to achieve our future vision and to prioritize the
preparation of leaders qualified to oversee the execution
of our strategic objectives. The target is to internalize these
values in the day-to-day activities of the entire team.
There was also an evolution in the organization aimed at
narrowing focus on strategy in order to guarantee results.
The Executive Committee (Comex) was expanded in 2013,
incorporating new functions and areas.
In 2013, there was no significant variation in employee
numbers compared with 2012 and 2011. There was, however,
a significant increase in the number of temporary workers,
due in great part to the opening of the new distribution
center in São Paulo (São Paulo), a period in which we ran
both the new operation and the old distribution center
in Cajamar in parallel. After validating the new operation,
we discontinued the Cajamar operations and reduced
the number of temporary workers. We also contracted
temporary staff for the launch of the Sou sub-brand.
The number of interns also grew between 2012 and 2013.
This occurred due to a reorganization of the workforce
in which we offered a number of vacancies for internships
in December 2012, which were only filled in January and
February 2013.
In the International Operations, there was only a
1% variation in the workforce. The most significant
fluctuations occurred in Chile and Peru, with a reduction
in the number of employees due to the outsourcing
of distribution centers, and in Argentina, where we
contracted new sales staff.
GRI G4-10
Number of Natura employees by region/country1
Unit
Brazil
Argentina
Chile
Mexico
Peru
Colombia
France
Un.
Total
Other work contracts
Apprentices2
Interns
Temporary staff3
In-house outsourced staff4
Un.
Total
2011
2012
2013
Total
Total
Total
Female
Male
5,483
449
293
113
301
191
55
5,354
394
268
119
283
213
52
5,339
465
197
126
245
232
51
3,161
387
165
79
224
192
41
2,178
78
32
47
21
40
10
6,885
6,683
6,655
4,249
2,406
Total
157
141
255
2,094
Total
164
80
337
2,505
Total
138
202
980
2,937
Female
69
147
412
1,319
Male
69
55
568
1,618
2,647
3,086
4,257
1,947
2,310
1 Since 2013, indicator information has been reported in accordance with the GRI G4 protocol. 2 Minor apprentices are contracted by a third-party
(Espro), responsible for managing the activities of this group. 3 Temporary staff are those contracted for a fixed term under Brazil’s CLT labor legislation,
through employment agencies. The number includes temporary staff at Cajamar, Nasp, Alphaville, the Shared Service Center (CSC) and the Instituto
Natura in Brazil, as well as temporary staff in the International Operations. 4 In-house outsourced staff are considered to be suppliers with work posts
(fixed or not) in company units for a period of more than six months. The number included outsourced staff in Cajamar, Nasp, Alphaville, the Shared
Service Center (CSC) and the Instituto Natura in Brazil, as well as temporary staff in the International Operations.
74
GRI G4-10
Employees by functional level1
2011
2012
Total
Total
Total
Female
Male
Operational
n.a.
2,476
2,371
1,001
1,370
Administrative
n.a.
3,474
3,503
2,822
681
n.a.
679
721
409
312
n.a.
54
60
17
43
n.a.
6,683
6,655
4,249
2,406
Unit
Management
Un.
Director level
Total
2013
1 Since 2013, indicator information has been reported in accordance with the GRI G4 protocol.
GRI G4-10
Number of employees by type of contract and employment¹
2013
Unit
Total
Female
Male
Fixed term
191
117
74
Permanent
6,464
4,132
2,332
6,655
4,249
2,406
6,649
6
4,244
5
2,405
1
6,655
4,249
2,406
Total
Full-time
Part-time
Total
%
1 Since 2013, indicator information has been reported in accordance with the GRI G4 protocol
Climate survey GRI G4-PR5
In 2013, Natura had the best result ever in its climate
survey since this process was initiated in 2006. The
favorability rate was 78%, beating the target of 73%
and the figure for the previous year (72%). The changes
implemented in the people management area in 2013 had
a positive impact on the survey, but as this is a continuous
improvement process, other actions developed over recent
years also contributed to the result.
In general, the results were good in important survey
items and among the administrative and operational staff,
as well as the sales force. In the items relationship and
quality of the decision marking process, the increases were
13 p.p. and 9 p.p., respectively. On the other hand, there
was a slight drop in questions related to Natura’s capacity
to respond to external changes (economy, market,
competition etc.) and identification between work and
the employees’ purpose in life. Other more critical areas
such as remuneration and performance management
continue to be monitored with care, even though the
rates achieved were above target.
In the sales force, growth in service levels had a positive
effect on organizational climate, while the reorganization
of structures and processes in the administrative area
led to a better perception of climate among these
employees. For employees in the operational area, closer
management, a series of training programs for managers
and the review of the language used in the questionnaire
contributed to the good result.
In Brazil, the favorability rate reached 77%, compared with
72% for the previous year. Growth occurred across all areas,
but was particularly noteworthy among operational staff.
75
Employee loyalty in Brazil, which takes into account top
scores for the questions satisfaction, recommendation and
intention to continue at Natura, reached 30%, in line with the
growth in previous years.
In the International Operations, the favorability rate grew in
all countries except for Colombia, where there was a two p.p.
drop, even though the final score was 83%. The country with the
highest growth was France (15 p.p.), where the rate was 88%. In
Mexico, the downward trend noted in 2012 was reversed with a
favorability rate of 80%. It should be noted that employee loyalty
is not yet monitored in the OIs.
For the coming years, the intention is to further improve climate
survey methodology to enable more in-depth, detailed analyses
of our employees.
GRI G4-PR5
Climate Survey – Favorability1
Unit
Brazil
Argentina²
Peru
Chile
Mexico
France
Colombia
Natura
%
2011
2012
2013
70
72
73
66
85
64
86
70
72
77
73
72
73
73
85
72
77
86
77
78
80
88
83
78
1 Equivalent to the percentage of employees giving a score of 4 and 5 (Top2Box) for the items surveyed, on a scale from 1 to 5 points. 2 The data
do not take into account management of the International Operations, the office in Buenos Aires which coordinates all the International Operations.
GRI G4-PR5
Employee loyalty1
– Brazil Operation
Unit
%
2011
2012
2013
28
29
30
1 Percentage of employees giving the top score (top 1 box), on a scale
of 1 to 5 points, for three items: satisfaction, intention to continue the
relationship with Natura and recommendation.
76
Education and training GRI G4-LA9/LA10
Natura recognizes that training is indispensible for the
company to achieve its strategic objectives and for its
employees’ professional development. Based on this,
the company elaborates its educational architecture
encompassing all the topics to be covered with employees
during the year.
In 2013, the average number of hours training per employee
was 90.3, 9% higher than the target set for the year. This was
the consequence of a series of initiatives such as functional
training for employees in the administrative and operational
areas facilitated by Natura staff – there were 142 of these
programs, resulting in more than 8 thousand hours training
beyond the total planned –, the extension of development
activities (virtual dialogs with company leaders) for interns
and the maintenance of subsidies for ongoing educational
programs aimed at executives, and Natura Education, which
provides study scholarships for technical, undergraduate and
postgraduate courses for employees. During the year Natura
Education provided 368 study scholarships, corresponding to
an investment of more than R$ 1 million.
In Brazil, the average number of hours training was 96 per
employee. Worthy of note in the administrative area was the
group of coordinators, who received a total of 46 thousand
hours training, compared with 33 thousand in 2012. In
addition to a program focused on management competencies,
the company encourages interaction and debates in a digital
forum, which is accompanied by a moderator.
Specifically for the sales force, the company offered a new
module focused on motivation and feedback in the Indirect
Management program. This has already been applied in the
Southern region and will be extended to the rest of the
country in 2014. For operational employees, we favored the
multiplication of skills and competencies through training
courses given by employees who have already completed
the My Way program, consisting of technical and functional
training in the workplace, in addition to development paths
outside working hours (operational matrix) and behavioral
training (operational development).
After a broad evaluation of internal competencies, another
evolution in 2013 was the development of a more assertive
education and development program for employees in
the Operations and Logistics areas, the initial focus of this
assessment. In 2013, the evaluation was extended to the
Brands and Businesses and Innovation areas, and, based on
the results, we will update the respective training matrices.
The plan is to gradually extend this process throughout the
company.
Employees also have access to an additional tool, focused on
human development, the purpose of which is also to improve
relationship quality. This is the program Você Tem Fome de
Quê? (What do you hunger for?), which consists of a series
of face-to-face meetings addressing themes of interest in
employees’ daily routine. With the presence of specialists,
the encounters in 2013 covered themes such as digital
technology, truths and myths related to stem cells, the Natura
Movement, carbon credit purchases in socio-environmental
projects and quality of life, among others.
The Building the Future program, specifically for employees
about to retire was not continued in 2013, due to a review
of the strategy, goals and scope of the initiative.
In the International Operations, the success of the
education actions planned also meant the target for the
year was exceeded by 16%, with an average of 66 hours
training per employee.
In 2013, the company increased its investments in training
and education in the IOs by 46%. In Argentina, where
growth in the training budget was significant, the priority
was leadership training. In the more recent operations, for
example Colombia, the emphasis in training is more on
improving technical skills.
77
GRI G4-LA9
Average number of hours training per employee,
per functional category, in the Brazilian operation1
Unit
Production
Administrative
Management
Director level
Average hours2
2011
2012
Total
97
86
88
60
90
Total
128
68
71
34
95
h
2013
Total
128
73
65
31
96
Female
111
63
65
36
78
Male
141
107
66
28
123
1Includes sales force training (sales managers and relationship managers). 2 Includes total number of training hours, at all levels, divided by the
total number of employees and interns in the corresponding year.
GRI G4-LA9
GRI G4-LA9
Number of hours training by gender
– Brazil Average number of hours training
per employee International Operations
Natura¹
2011 2012 2013
h
66
85
58
88
66
90
Unit
Male
Female
%
2011 2012 2013
55
45
52
48
52
48
1 Consolidated average for all Natura operations in Brazil and in the
International Operations..
GRI G4-LA10
Investment in employee education and training
Operation
Brazil¹
Unit
2011
2012
2013
000’s of R$
26,415
19,634
16,074
1 The amount of investment in Brazil incorporates the cost centers of the areas of Corporate Education, Commercial Development and Training
(investments in relationship managers), the Educational Architecture Professional Education Programs and Integration and Relationship programs
with the academic world.
GRI G4-LA10
Natura Education Program – Brazil¹
Unit
Scholarships granted
Scholarship granted/enrollments
Amount invested in Natura Education program
2011
2012
2013
Un.
510
376
368
%
69
46
42
1,014
1,218
1,094
R$ 000s
1 All employees enrolled and selected during the year are considered to have attended.
78
GRI G4-LA10
Courses fully or partially subsidized by Natura taken by
employees or family members (Brazil)¹
Unit
2011
2012
2013
Technical/professional
57
44
37
Languages²
43
6
3
1
0
1
277
247
234
132
79
93
510
376
368
Pre-university entrance
Undergraduate
Un.
MBA and postgraduate
Total
1 All employees enrolled and selected during the year are considered to have attended. 2 We continued to reduce the total number of scholarships
for language courses in function of the new educational strategy, which considers such courses to be functional training. During the year, we only
maintained subsidies for scholarships granted for courses in 2010 and which continued in 2013.
Human rights and corruption
All employees entering Natura undertake training in which subjects such as the company’s Essence and culture, sustainability and
commitment to human rights are addressed. It should be noted that the question of human rights is discussed in a pulverized
fashion in diverse training courses held during the course of the year. Since there was an increase in the number of training
sessions in 2013, training on human rights issues was proportionally greater, with 76% of employees receiving 13,346 hour of
training. GRI G4-HR2
Although there is no specific training in corruption-related questions, with the 2013 launch of the Code of Conduct, which
replaced the Natura Principles of Relationship, a major part of company employees received training in the new code (9% were
managers and 80% non managers). Of the 16 topics addressed in this training, seven are related to corruption: contracting
suppliers; travel and accommodation; gifts, presents and other offerings; fraud, bribery and corruption; preservation and proper
use of company assets and resources; compliance with policies, corporate standards and procedures; and posture towards the
media, press, government and public presentations. GRI G4-SO4
GRI G4-SO4
communications and/or training related to anticorruption procedures ¹ ² ³
2013
Director level4
Management5
Administrative6
Operational7
Total
Communications
45
548
2,571
2,491
Training
45
519
2,398
2,105
Percentage
Communications
Training
100%
100%
100%
95%
100%
93%
100%
85%
1 Since 2013, indicator information has been reported in accordance with the GRI G4 protocol. 2 Natura conducted training on this subject with
commercial partners, but it is not possible to determine the percentage of the total universe of partners this corresponds to. 3 Data on training is
not monitored by region, because the company does not consider this material for the business. 4 This takes into account all staff in the sub-group
directors and scientific directors. 5 This takes into account all staff in the sub-group administrative managers and scientific managers. 6 This takes
into account all staff in the sub-group administrative and operational-industrial employees, as well as staff of the Instituto Natura, trainees, interns and
sales force. 7 This takes into account all staff in the sub-group operational staff and minor apprentices.
79
Leadership development
An ongoing challenge, Natura understands that strengthening
leadership is essential to sustain its growth plans. In the course
of 2013, the company worked on a number of fronts to
develop leaders for its succession pipeline. The objective is to
simultaneously work on competencies required by all leaders
and on the particular skills individuals need to develop. To
enhance this process, the company intends to reorganize the
pipeline so that succession processes are conducted in a more
strategic manner in alignment with business objectives. Currently,
successors have been identified for 45% of the strategic positions
within Natura, considering the short, medium and long term.
The Cosmos corporate education program is one of the main
tools in Natura’s leadership development strategy. Launched
in 2011, 615 managers in Brazil and 168 in the International
Operations, totaling 783 people, have been trained in the
program; this corresponds to 57% of the company’s leaders
(67% in Brazil and 19% in the IOs). In 2013, 113 employees took
part in the program.
The program comprises four dimensions: school, brotherhoods,
communities of interest and workshops. A large part of the
training is related to the school dimension, which breaks down
into three categories: people and relationship management,
process management and business management. Each participant
enters one of the program categories and takes specific training
courses. Upon concluding this stage, the leader continues to
another category and starts to develop new competencies.
In 2013, three groups completed the people and relationship
management component, while one completed the process
management module.
During the year there were also three brotherhoods. These
are meetings that are open to all managers, whether they are
participating in the program or not, aimed at promoting the
sharing of experience and information. The 2013 brotherhoods
included a talk on the social networks with Gil Giardelli, a
specialist in digital culture; two reading laboratories with the
historian Dante Gallian; the talk “What is the purpose of ethics?”,
by Lia Diskin, coordinator of the São Paulo Committee for a
Decade of a Culture of Peace (a United Nations program); and
the talk “Business opportunities at the base of the pyramid”, with
Stuart Hart, organizer of the global network of laboratories
dedicated to researching this question.
In the communities of interest dimension, we seek to disseminate
ideas and foment an exchange of opinions among Cosmos
participants via an online platform along the lines of the social
networks. In 2013, in function of a budget review, the last
dimension of the program, the workshops, was not held. This
component is intended to be a space in which leaders put
their learning in the Cosmos program into practice, developing
projects aligned with the business.
80
Attracting and retaining talent
Natura people management strategy is centered on attracting
and retaining employees aligned with the company’s Essence
and vision for the future. We work on two fronts, attracting new
professionals from the market and maximizing internal potential
through analysis and development actions.
As part of company relationship strategy with the surrounding
community, we also promote professional training, especially
for young people. This is the case with the Cajamar School
Network and the agreement made with Senai in Benevides
(read more on page 120).
In 2013, the company reassessed its understanding of
maximizing internal resources, seeking to align processes
with company strategy, the current business context and new
models of labor relations. As a result, the decision was taken to
consider in-house outsourced workers for internal recruitment
processes, applying the same criteria adopted for employees:
a minimum of one year in the current position and good
performance. With this change, the rate of internal recruitment
increased from 67% to 74%.
Specifically with regard to senior management positions, Natura
prioritizes internal promotion regardless of where a person
lives, thus increasing the chances of professional growth for
existing employees. In the International Operations, currently
many senior management positions are occupied by locals,
ensuring our businesses operate in accordance with market
practices. Even so, a number of vacancies are filled by Brazilian
employees, who are more aligned with the company’s Reason
for Being. GRI G4-EC6
When unable to identify the competencies necessary for
a determined function internally, the company resorts to
external recruitment. Although there are no restrictions as
to the place of origin of an individual, whenever possible, we
seek to recruit people from the surrounding community. In
2013, for example, with the expansion projects at Cajamar
and Benevides and the inauguration of the distribution center
and administrative space in São Paulo, 90% of the temporary
staff hired came from the surrounding communities. This
process was complemented by the hiring of local third-parties
and service providers.
An important gateway to Natura is the company trainee
program, which attracted more than 15 thousand applicants
for 37 places in 2013. Similarly, a total of 134 young people
were contracted under the Natura internship program in
the year. A novelty in 2013 was the online dialog platform for
candidates, with more than 68 thousand active participants.
Natura also has its Semear (Seeding) project for hiring young
apprentices. Currently there are 138 apprentices aged from
15 to 21 years in the project. Of these around 10% are later
contracted by the company.
GRI G4-EC6
Senior managers from the local community1 2 3
Unit
Total members of senior management
Cajamar
Itapecerica da Serra
Benevides
Nasp
Un.
%
2011
2012
2013
168
179
159
3.6
6.1
8.2
4.2
4.5
-
0.6
0.6
100
-
-
8.2
1 Senior management is considered to be from the position of senior manager up. 2 Surrounding area of Cajamar: Cajamar, Campo Limpo,
Santana de Parnaíba and Várzea Paulista; surrounding area of Benevides: Benevides, Barcarena, Belém, Ananindeua and Marituba; surrounding area
of Itapecerica da Serra: Itapecerica, Embu and Cotia. 3 Important operating units are those with at least 50 people in the Commercial, Brands and
Businesses and Operations and Logistics areas and which conduct the main processes in the company’s value chain.
81
GRI G4-EC6
Senior managers from the local community1
Unit
Argentina
Chile
Colombia
France
Mexico
Peru
%
2011
2012
2013
86
87
71
91
88
81
62
0
33
100
67
20
48
0
40
100
56
40
1 Senior management is considered to be from the position of senior manager up. Senior managers from the country in question are considered
to be local.
Compensation and
performance GRI G4-LA11/LA13
In 2013, Natura updated its compensation and recognition
strategy, repositioning the company in the market and making it
more competitive in compensation to promote talent retention.
Moving from the median position, in which compensation was
equivalent to that offered by other companies in the sector, the
company was repositioned in the third quartile, meaning that
Natura is now one of the 25% of companies offering the best
employee remuneration in the market.
It should be noted that variations in salaries between women
and men are exclusively in function of the distribution of
remuneration within the Natura structure. When each salary
group is compared individually, no significant differences may
be noted between men’s and women’s salaries, as stipulated
in Natura Remuneration policy, which is based on the premise
of same job, same salary. Currently, there are more men than
women in the highest salary groups.
The restructuring of the compensation strategy also included
a change in the mix of fixed and variable remuneration for
managers, with a reduction in the variable component. For
higher positions, the company’s profit share scheme (PLR in the
Portuguese acronym) remained the same as in previous years,
with targets tied to the triple bottom line.
The company also provides private pension plans in which
employees may define which percentage of their salary they
wish to contribute, between 1% and 5% (complementary
pension). Natura contributes 60% of this amount, up to the
limit of 5% of the employee’s salary. These plans are offered
in the Brazilian operation and are limited to the ceiling
of R$ 19,140. In 2013, the company contribution totaled
around R$ 5 million – compared with R$ 4.8 million the
previous year. GRI G4-EC3
A fundamental component in the profit share plan is the
Performance Management Program (PGD), which is extensive
to all employee groups and all operations. This program ensures
efficient performance management for all eligible employees,
irrespective of gender, with structured individual development
plans. Performance appraisal is based on specific tools, such as
360 degree assessment, which encompasses self-assessment by
the employees and appraisal by others, such as managers, peers
and subordinates. In addition to this behavioral assessment,
performance is also measured by the achievement of individual
targets established on an annual basis. These appraisals contain
objective (numerical) and subjective (performance contract)
variables. The process takes place over the months of December,
January and February.
In 2014, the company intends to review the performance
management program with a view to making it more strategic
and clearer to employees. This review should also contribute to
the leadership succession pipeline.
82
GRI G4-LA11
Number and percentage of employees receiving
performance and career development analysis ¹ ² ³
2013
Percentage of
employees (%)4
Total employees (un.)
Functional category
Male
Female
Male
Female
1,323
953
97%
95%
Administrative
599
2,485
88%
88%
Management
271
376
87%
92%
Director level
41
9
95%
53%
Operational
1 Since 2013, indicator information has been reported in accordance with the GRI G4 protocol.
2 The data covers the Brazilian and international units.3 Since the appraisal process occurs in May,
there are cases where employees are appraised but leave the company during the course of the
year but are counted in the indicator. There was an increase in the number of directors during the
year which explains the percentage below 100%. Most of the employees who were not appraised
were not eligible because of the date of admission or leaving the company. This is the reason the
appraisal was not conducted for Management and Director level staff. 4 Percentage calculated
based on total of employees indicated in G4-10.
GRI G4-LA13
Ratio of women’s salary to men’s salary
(by functional category) ¹ ² ³ 4
Unit
Operational
Administrative
Management
Director Level
%
2011
2012
2013
-21
34
-7
-17
-22
16
-7
-14
-23
30
-8
-16
1 The calculation does not take into account short-term incentive payments (profit share plan). 2 For this calculation, the bonuses paid to sales
managers and relationship managers plus weekly paid rest were taken into consideration. 3 When distributed throughout the categories, sales
force employees reinforce the average women’s salaries due to sales bonuses, excluding production jobs. 4 Percentage calculated based on total of
employees indicated in G4-10.
83
GRI G4-EC5
Ratio of lowest salary to minimum salary,
by operation1 2 3 4 5 6
Brazil
Argentina
Chile
Peru
Mexico
Colombia
France
2011
2012
Total
1.6
1.3
1.2
1.4
4.5
1
1.0
Total
1.4
1.4
1.2
1.3
4.4
1
1.1
2013
Total
1.5
1.3
1.2
1.3
5.4
1.0
1.1
Men
1.5
3.0
1.8
3.7
6.0
1.0
1.9
Women
1.5
1.3
1.2
1.3
5.4
1.0
1.1
1 Since 2013, indicator information has been reported in accordance with the GRI G4 protocol. 2 Important operational units: all the units in Brazil
and the IOs. 3 The salary paid in the operational units is defined through salary surveys based on the local market. 4 Our levels comply with the
minimum remuneration levels in the local markets. 5 The minimum salary used for comparison refers to the national minimum salary in force in
each country on December 31, 2013. 6 The salary difference between men and women in some countries is due to the fact that we do not have
employees of both sexes. Another factor is an employee’s recent entry into the company in which he/she will receive the initial salary range for the
respective position, which will be adjusted the longer the employee stays in the company.
GRI G4-EC3
Natura contributions to
employee pension fund Brazil
(in millions of R$)
4.300
4.849
5.012
2011
2012
2013
In 2013, collective agreements resulted in an 8% salary increase
for employees in the operational and administrative areas. For
managers, a fixed increase was incorporated into the base
salary. GRI G4-LA13
Collective bargaining at Natura is coordinated by the
Human Resources area. It covers all employees and is in
compliance with the standards and limits set forth in local
legislation. The company conducts formal meetings with the
unions associated with its businesses to discuss previously
agreed upon subjects with union representatives. We always
provide information about collective bargaining agreements,
preferably with prior notice to enable open discussion of the
issues involved. We do not establish a minimum notification
period for operational changes in collective agreements
and conventions but comply with the minimum periods
established in law or in union agreements. Natura does not
have processes for identifying operations in which the right
to exercise free association or collective bargaining may be
violated. GRI G4-11/LA4/HR4
84
Benefits GRI G4-LA2
Natura provides its employees with a wide-ranging benefits
package. In addition to the traditional medical and dental plans,
the company offers transportation vouchers and restaurant*/
meal vouchers, private pension plan and maternity leave. Other
benefits are:
Who
All employees in Brazilian operations
Benefit
Ergonomics program
Social servicel
Description
Seeks to enhance employee
comfort and productivity in the
workplace and adaptation to working
conditions.
A space for employees to discuss,
understand and resolve their social
issues.
Chronic disease control program
Designed to promote health and quality
of life in the workplace, reducing stressrelated diseases.
For employees and dependents having
chronic diseases.
Product discounts
A 40% discount on the purchase of up
to five Natura products per month.
Workplace exercise program*
Accompaniment for mothersto-be, upgrade in medical plan
Women's program
and post-natal psychological
accompaniment.
Educational allowance for disabled
Daycare allowance and special allowance
children.
Available for all employees in
Life insurance
Brazil.
Vehicles for senior management level
employees and above, plus fuel allowance
Transportation
for senior management level employees
and above.
Available at Cajamar, Nasp and
Parking
Alphaville.
Discount on medication for all
employees with payment via deduction
Medication subsidy
from payroll.
Free chartered transportation*
140 free chartered
bus lines for
employees
85
Who
Benefit
Runners project*
School material sales
Clube Natura*
Espaço Bem Estar*
Wellness Space
Convenience services*
Partnerships
Presents*
Recognition for length of service
Natura Educação
(Natura Education)
Nursery
Adoption
Health and dental plans
Partial reimbursement of
medication expenses
Description
Jogging and running in parks with
specialized supervision (Villa-Lobos,
Ibirapuera, Alphaville and Cajamar).
At a discount, in installments deducted
from payroll.
Physical fitness, swimming pool (open on
weekends and extensive to dependents),
dance lessons, football tournaments and
multipurpose sports court (Cajamar).
Massage, hairdresser, depilation and
manicure at special prices.
Sewing, laundry, shoe repair, optician,
insurance, postal, book and video rental
services (Cajamar).
Discounts and/or special conditions for
employees (gym, household appliances,
travel agency, cakes, cinemas and theme
parks).
Presents for employees’ mothers
and employees who are mothers on
Mother’s Day, for fathers on Fathers
day and for employees’ children at
Christmas.
Celebration and present for employees
from five years length of service.
Recognition at five year intervals.
Study scholarships for employees
and dependents.
Full subsidy for children up to 2 years
and 11 months.
Support in adoption processes.
Free medical and dental assistance
plan for employees. Check-ups for
management level and above.
For cardiovascular conditions, diabetes,
kidney failure, oncology, liver diseases,
neurological disorders, work-related
osteomuscular diseases and psychiatric
disorders.
86
Who
Benefit
Description
Telemedicine
Emergency electrocardiogram by
telephone.
Saúde em Movimento
(Health in Movement)
Program to encourage physical activity,
with medical, nutritional and physical
assessment prior to start.
Gym allowance
Free products
Christmas Hamper*
Espaço Saúde*
(Health Space)
For relationship managers and sales
managers.
Five free products a month for
management and director level
employees.
For all employees.
Emergency medical care, physiotherapy,
GPR, gynecology and obstetrics,
acupuncture, orthopedics, nutrition and
psychology services.
* Benefit extensive to in-house outsourced workers.
Diversity
Natura’s focus on relationship makes diversity a particularly
relevant topic for the company. In 2011, we established our
positioning on diversity focusing on three priorities: social
inclusion, women and multiculturalism.
Our efforts in 2012 were concentrated on women. Some results
were already evident in 2013, when we saw growth in the
number of women in director level positions, from 26% to 35%
compared with 2012. Overall, women corresponded to 64% of
our employee body, the same proportion as 2013.
We offer female employees the Cuidando de quem Cuida
program, providing special guidance for mothers-to-be and
those who have recently given birth. In 2013, there were four
courses for mothers-to-be, in addition to special attention for
new mothers. The company also has a nursery for children
up to 2 years and 11 months of age at the Cajamar and São
Paulo units, with flexible work schedules to enable mothers
to breast feed their children. Since 2010, we have offered the
option of six months maternity leave. In 2013, the retention
rate for employees returning to work after maternity leave
was 94%. GRI G4-LA3
In 2013, the opening of the new distribution center in São Paulo
helped boost our strategy to hire disabled people. Currently
disabled employees, who work on the order picking line,
represent 15% of the staff at the São Paulo distribution center.
Our target is to reach 30%. The initiative had a positive impact
on our disabled employee indicator. During the year, 50 people
were hired, against 42 discharges.
To enhance our strategy to attract and develop disabled persons,
we launched the Natura Soma (Natura Adds) program, whereby
employees are invited to indicate disabled acquaintances to join
our team, and we increased job training, reaching more than 64
thousand hours for this particular group. We also implemented a
module to drive awareness about inclusion in our new employee
induction program.
The multicultural aspect is part of our future strategy and reflects
our intention of increasingly attracting people with diverse
backgrounds and experience. In 2013, there was a decrease in
this indicator due to the adoption of a new methodology which
considers only employees with international experience from the
time they join Natura.
87
GRI G4-10
Number of Natura employees by gender %
Unit
Men
Women
%
2011
2012
2013
55
45
52
48
36
64
GRI G4-LA12
Diversity¹
Total employees Brazil
Women
As a percentage of total employees
In management positions as a percentage of total management
positions
In executive positions as a percentage of all executive positions
Over 45 years of age
As a percentage of total employees
In management positions as a percentage of total management
positions
In executive positions as a percentage of all executive positions
Multiculturalism
Total leaders who are foreigners or have international experience2
% of leaders who are foreigners or have international experience as
a percentage of total leaders3
Disabled employees
Number of disabled employees
Percentage of total employees
Number of disabled trained in the Basic Professional Skills
program4
Unit
2011
2012
2013
Un.
5,483
5,354
5,339
61
60
59
57
59
56
24
26
12
13
33
14
11
11
12
22
35
Un.
42
38
42
24
%
33
30
21
%
%
Un.
%
258
4.7
219
4.1
230
4.3
Un.
258
244
251
1 We do not classify by minority due to a different understanding of diversity involving a broader concept of social inclusion. 2 There was a
significant increase in this indicator due to the promotion of some female employees who joined this category, which also explains the 8% reduction
in the number of women in management positions. 3 In 2013, this indicator was calculated considering only employees having international
experience with Natura. 4 Some of the 251 employees trained left the company during the year.
88
GRI G4-LA3
Number of maternity and paternity leaves and
return rate Brazil¹
Unit
Employees entitled to maternity/paternity leave
Employees taking maternity/paternity leave in period²
Employees returning to work after end of maternity/
paternity leave
Employees returning from maternity/paternity leave
still employed 12 months after return
Retention rate of employees returning to work after
end of leave³
2011
2012
2013
Men
2,172
2,135
2,178
Women
3,393
3,235
3,161
Total
5,565
5,370
5,339
Men
72
71
62
Women
156
157
182
Total
228
228
244
Men
70
72
62
154
158
179
Total
224
230
241
Men
61
58
63
Women
%
Women
139
133
149
Total
200
191
212
Men
87
83
88
Women
84
86
94
Total
85
85
92
1 The 2011 figures were restated due to the new indicator calculation methodology. 2 The total number of women taking maternity leave in
the 2012 report was corrected because it included an employee of the Instituto Natura. 3 The retention rate of employees returning to work
after the end of their leave is calculated based on the total that remained for more than a year divided by the total of persons that took leave
the previous year.
Employee turnover GRI G4-LA1
In 2013, Natura had its lowest employee turnover rate for the
last three years – 7.8%, compared with 9% in 2012. However,
this was not sufficient to reach the 7% target established for
the year.
With respect to gender, levels were similar to previous
years, with greater turnover among men. In terms of age
group, the highest turnover rate was among employees up
to 30 years of age.
In Brazil, the drop in turnover occurred in management and
the administrative and operational areas. This was due to the
improvement in our professional development plans, worthy
of note being the operational area in which we implemented
an absenteeism control program and sought to develop closer
ties between leaders and their immediate subordinates. In
administration, the number of coordinators resigning grew due
to the expansion of the labor market. Most of the discharges
(72%) occurred in function of poor performance.
In the International Operations, turnover increased by 28%
in 2013, a rate of 10.46% compared with 8.16% the previous
year. The figure was highest in Colombia, where there were a
number of discharges due to poor performance, particularly in
the sales force.
89
GRI G4-LA1
Number and rate of new hires by age group¹²
2013
Age group
Total (un.)
Rate (%)¹
Under 30 years of age
471
7.1%
Between 30 and 50 years of age
615
9.2%
15
0.2%
1,101
16.5%
Over 50 years of age
Total
1 Since 2013, this indicator has been reported in accordance with the GRI G4 protocol. 2 Calculation of rate: total employees hired /total
GRI G4-LA1
Number and rate of new hires by gender¹²
2013
Gender
Women
Men
Total
Total (un.)
633
468
Rate (%)²
9.5%
7%
1,101
16.5%
1 Since 2013, this indicator has been reported in accordance with the GRI G4 protocol. 2 Calculation of rate: total employees hired /total
GRI G4-LA1
Number of employees hired and rate by region1²³
2011
2012
Total (un.)
Total (un.)
Total (un.)
Rate (%)³
Brazil
758
708
747
11.2%
Argentina
n.a.
21
132
2%
Chile
n.a.
16
36
0.5%
Mexico
n.a.
20
34
0.5%
Peru
n.a.
16
53
0.8%
France
n.a.
3
17
0.3%
Colombia
n.a.
20
82
1.2%
758
804
1,101
16.5%
Units
Total
2013
1 Monitoring of indicator in International Operations initiated in 2012 2 Since 2013, this indicator has been reported in accordance with the GRI
G4 protocol. 3 Calculation of rate: total employees hired /total employees indicated in G4-10.
90
GRI G4-LA1
Employee turnover in Brazil by gender¹ ²
Unit
Men
Women
2011
2012
2013
10
7
12
8
8
7
%
1 Turnover definition: number of discharges at the company’s initiative (with or without just cause) or resignation of employees with subsequent
replacement. Calculation method: discharge of employees with request for replacement /effective company headcount. 2 Data corresponding to
Brazilian operations..
GRI G4-LA1
Turnover in Brazil by age group1 2
Unit
Below 18 years
Between 18 and 25 years
Over 50 years
%
2011
2012
2013
0
10
9
9
6
5
4
12
11
9,5
6
7
0.0
8.7
8.5
6.9
5.8
5.8
1 Turnover definition: number of discharges at the company’s initiative (with or without just cause) or resignation of employees with subsequent replacement.
Calculation method: discharge of employees with request for replacement/effective company headcount. 2 Data corresponding to Brazilian operations.
GRI G4-LA1
Turnover rate by country¹ ²
Unit
Brazil
Argentina
Chile
Mexico
Peru
France
Colombia
Total
%
2013
7.1
9.0
7.0
10.9
7.6
15.5
18.4
7.8
1Turnover definition: number of discharges at the company’s initiative (with or without just cause) or resignation of employees with subsequent
replacement. Calculation method: discharge of employees with request for replacement /effective company headcount. 2 Since 2013, this indicator
has been reported in accordance with the GRI G4 protocol.
91
Health and safety GRI G4-LA6/LA7
With its focus on relationships and commitment to well being
well, the company pays close attention to employee welfare.
The occupational health guidelines and policies and the constant
actions implemented are aimed at promoting balance in the
physical and emotional, spiritual and social well being of the team.
In 2013, Natura invested R$ 1,009 per employee in accident
prevention and R$ 1,407 per employee in disease prevention, a
substantial increase compared with 2012
In 2013, we initiated the restructuring of the occupational
safety management system, a process that will continue through
2014 and 2015. This is aimed at driving the question of safety
throughout the company and creating a safety culture. The new
system will include behavioral change measures for employees
and service providers with a view to gaining full commitment
regardless of the employee’s position in the company.
During the year, there was a challenge in maintaining company
health and safety standards in function of the expansion
projects underway, which led to an increase in the number
of temporary workers. As a result, the number of incidents
(accidents) involving employees remained stable, but those
involving contract workers increased.
With the start up of operations at the new distribution center
and administrative office in São Paulo, we implanted the
Espaço Saúde (Health Space) in the unit. This has a specialized
multidisciplinary team providing emergency medical care
and services which include physiotherapy, acupuncture and
psychological accompaniment, among others. The inauguration of
this area also contributed to the growth of the total volume of
investments by the company in 2013.
The company also maintained its Quero Estar Bem (I want
to be Well) program, focused on health, preventive measures,
incentives for physical exercise and promoting quality of life
for employees. Additionally, the company provides preventive
examinations, the application of vaccinations not covered by
the public health service and support for mothers-to-be and
the mothers of newborn babies, within the Cuidando de quem
Cuida program (read more on page 87).
Other measures in this area include workplace exercises
– three times a week for administrative staff and daily
for operational workers –, an ergonomics program
and a rotation scheme in the operational area. These
measures, together with investments in ergonomics and
the multidisciplinary team in the Health Space, have helped
promote health and prevent the emergence of new
occupational diseases among employees. It should be noted
that no employees are engaged in occupational activities
involving a high risk of contracting diseases.
All questions concerning serious diseases are treated on a
case by case basis by the Social, Medical and Occupational
Health Service. Regarding absenteeism, employees are
monitored systematically with the objective of identifying
the main causes of absences through consultations
with workplace medicine doctors and assessment by
multifunctional teams as necessary. In 2013, absenteeism
was reduced by 21%, reaching an absenteeism rate
of 3.12%; this was accompanied by a 49% increase in
health investments. In 2013, there were no new cases of
occupational diseases.
The employees at the Cajamar and Benevides units are
represented on formal health and safety committees through
the Internal Accident Prevention Commission (Cipa in the
Portuguese acronym), open to all employees at all levels.
These meet on a monthly basis; 50% of the representatives
are indicated by Natura and the other 50% are elected by the
employees. GRI G4-LA5
All union agreements cover employee health and safety
items: use of personal protective equipment (PPE);
the Cipa commissions; periodic inspections and the
participation of employee representatives in inspections,
audits and accident investigations; training and education;
complaint and grievance systems; the right to refuse to
do unsafe work; compliance with International Labor
Organization (ILT) standards; problem solving mechanisms;
and commitments related to desired levels of performance
and practices. GRI G4-LA8
GRI G4-LA6
Occupational diseases in the Brazilian operation¹
Absenteeism rate
2011
2012
2013
5.83
3.95
3.12
1The data refer only to Natura employees.
92
GRI G4-LA6
Health and safety numbers and rates in the Brazilian operation¹ ² ³
2013
Employees
0
298
1.32
0
Occupational disease frequency rate %
Days lost – accidents5 6
Injury rates (accidents with and without leave)7
Total number of fatalities
In-house outsourced workers4
0
113
3.09
0
1 Since 2013, this indicator has been reported in accordance with the GRI G4 protocol 2 In 2013, these take into account
accidents recorded among employees at the Cajamar, Itapecerica da Serra, Alphaville, Shared Service Center, distribution
centers, Nasp and Benevides units. Minor injuries requiring only first aid were not included. 3 There were no fatalities in 2013.
4 This includes in-house service providers at the Cajamar, Itapecerica da Serra, Alphaville, Shared Service Center, Benevides and Nasp units. 5
Days lost are counted as the number of consecutive days the employee does not return to work from the day after the accident. 6 Total hours
programmed: takes into account 8 hours/day x working days in period.7 Equivalent to number of accidents with and without leave divided by
million man/hours worked.
GRI G4-LA6
Investment in health and safety
Investment in accident prevention per employee (R$)1
Investment in disease prevention per employee (R$)
Unit
2011
2012
2013
R$
R$
795
940
582
942
1,009
1,407
1 Investment in accident prevention includes the entire budget of the Occupational Safety Department and expenses and investments incurred by
the Engineering and Manufacturing areas to ensure and/or improve safety conditions and comfort in the workplace. Obs.: Spending on training (the
responsibility of the HR/Education and Development area) is not included.
93
Consultants
and NCAs
For Natura, direct selling is much more than a business model:
it is a live relationship network. In this network the Natura
consultants play the fundamental role of connecting the company
with its consumers.
In addition to the NCs, the sales forces comprises three other
key links (see following table): Natura Consultant Advisors
(NCAs), Relationship Managers and Sales Managers. This
structure has been consolidated in Brazil and is replicated in
the International Operations, with some adaptations to local
specificities, as is the case in Mexico (read more on page 102).
At the end of 2013, our network in Brazil comprised almost 1.3
million NCs, 2% up on 2012 and in line with company strategy
of prioritizing increased productivity and income generation for
existing consultants rather than growing the network. In 2013,
average productivity for the Brazilian NCs (the average amount
commercialized in products per consultant in each sales cycle)
increased by 1.4%, with a 6.4% increase in the fourth quarter
alone, the result of a series of actions to increase consultant sales
volumes. Average annual income for the consultants was R$
4,138, 5.79% higher than in 2012.
In the IOs, there was a significant increase in the number of
NCs (20%), with the total reaching 366,500. Worthy of note
were Argentina, with a 26% increase, and Mexico, which has a
differentiated multilevel model, and grew 32% in the year. Both
in Brazil and the IOs was a slight reduction in the number of
Natura Consultant Advisors (NCAs). At the beginning of 2013,
we had recorded a 7.5% decrease in our NCA network in
Brazil, as a consequence of specific rules governing the model.
This was reverted during the course of the year, with the
reduction standing at only 1% in December 2013. During this
period, we made adjustments to the NCA remuneration model
to prioritize the attraction and retention of advisors in the
network. Average annual income for NCAs in Brazil grew 25%
in 2013, reaching R$ 14,412. In the other countries using this
model – Chile, Peru and Colombia –, there was a 3% retraction
in NCA numbers. Even so, we expect to see a resumption in
growth in the course of 2014.
To drive the constant development of the network, we have
dedicated significant resources to infrastructure in recent
years, aimed at raising service quality (read more on page 100).
With growing investments in digital technology, as well as in
the Natura Network pilot project (read more on page 96), the
company developed a series of resources to streamline work
processes for the sales force and increase its efficiency.
Another important advance in November 2013 was the
adoption of credit cards as a means of payment for consultants.
Furthermore, NCs may pay their invoices by bank order, an
option previously available only for specific cases.
The company continues to invest in ongoing education and
promoting an entrepreneurial spirit among NCs as important
tools for creating value for this stakeholder group.
Our sales force
Natura Consultants (NCs): freelance professionals, mainly women, who commercialize Natura products, receiving a commission
on sales – 30% of the recommended price of each product in the Natura magazine. They are not Natura employees.
Natura Consultant Advisors (NCAs): more experienced Natura consultants who are also engaged in promoting the growth of
the consultant network, the productivity of NCs and disseminating best practices. In addition to sales commissions, the NCAs are
remunerated for the activities they carry out. They are not Natura employees.
Relationship Managers: These are Natura employees. They are all women and are responsible for training NCs in the Natura
Encounters held during every sales cycle and in other courses and activities. Their role includes promoting productivity and
entrepreneurship among NCs and providing support for NCAs.
Sales Managers: Also Natura employees, the sales managers provide support for the Relationship Managers and work from the
Natura regional business units.
94
Number of consultants in activity1
Unit
2011
2012
2013
1,175.5
1,268.5
1,290.0
Argentina
63.7
74.9
94.6
Chile
37.9
52.1
59.6
58.5
74.3
97.8
54.9
63.6
70.6
27.1
37.0
42.3
3.1
2.6
1.7
1,420.7
1,572.9
1,656.5
Brazil
Mexico
Peru
000s
Colombia
France
Total
1 In Brazil and the IOs the figures refer to the number of consultants in activity at the end of the year.
Unit
Number of Natura Consultant
Advisors in Brazil¹
Un.
2011
2012
2013
13.230
12.125
11.957
1 Number of NCAs at the end of the year.
Number of NCAs in activity in the International Operations¹
Unit
Chile
Mexico
Peru
Colombia
France
000s
Total OIs
2012
2013
728
n.a
760
388
n.a
692
n.a
827
292
n.a
1,876
1,811
1 The figures refer to the number of CNAs at the end of the year. This is the second year in which the indicator is monitored.
GRI G4-EC8
Average annual income generated
Consultants (NCs)1
Natura Consultant Advisors (NCAs )2
Unit
2011
2012
2013
R$
3,904
9,521
3,912
11,515
4,138
14,412
1 Calculated based on NCs’ 30% profit on product prices in magazine. 2 The NCAs receive a commission based on their performance in terms of
number of consultants placing orders and order volume.
95
Natura Network
To further develop the business model and enhance the
purchase and sales experience with company products, in
2013 we launched the pilot phase of the Natura Network,
which extends relationship selling to digital media.
In the Natura Network, consultants may have their
own internet page to commercialize our products.
Unprecedented worldwide, this model further
strengthens the relationship between the NCs and their
customers, reinforcing their role as a consultant. This is
because in the Natura Network the company is directly
responsible for charging for the orders and delivering the
products, freeing the consultants to focus on the quality
of the relationships they build and maintain with their
customers. Natura is developing a series of resources to
reinforce these relationships (read more on following page).
This also represents an opportunity to attract new
customers to the consultants’ relationship networks by
leveraging their business volume, since to make a purchase
the consumer must connect with an NC. In the current
Natura Network space, consumers have the choice of
choosing a consultant from their own list of contacts, from
the lists of their virtual friends or from Facebook. It is also
possible to find an NC through a search system with filters
by name, district, city or postal code.
For the consumer, the system is more streamlined and
convenient. They have the option of paying by credit card,
bank order or bank transfer. Product delivery is also faster.
Undertaken by Natura, the order is delivered in up to two
days after confirmation or may be scheduled for a day and
time chosen by the consumer.
The Natura Network test phase was begun in November
2012 in Campinas (São Paulo); in 2013 it was extended
to all the six thousand consultants in the city. The system
was implemented in São José dos Campos (São Paulo) in
October 2013, where new formats are being tested. Based
on learning and experience in the pilot phase, the Natura
Network will be launched in other regions in the country
throughout 2014.
Technology
With the advance in digital technologies, the company discovered
an opportunity to use the information in its consultant database
to identify opportunities to strengthen relations with NCs
and with consumers. In 2013, we consolidated the Natura
Customer Relationship Management (CRM) system which,
based on the electronic cross referencing of different types of
data, enables us to have a more complete picture of the profile
and behaviors of NCs, NCAs and end consumers and build a
segmented relationship strategy that has a positive effect on NA
performance and company results.
In the second half of the year, we implemented an
action aimed at re-establishing relations with ex-Natura
consultants based on information collected by the CRM
system. Via direct mail, SMS and email, we invited these
professionals to resume their relationship with the
company. This strategy was backed by our NCAs and a
series of incentives for ex-consultants. The tactic produced
immediate results, contributing to Natura’s performance in
the second half of the year.
Part of our sales force excellence program, the geographical
micro-management project was another initiative that used
CRM data. In this project, on a city by city basis we look for
opportunities to increase our NC base and productivity.
This enables the company to prioritize efforts to grow the
network in municipalities in the interior of a number of
states in Brazil where there is still significant growth potential,
instead of state capitals, where there is already a consolidated
consultant base.
The potential of CRM has already been tested in the
Natura Network pilot project. On the internet page
of some participating NCs, we provide data on their
customers, for example, the date the customer last bought
a determined product, suggesting they make a proactive
contact with that consumer.
In 2014, we want to further explore the system’s resources, with
new focused actions based on different profiles: area of activity,
average purchase value, most interesting products, new NCs,
among others. We also intend to develop actions aimed at the
end consumers.
96
Loyalty and satisfaction
Applications
In an increasingly connected world, computers, smartphones
and tablets have become important work tools for
the direct selling model, driving gains in efficiency and
productivity. In 2013, we developed a number of applications
to make life easier for the sales force, including solutions for
Relationship Managers, NCAs and NCs.
Exclusively for new consultants, in 2013 we tested a tool
which was launched in the beginning of 2014. This enables
the consultant to record orders, see the full portfolio of
Natura products and access a list of customer contact
details, as well as receive tips and news. In the future, the
company intends to extend this tool to other consultant
groups, such as university students.
The company also developed a communication channel for
NCAs via SMS messaging. At no cost, the advisor may simply
send an SMS with a key word to obtain information about
sales cycle status, the NCs in their base etc. This solution is
expected to be deployed briefly.
We monitor the quality of relations with the network of NCs and
NCAs by means of periodic surveys which measure satisfaction
and loyalty, the latter determined by the top score in the items
satisfaction, recommendation and intention to maintain the
relationship with Natura.
In 2013, NC loyalty dropped from 24% to 23%, while NCA
loyalty decreased from 40% to 38%; in parallel, there was a
growth in the level of satisfaction from 90% to 92% among
NCs and from 96% to 97% among NCAs.
The slight decrease in loyalty is attributed to increased
competition both in the direct selling market and the personal
hygiene, perfumery and cosmetics market in Brazil.
It should be noted that this survey measuring NC satisfaction in
Brazil is conducted for every sales cycle. In 2013, this practice was
extended to the NCAs, when the company started to monitor
the indicator every two cycles. We believe that this periodic
monitoring enables us to identify necessary improvements and
enhance our relations with these stakeholders.
In the International Operations, a similar slight downward trend
in NC and NCA loyalty and satisfaction rates was detected. The
exceptions were Mexico and Peru, in particular the latter, where
our performance improved considerably over the previous year.
GRI G4-PR5
Quality of relationships with NCs in the Brazilian operation
Unit
Satisfaction1
Loyalty
2
%
2011
2012
2013
87
90
92
19
24
23
1Satisfied and completely satisfied NCs – Top2Box. 2 Percentage of NCs giving the top score (Top1Box), on a scale from 1 to 5 points, for three
aspects: satisfaction, intention to continue the relationship with Natura and recommendation.
GRI G4-PR5
Quality of relationships with NCAs in the Brazilian operation
Unit
Satisfaction1
%
Loyalty
2
2011
2012
2013
87
96
97
24
40
38
1Satisfied and completely satisfied NCAs – Top2Box. 2 Percentage of NCAs giving the top score (Top1Box), on a scale from 1 to 5 points, for three
aspects: satisfaction, intention to continue the relationship with Natura and recommendation.
97
GRI G4-PR5
Quality of relationships with NCs in the International Operations – loyalty rate (%)1
Unit
2011
2012
2013
Argentina
38
45.4
43.3
Chile
36
39.0
37.9
37
42.8
38.5
Mexico
Colombia
40
38.4
39.0
Peru
23
25.9
31.8
n.a
38
38.1
%
Total International Operations
Quality of relationships with NCs in the International Operations – satisfaction rate (%)2 3
2011
2012
2013
Argentina
Unidade
94.0
96.5
94.8
Chile
95.5
94.0
92.5
95.5
95.3
97.3
Mexico
91.5
90.0
93.8
Peru
92.5
91.0
96.0
Colômbia
%
1Percentage of NCs giving the top score (Top1Box), on a scale from 1 to 5 points, for three aspects: satisfaction, intention to continue the
relationship with Natura and recommendation. 2 Monitoring of this indicator was initiated in 2012. The data is presented by country in function of
the alteration they may suffer due to the size of the network in each place. 3 Very satisfied and completely satisfied NCs – Top2Box.
GRI G4-PR5
Quality of relationships with NCAs in the International Operations – loyalty¹
Unit
Argentina
Chile
Colombia
Mexico
Peru
%
2012
2013
n.a
46
58
52
50
n.a
42
51
51
45
GRI G4-PR5
Quality of relationships with NCAs in the International Operations – satisfaction²
Unit
Argentina
Chile
Colombia
Mexico
Peru
%
2012
2013
n.a
95.8
99.0
93.1
97.0
n.a
93.0
98.0
95.0
98.0
1 Percentage of NCAs giving the top score (Top1Box), on a scale from 1 to 5 points, for three aspects: satisfaction, intention to continue the
relationship with Natura and recommendation. 2 Very satisfied and completely satisfied NCAs – Top2Box.
98
Training
With 17% growth in Natura consultant participation, during
2013 the internet was consolidated as an important vehicle for
the dissemination of content and learning. In the Knowledge
Portal – a website linked with our order placement platform –,
NC participation in courses and e-learning continued to grow. In
total, there were more than 1.3 million consultant participations
in training in Brazil, helping exceed our target for the year of 1.1
million participations.
We also carried out a diagnosis aimed at optimizing training and
from 2014 will be providing contents focused on competencies
that have not yet been fully developed. We are also working on
the implementation of indicators to assess effective learning and
value generation for each course on offer.
The company also maintained the face-to-face training given
by the Natura Relationship Managers, the regional make up
and perfumery workshops and the provision of self-study
courses for NCs living far from the locations where these
courses are offered.
In spite of the overall growth in the index, participation in the
First Steps training for new consultants decreased by 18% in
the year. In 2014, Relationship Managers will focus on this target
once again. We expect to revert this drop through face-to-face
and virtual training.
Training – Operation in Brazil¹ ²
Total NCs trained
Unit
000s
2011
2012
2013
-
1,152
1,348
1 This takes into account the participation of the same NC in a training action, whether by Relationship Manager, virtual training and/or other
corporate initiatives.2 Monitoring of this indicator was initiated in 2012.
Training NCs – Operation in Brazil Initial training Unit
000s
2011
2012
2013
358
343
283
In the International Operations, more than 23,600 NCs received
training. The reduction compared with the total number of
consultants trained in 2012 was due to the attention dedicated
to training quality, with a smaller number of consultants
participating in each session. In 2013, 46% of the NCs in
Argentina, Chile, Colombia and Peru received training. Among
beginning consultants, 36% took other courses besides the First
Steps program.
Training NCs – International Operations¹ ²
Unit
2011
2012
2013
Un.
7,243
10,973
7,352
Chile
3,802
7,450
5,427
Colombia
3,656
5,161
4,382
Peru
5,847
10,383
6,530
20,548
33,967
23,691
Argentina
Total
1 Number of NCs trained, with no repetition (if an CN does the same course more than once in the year, participation is counted only once).
2 In 2012, monitoring of this indicator was discontinued in Mexico. It was discontinued in France in 2013, due to peculiarities in the models in each
of the two countries.
99
Relationship with NCs and NCAs
Service level excellence
Our sales force service centers were structured in a segmented
fashion to ensure greater efficiency and focus in the service
provided. We have the Natura Call Center (CAN) for NCs,
via chat, email and telephone. There is the Advisor Call Center
(ATO) for the NCAs and the Sales Force Service (AFV) for
Relationship Managers.
The company’s most recent investment cycle, which prioritized
expansion of logistics infrastructure, has already improved the
quality of services provided to the NCs. In the new Natura
administrative and distribution center, inaugurated in the city
of São Paulo in February 2013, the high technology employed
in the order picking lines enabled the company to reach a
historical record of 4.5 million items picked in a single day. The
delivery time to NCs was reduced from 5.1 to 4.5 days and
the company exceeded its target of delivering 35% of orders
in up to 48 hours. Other gains included a reduction in the
non-conformance rate.
The company also publishes the Revista Natura and the Revista
Consultoria every cycle, providing information on consulting
activities, special promotions and relationship actions. On the
web, we have the Natura Digital (www.revistanatura.com.
br) magazine, in a more interactive format, enabling access
according to consumer and consultant profile. We are also
reformulating the Consulting Blog (blogconsultoria.natura.
net), in which we concentrate information about product
concepts and functionalities and contents on sustainability and
entrepreneurship, among other subjects.
Currently, almost all our orders are processed online – 96%
in Brazil and 80% in the International Operations. In 2013, we
introduced new services to facilitate NCs’ work routines. One of
these is the provision of notifications – by email, SMS message or
telephone – about consultants’ order status.
In the social networks, the company monitors its Facebook
and Twitter pages, responding to all contacts from consultants
and consumers (read more about Natura in the social media
on page 103).
The company also reaped the fruit from initiatives implanted
in previous years. This is the case of the Customer Committee,
a forum with representatives from different Natura areas
directly involved in product availability and delivery. In 2013, a
plan offering alternatives for servicing consultants in the case of
non-availability of products was one of the improvement actions
implanted by the committee. A differentiated process was also
established for product replacement, reducing the time necessary
to exchange a product from 13 to seven working days. The
reduction of around 70% in the non-service rate between 2011
to 2013, bringing it to its lowest level ever, was also due to the
work of the committee.
The group tracks more than 70 indicators in what we call the
Perfect Service process, aimed at providing quality service and
delivering product in the shortest time possible.
In company operations in Latin America, which are supported
by distribution centers and picking lines in each of the
countries in which Natura operates, we have already achieved
the rate of more than 50% of orders delivered within 48
hours. The target for 2014 is 55% of orders delivered within
48 hours.
Recognition
We currently recognize consultants based on two criteria:
time engaged in activity and sales performance – the
latter includes sales of refills and the Believing is Seeing
product line. Every year an average of 50 to 55 thousand
NCs receive recognition for length of activity. Regarding
performance, in 2013 the company recognized 8,969 NCs
and 3,808 NCAs in Brazil and 1,069 NCs in the IOs.
From 2014, we intend to take this a step further, recognizing
not only performance and how long consultants have
partnered with Natura, but also their efforts to develop
professionally and their contributions to transforming their
community and society.
100
Sustainable
Entrepreneurship
The Natura materiality matrix, revised in 2010 and 2011,
indicated that one of the company’s priority topics was
sustainable entrepreneurship, which may be promoted
particularly among our consultant network. Believing in the high
entrepreneurial potential of consulting, the company intends
to boost this value, linking economic results with greater
generation and distribution of wealth, care with relationship
quality and the sustainable use of natural resources.
To enhance our understanding of entrepreneurship, we
supported the development of a global research network on
new businesses at the base of the pyramid (comprising the
less privileged social classes), led by Professor Stuart Hart
of Cornell University (USA). The network already has 18
laboratories in diverse countries, such as Denmark, Venezuela,
South Africa and the Philippines.
In 2013, the World Forum of the Global Base of the
Pyramid (BoP) Laboratory Network was held at
Cajamar (São Paulo), attended by BoP theoreticians,
representatives of other companies and leaders from BoP
laboratories worldwide.
It is the company’s intention to focus more on sustainable
entrepreneurship initiatives in our NC network. This intention is
being put into practice through the Movimento Natura (Natura
Movement) in Brazil and the differentiated commercial model
under construction in Mexico (read more ahead).
NCs engaged in Natura Movement¹ ²
Unit
Un.
2011
2012
2013
122,953
176,331
209,562
Movimento Natura (Natura Movement)
Created in 2006, the Natura Movement is key in our
commitment to generate greater value for our network and
drive mobilization and engagement. One of the movement
fronts, the Acolher (Welcome) program provides financial and
consulting support for projects developed by NCs to transform
their local reality, as well as to connect these consultants and
their respective relationship networks.
The program is enhanced by the Welcome Award, presented to
the most transformational initiatives presented by participating
consultants, in areas such as eating habits, education, art
and culture, social assistance, income generation and the
environment. In the third edition in 2013 there was a total of
586 entries, with eight selected as winners. The novelty in the
2013 award was the participation of 63 Natura employee
volunteers – or “welcomers” –, who provided support for the
finalists and the award winners.
In addition to the Welcome program, in 2013 the Natura
Movement was involved in other initiatives, such as the
Greenpeace Zero Deforestation campaign aimed at getting
public support for passing a law prohibiting deforestation
through the Brazilian Congress. By activating the Natura
Movement, we managed to get more than 84 thousand NC
signatures in support of the initiative.
In 2013, there were more than 209 thousand participations in the
Natura Movement, higher than the target set for the period and
19% up on the previous year. This indicator also takes into account
consultant engagement in Believing is Seeing (read more the about
the results of Believing is Seeing in 2013 on page 32 to 34). In 2013,
an average of 125 thousand NCs sold Believing is Seeing products
in each sales cycle.
1 Equivalent to the sum of the average number of NCs active in
Believing is Seeing product sales plus NCs participating in other Natura
Movement initiatives, such as the Welcome Program, per cycle. 2
Considering cycle 01/2013 to cycle 19/2013. There was an increase of
one sales cycle compared with 2012.
101
Natura Movement 2.0
With these learnings, the company is preparing to expand the Natura Movement and reinforce commitment to what we are calling
well doing well – a reference to our well being well value proposition. It is our wish not only to involve our consultants, but also to
get closer to other people and build a network that connects agents of change (owners/advocates of socio-environmental initiatives)
and people interested in collaborating with them, either with their skills and talents or with funding, among other possibilities.To
reach this higher level, in 2014 we will launch a digital collaborative platform that will connect and bring the promoters of initiatives
together with volunteers, in accordance with their affinities, needs, special interests and geographical location.
In this context, the tools and methodologies necessary to make this new network work will be concentrated in the Welcome
Program. We also plan to improve Natura Movement indicators and to do this are working on an index that will enable
measurement of the impact of our initiatives. With this, we will be able to prioritize investments that help drive human
development, especially those focused on our NCs.
Sustainable Relationship Network
Three years after implantation, the differentiated commercial
model applied in our operations in Mexico is showing its
potential to foment entrepreneurship and innovation. Known
as the Sustainable Relationship Network, this is a multilevel
direct selling model – a format already explored in the
Mexican market –, that foments the construction of consulting
networks. In 2013, this system grew 22%. At the beginning of
2014, it passed the symbolic mark of 100 thousand NCs. Since
2009, the consultant network in Mexico has grown on average
33.5% per year.
More than building networks, Natura wants to contribute to
the creation of inclusive business capable of generating social
capital. The core idea behind the Sustainable Relationship
Network is that the consultants’ career and relationship with
Natura evolves as they attract new NCs to the networks, work
on preparing new leaders and engage in socio-environmental
activities in their communities. The strategy is based on four
pillars: self-knowledge, business management, relationship
network and society.
Based on quantitative and qualitative criteria, the company
established different levels for each moment of the
consulting career (see following table). To support this
growth, we provide educational modules on sustainable
entrepreneurship. Consultants also gain recognition each time
they move up a level.
In 2013, participations in face-to-face and virtual training
totaled 1,915; 712 consultants participated in the Sustainable
Development Experience, which addresses the promotion of
socio-environmental initiatives.
During the year, we presented our experience with the
Sustainable Relationship Network in a number of forums
dedicated to promoting inclusion, worthy of note being the
2nd Base International Forum for the Development of Markets
at the Base of the Pyramid, promoted by the Inter-American
Development Bank (IADB) in June 2013 in Colombia.
Natura Associate
Specialist in business management
Reference in Triple Bottom Line
Natura Inspirer
Developing in business Management
Natura Transformer 2
Specialist in network management
Reference in network management
Natura Transformer 1
Developing in network management
Natura Instructor 2
Specialist in managing direct groups
Reference in managing direct groups
Natura Instructor 1
Developing in direct group managemento
NC Natura Entrepreneur
Specialist in indication and follow up
NC Natura consultant
Specialist in Natura consulting (sales)
102
Consumers
Guided by our belief in promoting well being well, every
year we strive to forge closer ties with our consumers in a
constant, ongoing exchange. To enhance these relations we rely
increasingly on digital technologies which present a series of
opportunities and challenges revolving around more interactive
and collaborative forms of relationship.
In 2013, we took an important step in this direction with the
launch of the pilot stage of the Natura Network project, which
connects the Natura consultants, end consumers and the
company, introducing an additional form of relationship and of
commercializing our products and strengthening the direct selling
model (read more about the Natura Network on page 96).
In the largest social network in existence, Facebook, the Natura
official page, which now includes our International Operations,
has more than 7 million fans. The company also has specific
pages, such as the make up channel, with more than 1.7 million
fans. Launched in 2012, the Aqui Tem Natura (Natura is Here)
application, which enables Facebook users to locate Natura
consultants among their friends and their friends’ contacts, has
more than 134 thousand NCs registered on it, from more than
5 thousand municipalities all over Brazil. On Twitter, more than 52
thousand users follow Natura.
In an innovative initiative, in 2013 Natura launched an application
with tips for exercises and reflections that stimulate selfknowledge and a feeling of well being well. Based on the results
of a survey about the meaning of gestures conducted by the
Natura Innovation area, the company put together a repertoire
of touches that promote well-being and may be used with
products from the Natura Plant, Natura Tododia and Natura
Ekos lines. There is also the Natura Mamãe e Bebê (Mother and
Baby) application exclusively for iPhones and iPads. This teaches
mothers how to perform a massage based on the ancient Indian
Shantala technique designed to reinforce bonds with their
children and promote well-being from an early age.
Outside the online environment we also promote a series
of measures to develop closer relations with consumers and
boost awareness and recognition of our brand. A success
throughout 2012, at the beginning of 2013 the company
discontinued the Espaço Conceito (Concept Space) designed
to promote access to Natura products through a multi-level
conceptual and sensorial experience. The Space should be
reopened in the second half of 2014 in the same region of São
Paulo. The company also has plans to extend this experience to
other cities in the country.
During 2013, Natura maintained its short Aqui Tem Natura
(Natura is here) program broadcast on the open TV Record
channel, as well as on the GNT, Viva and Discovery Home
& Health cable channels. Available also on the online portal
tv.natura.net, the program content addresses questions of
interest to Natura and consumers, such as well-being, health,
beauty, sustainability and social entrepreneurship.
During the year, the company also invested in the Customer
Relationship Management (CRM) system, which employs
digital technologies to learn more about consumers and
improve services for them. Based on the same premise, in
the first quarter the Natura Eu Gosto (I like Natura) project
was launched offering product categories based on specific
profiles and habits. A total of 20 profiles were created, such as
“Man and Style”, presenting skincare, deodorants, hair gel and
perfume for men.
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Inspiring marketing
The company’s various communication, advertising and
marketing actions seek to transmit the Natura values and
Essence to the public, as well as relevant messages, such as
relationship quality, well-being and sustainability. In 2013, Natura
increased its investments in marketing, a strategy which produced
record sales during the Christmas sales cycle.
To publicize the Sou product line, in the second half of 2013 we
opened the Espaço Sou para Nós (Sou Space for Us) in Salvador
(Bahia) and Recife (Pernambuco), promoting reflection on
conscious consumption. Residents of Rio de Janeiro also enjoyed
an interactive experience with the new brand. Natura invited the
public to give up their excesses and share their stories. Natura
employees kicked the campaign off by collecting books which
were then offered to the public in vending machines installed
in different underground stations. Another initiative involved
videoconferences on Youtube to encourage reflection about
society’s current consumption habits.
The Kaiak product line promoted the “O que move você?”
(What moves you?) action in Salvador (Bahia), Fortaleza
(Ceará) and Recife (Pernambuco). In conjunction with a sports
consultancy, treadmill simulators were set up in shopping malls
in the cities. Participants chose the kind of sport, the soundtrack
and the length of the challenge and were awarded Kaiak
products depending on their performance.
All company communications are aligned with the Natura
Ethical Communication Guidelines. The document is for
employees and providers involved in communication processes
and sets forth the main principles governing communication
campaigns and actions, such as the environmental impact
of products, conscious consumption, respect for children
and diversity. The company areas responsible for each
communication action are charged with ensuring the guidelines
are followed. The company also has its Brand Committee which
reports directly to the Executive Committee.
Natura complies with the guidelines set forth by the advertising
self-regulatory body Conar and the codes of conduct of the
Brazilian advertising, consumer defense and direct selling
associations. In 2013, the company received no notifications
related to violations of laws or voluntary codes related to
marketing communications, including advertising, promotion and
sponsorship. GRI G4-PR7
Loyalty and preference
On an annual basis, Natura assesses consumer satisfaction
using three indicators: penetration, preference and loyalty, the
latter encompassing three dimensions (satisfaction, intention to
continue the relationship with Natura and recommendation).
In 2013, there was a slight decrease in the evaluation of the
Natura brand by consumers, according to a Brand Essence
image survey conducted by the consultancy Ipsos. The
percentage of consumers attributing the top score to Natura
decreased from 79% to 77.8%. During the year, however, the
number of locations consulted was increased, which reduced
comparability with 2012 data.
In the cosmetics, perfumery and personal hygiene market, our
loyalty and preference rates were 51.6% and 43.8%, respectively.
In 2012, the loyalty rate was 51%, while preference scored 46.5%.
The results shows stability from one year to the other.
Natura was also elected the most valuable brand in the Brazilian
retail trade in the ranking produced by the consultancy Interbrand.
At the beginning of 2014, Natura was recognized as the second
best company in terms of image among Brazilian consumers,
according to the ranking of the British consultancy BrandIndex.
104
Brand image survey overall assessment
in Brazil1 2 3
Unit
2011
20123
2013
73
79
77.8
%
1 Source : Brand Essence/Instituto Ipsos. 2 The global assessment Top
Box considers respondents who gave the Natura brand the top score
on a scale from 1 to 5. 3 Survey based on a quantitative sample of 3
thousand personal and household interviews in 50 markets. With the
addition of small cities, the 2013 indicator lost comparability with the
2012 indicators. The 2012 score on a same market basis is 78.8%.
Quality of relationships with
consumers in Brazil1 2
Unit
Loyalty
Preference
%
%
2011
2012
2013
66
47
51
46.5
51.6
43.8
1 Source : Brand Essence/Instituto Ipsos. 2 Survey based on a
quantitative sample of 3 thousand personal and household interviews
in 50 markets. With the addition of small cities, the 2013 indicator lost
comparability with the 2012 indicators. 3 Percentage of consumers
giving the top score (Top1Box), on a scale from 1 to 5 points, to three
aspects: satisfaction, intention to continue relationship with Natura and
recommendation.
Penetration in Brazilian households1 2 3
Unit
%
During the year, Natura came in 12th place in a Brandz, WPP
and Millward Brown survey which ranked the 50 most valuable
Latin brands. The company was also listed in the image and
most admired brands rankings in Argentina, organized by the
magazine Apertura.
GRI G4-PR5
GRI G4-PR5
3
Given the growing importance of the Latin American market
for the business, Natura also tracks loyalty, brand preference
and recommendation indicators in the countries in which it has
operations. In 2013, consumer loyalty increased from 49.3% to
54.2%. The percentage of consumers who would recommend
Natura reached 77.5%, compared with 70% in 2012.
2011
2012
2013
62
60
58.5
Relationship quality with
consumers in the International
Operations
Unit 2011 2012 2013
Loyalty¹
Preference²
Recomendation
%
%
%
n.a
11
n.a
49.3
14.3
70
54.2
16.6
77.5
1 The loyalty index comprises top box in recommendation, top box in
repurchase and top box in satisfaction. It takes into account consumers
who bought and used Natura products in the last 12 months.2 The
preference index is measured in the main markets of the countries in
which the IOs operate and surveys consumers aged between 25 and
55 years.
1 Source : Kantor World Panel. 2 A Penetration is the percentage of
households in the population represented in the survey who bought
the brand in the specified period. 3 The panel represents 81% of the
household population and 90% of the consumption potential in the
country, according to the Target index. In function of updates to the
population profile, the data on Natura were adjusted and the numbers
were revised.
105
Customer service
Consumer contacts are centralized in the Natura Customer
Service operation (SNAC). The company also responds to all
complaints, doubts and criticisms on its profiles in the social
networks (Facebook and Twitter) and its blogs.
With the continuation of initiatives to improve processes, the
company decreased the time necessary to replace products
from 13 to seven days. One measure that contributed to
the reduction was the introduction of simultaneous product
exchange, with the replacement being delivered at the same
time that the original product is collected. Previously, the
consumer had to deliver the product for analysis before a
replacement was sent.
Natura also consolidated its service for Chronos, in which
attendants receive specific training related to adverse reactions.
With the success of this initiative, the company is planning to
extend segmented attendance to other brands with a similar
profile to Chronos.
With respect to consumer privacy and information
confidentiality, all consumers contacting customer service
via telephone or the internet are protected by information
security policies and systems. In 2013, the company adopted
one of the most advanced data security technologies
available, enabling the authentication and identification of
all users of company digital systems, in particular NCs. This
system also facilitates access and permits faster navigation
speeds. During the year, there were no legal or administrative
cases involving the violation of consumer privacy or loss of
consumer data. GRI G4-PR8
Radical transparency
Having identified an opportunity to increase the transparency
applied to consumer relations, in January 2013 Natura launched
the Radical Transparency project, aimed at providing consumers
with the maximum information possible, enabling them to make
conscious, informed decisions.
The first year of this project was dedicated to data
collection. On the company’s co-creation platform
– Co-creating Natura –, a specific exercise related to
transparency and product safety was implemented, involving
the participation of consumers, NCs and employees (read
more on page 43).
After this stage and consultations with company leaders and
specific areas, we realized that consumers still know little
about Natura’s essential topics, ranging from information
about products to data concerning the company’s value
chain and sustainability management. A desire on the part
of consumers to have access to more information about all
these areas was identified.
Accordingly, four priority topics were defined for the
Radical Transparency initiative: traceability in the value chain,
environmental impact, social impact and health and safety.
The intention now is to develop an action plan to ensure that
consumers may access this information in the clearest, most
straightforward way possible, in line with Natura’s commitment
to transparency.
Consumer safety GRI G4-PR1
Natura has a permanent commitment to the health
and safety of its consumers. It maintains strict internal
processes, from the conceptual development of products
to manufacture. These processes include product and
raw material safety and efficiency tests and assessments,
stability, microbiology and analytical development tests to
ensure approval and compliance with sanitary authority
requirements and demonstrate the company’s commitment
to truth, ethics and transparency.
Based on the premise of continuous improvement, Natura’s
cosmetovigilance process monitors products on the market
and defines actions in the event of risks to consumer health by
assessing any complaints concerning possible adverse reactions.
In 2013 this process evolved based on new European
regulations. The company increased the scope of individual
assessments and implanted a strategy of notifying any serious
cases to the sanitary authorities, among other actions. To
ensure incidents are dealt with effectively, in partnership
with the customer service center (SNAC), we developed
specialized procedures for dealing with cases in which the
customer still feels undesirable effects potentially caused
by the use of a Natura product – including the provision
of medical care. The company also invested in training for
customer service staff.
The company has a collaborative network involving
Brazilian and international researchers, academics and
independent consultants. This enables us learn more and
more about consumer behavior and provide innovative
products and services that meet their expectations. To
ensure alignment with the rigorous standards adopted
in Brazil. we have a technical-scientific area for the IOs
responsible for overseeing regulatory, cosmetovigilance and
quality processes, which reports to the Consumer Safety in
Innovation area in Brazil.
106
During the year the company reviewed its positioning to
ensure further clarity. One of the updated guidelines, which
has now become Natura policy, is related to animal testing
(read more ahead). For the review process, a working group
was created with representatives from different company
areas, such as Communication, Legal Affairs and Quality. Data
collected on the internet based on user behavior was also used
in the process.
One fundament of the company’s work is the precautionary
principle. Natura keeps abreast of scientific developments
worldwide and closely monitors trends related to controversial
issues and ingredients, working on replacements whenever
necessary. The company has already eliminated substances from
its products, such as paraben in 2011 and phthalate, in 2008.
The company continually seeks new internationally approved
methods which ensure consumer safety and attest the benefits
of its products. GRI G4-14
Since Natura uses a significant amount of raw materials of
plant origin, knowledge has been developed of predictive safety
methods with monitoring of natural modifications to ensure
these changes do not affect the safety and efficiency standards of
company products.
All company products are approved by Anvisa in Brazil or by
the local regulatory authorities for our International Operations
before they are launched. The company does not commercialize
products that are prohibited in Brazil or in the other countries
in which it operates. Natura conducts analyses on raw materials
prior to presentation to regulatory authorities to ensure
compliance for all its finished products. In 2013, there were no
sanctions or fines for violations of laws or regulations related to
the supply and use of products and services, product labeling or
risks to consumer health and safety. GRI G4-PR2/PR4/PR6/PR9
At the end of 2013, an analysis by the NGO Proteste (Brazilian
Consumer Defense Association) indicated that the protection
factor of the product Natura Fotoequilíbrio Spray FPS 30 was
less than it was claimed to be. This analysis was published in
the media and sent to the Public Prosecution departments
in the states of Espírito Santo and São Paulo, to the Procon
consumer protection services in both states and to Anvisa.
Natura responded to the press and to Anvisa proving that the
product had been subjected to rigorous testing beyond legal
requirements to assess its efficiency in skin protection, and
demonstrating that the company had technical assessment
reports from three independent laboratories attesting to the
protection factor. GRI G4-PR6
Alternatives to animal testing
Since 2006, Natura has had a policy that repudiates animal
testing in all company processes, including assessments
of new raw materials. This is also the positioning adopted
at Aesop. The company works continually to consolidate
new and alternative methodologies such as in vitro tests
to guarantee the safety and efficiency of its products. The
company stays abreast of this movement worldwide and has
a specialized technical team dedicated to this question on an
international level.
A major challenge in recent years has been finding
laboratories equipped to conduct alternative tests in
line with Natura quality and safety standards. In 2013, an
important step was taken to ameliorate this problem by
approving laboratories in the United States and in Brazil and
prospecting others in Europe.
In commercial contracts the company is explicit about its
opposition to animal testing and suppliers must commit to
this restriction. The company does not have mechanisms to
prevent suppliers from carrying out animal tests for other
organizations or industrial sectors.
107
Suppliers
In order to consolidate a high added value supply chain, Natura
needs to lead by example and share its experience and knowhow with suppliers.
rate, social inclusion/hiring disabled workers and private social
investment), the initiative provides inputs for development plans
for these suppliers.
In 2013, the company further reinforced relations throughout
its chain comprising more than 5 thousand business partners in
Brazil. This base falls into three categories: outsourced suppliers
(finished products), production inputs (biodiversity ingredients,
raw materials and packaging materials) and indirect materials
and services. In 2013, the company had 1,762 active suppliers in
the production input and indirect materials and service provider
categories. Of these, 283 partners accounted for approximately
70% of purchase volume during the year. GRI G4-12
Improvements were introduced in the program in 2013,
with the simplification of processes, such as the filling out
of indicator spreadsheets and a change in the frequency of
meetings with suppliers, which are now held every six months
– instead of quarterly – to give them more time to review
practices and improve performance. In the meetings, the
supplier’s progress is reviewed and performance is compared
with that of other partners in the same category. To stimulate
the exchange of experience, the company created forums in
which different suppliers get together to discuss questions of
mutual interest.
Different tools are used to monitor purchasing processes,
ranging from procedures to determine which activities are the
responsibility of suppliers and authorization levels for each
process to technology systems that store all company data on
tenders and bids and which may be subject to audit.
During 2013, the company consolidated its Sustainable Supply
Chain strategy which, based on a methodology developed by
Natura in partnership with international experts, includes socioenvironmental criteria as well as traditional supplier selection
parameters. In 2013, the proportion of production input
suppliers participating in the program was increased from 87%
to 96%. During the year, transportation and service providers
were also included in the initiative.
In addition to tracking supplier impacts related to Natura’s
chain and quarterly monitoring of eight performance indicators
(CO2 emissions, water consumption, waste generation, formal
education programs, employee training, workplace accident
During the year, 231 suppliers took part in the face-toface sessions organized by Natura, totaling 10,248 hours
of training. There were 77 participations in virtual training.
The subjects addressed included TBL (triple bottom line)
methodology, internal supply area processes and the
company’s supplier development program Qlicar (Quality,
Logistics, Innovation, Competitiveness, Environment, Social
and Relationship).
In the third year of its existence, the positive socioenvironmental externalities generated by the program
corresponded to R$ 447,000. This takes into account the
benefits generated by these suppliers in education programs
for their employees, the hiring of disabled workers, among
others factors. The total benefits generated were R$ 2.78
million or 17.3% of the company’s target of R$ 16 million in
socio-environmental gains by 2015.
108
Supplier development
In line with company Sustainable Supply Chain strategy,
Natura’s supplier development program Qlicar (Quality,
Logistics, Innovation, Competitiveness, Environment, Social and
Relationship) assesses critical service level indicators as well
as social and environmental questions. In 2013 a total of 87
suppliers of inputs and finished products and brand-related,
logistics and NC service providers took part in the program.
One advance in the program was the establishment of the
Suppliers Committee, comprising employees from diverse Natura
areas (Finance, Innovation and Supplies, among others), who
meet on a monthly basis. Inspired by the Customer Committee,
whose work is focused on the services provided for consultants
(read more on page 100, Consultants and NCAs), the Suppliers
Committee aims to identify critical points and opportunities for
improvement in relations with suppliers in areas such as delivery
logistics and means of payment. On a pilot basis, the company also
promoted e-learning sessions with Qlicar participants. Another
advance in 2013 was the institution of periodic financial analysis
of commercial partners, a practice which hitherto was only
conducted when a supplier was contracted.
Natura also organized the third edition of the Qlicar Award,
with prizes for 16 suppliers in the packaging, fragrance, raw
material, outsourced suppliers Brazil and Latam, service,
logistics, transportation, socio-environmental progress, supplier
communities and innovation categories. The intention in 2014
is to introduce a technology category in the award. In coming
years, Natura also plans to include other categories for suppliers
of the International Operations.
Risk management in the supply chain
Risk management concerning suppliers takes into account the
market, finance, socio-environmental factors, occupational health
and safety, and quality, in addition to legal requirements. In 2013,
436 suppliers were identified as being eligible for risk assessment
and control. Of these, 186 were audited during the course of the
year. The audits generated a series of continuous improvement
plans with 111 suppliers committing to environmental
improvements, 100 to reducing negative societal impacts, and
118 to improving working conditions. It should be noted that
among these suppliers the impact levels differed (high, medium
and low). No agreements were reached to correct human rights
related issues, because Natura’s positioning in this respect is zero
tolerance for any kind of violation.
GRI G4-EN33/HR11/LA15/SO10
In the audits focused on environmental questions, in addition
to compliance with legal requirements and the existence
of emergency environmental plans, the company examines
how the partner identifies the significant impacts produced
by its operations and how it manages waste, water, energy,
wastewater and emissions. Audits focused on labor practices
encompass risk prevention (fire brigade, first aid.), the use
of protective equipment, emergency plans etc. Social impact
audits concentrate on assessing whether suppliers have codes
and guidelines governing ethical conduct, commitments to
labor practices and human rights, compliance with Ministry of
Labor quotas (young apprentices and/or the disabled), CLT
labor regime contracts for the employees working on Natura
premises and the promotion of community development
initiatives, among others. GRI G4-EN33/LA15/SO9
Of the suppliers joining the Natura supply chain during the year,
2.3% were assessed in terms of environmental, social, labor and
human rights risks upon signature of the contract. It should be
noted, however, that these new suppliers are in the category
representing 70% of Natura purchase volume.
GRI G4-HR10/EN32/LA14/SO9
Also worthy of note is the fact that 100% of Natura supply
contracts contain human rights clauses, covering questions such as
child and forced labor. Significant investment contracts including
human rights-related clauses are those worth in excess of R$
5 million. In 2013, 16 contracts in this range were signed. For
purposes of comparison, in 2011 the company signed 44 contracts
of this type. The reduction in number was due to the lower
number of projects in 2013. GRI G4-HR1
During the year no contracts were terminated as a result of
corrupt practices. With respect to the right to exercise freedom
of association and collective bargaining, Natura does not have
mechanisms for assessing compliance with this guarantee among
its business partners. It should be noted that our security
practices encompass training in human rights, including both the
legal training provided by the Federal Police and internal training.
All security staff undergo the Federal Police training, as well as
additional training; however percentages are not measured. GRI
G4-SO5/HR4/HR7
109
GRI G4-EN33/HR11/LA15/SO10
Total of critical suppliers assessed in socio-environmental,
human rights and labor practices
Improvement agreements
stemming from assessment
Type of impact
Negative environmental impacts
Violation of labor rights
Negative societal impacts
Total
186
186
186
Total
111
118
100
%
25%
27%
23%
Loyalty and satisfaction GRI G4-PR5
Natura monitors the quality of relationships with suppliers by
means of satisfaction and loyalty indicators, similar to those
used with other priority stakeholders. In 2013, the loyalty rate
resumed growth among suppliers in Brazil, increasing from 23%
to 30%, higher than the 28% target established. This is the first
year that the company has presented indicators for loyalty in
the IOs. Comparing 2013 with 2012, the most significant growth
rates occurred in Mexico, Colombia and Chile. Participation in
the survey also increased during the year, with a 30% rise in the
number of respondents.
GRI G4-PR5
Quality of relationships with suppliers
Unidade
Satisfaction¹
Loyalty – suppliers Brazil²
Loyalty – suppliers IOs²
Loyalty – Natura suppliers (consolidated)
%
2011
2012
2013
81
27
n.a
n.a
79
23
29
24
85.5
30
38
31
1 Percentage of satisfied and completely satisfied suppliers (Top2Box). 2 Percentage of suppliers attributing top score (Top1Box), on a scale from 1
to 5 points, for three aspects: satisfaction, intention to continue relationship with Natura and recommendation.
Environmental impact of main suppliers
Natura also monitors the environmental impact of its main suppliers. In 2013, the number of suppliers (accessories, packaging,
printing, fragrances and raw materials, among others) monitored increased from 66 to 91. This year, the indicators were collected
on a six-monthly basis.
In energy consumption, taking into account the inclusion of new suppliers, there was a 15% reduction in relative consumption.
Similarly, total waste generated decreased from 622 metric tons in 2012 to 466 metric tons in 2013. During the year, the company
also started to monitor the amount of waste recycled, which totaled 5,377 metric tons. However, water consumption increased by
17%, due to the inclusion of new suppliers and greater accuracy in the data reported.
110
Main Natura packaging and raw material suppliers
Unit
2011
2012
2013
62
66
91
Primary electricity source – electricity consumption (J)
9.7 x 1013
9.3 x 1013
1.4 x 1014
Self-generated electricity – diesel generator (J)
2.0 x 1013
2.7 x 1013
7.7 x 10¹²
12
6.2 x 10
1.2 x 1014
12
5.7 x 10
9.7 x 1013
1.3 x 10¹³
9.5 x 10¹³
2.4 x 1014
2.2 x 1014
2.5 x 10¹4
179,740
184,049
295,954
577
n.d
622
n.d
466
5,377
Total suppliers assessed
Un.
Energy consumption
LPG consumption (J)
Others –natural gas (J)
Total energy consumed (J)
Water consumption
Total water consumption
Waste generation by main Natura suppliers
Total waste generated
Total waste recycled ¹
Joules
m3
t
t
1 Monitoring of the indicator was initiated in 2013.
International operations
Natura’s expansion plans for Latin America rely heavily on
relations with local suppliers. We ended 2013 with 10.3 million
units produced by outsourced suppliers outside Brazil, compared
with around 3 million units in 2012. Currently local production
is centered on Argentina (perfumes, moisturizers, shampoos
and make up), Mexico (perfumes, shampoos, conditioners and
make up) and Colombia (perfumes, soaps, moisturizers and
conditioners). In 2013, the company reached a local production
corresponding to 16.5% of net revenues for the region –
Colombia accounted for 51.6% of production, followed by
Argentina with 46.5%, and Mexico, with 2%.
To meet the increased demand generated by the accelerated
growth of Natura’s International Operations, the company plans
to intensify production in Argentina, in Colombia and principally in
Mexico. There are also plans to increase the capacity of our order
picking lines in Chile, Peru, Mexico and Argentina. In Argentina,
Chile and Peru, the company has contracted specialized partners
to manage its order picking lines.
In parallel with the growth of International Operations, the
company is seeking to build a supplier chain that is aligned with
Natura values. In 2013, supplier audit and approval processes
included assessment of socio-environmental questions aligned
with the standards used by the company in Brazil. This was an
important step towards the introduction of the company’s
Sustainable Supply Chain strategy in the IOs from 2014. In this
pilot stage, 20 suppliers will be engaged in the program, three
in Colombia, ten in Argentina, four in Mexico, one in Peru and
two in Chile.
111
Supplier
communities
GRI G4-EC7/EC8
Support for the development of the communities that supply the
Brazilian social biodiversity ingredients used in Natura products
is part of company strategy to strengthen the overall supply
chain. This relationship entails support for sustainable stewardship
techniques, leadership development and the formation of
cooperatives and is based on fair pricing and benefit sharing.
Essentially, Natura seeks to supply tools that will enable the
supplier communities to retain their independence, generate
added value and drive sustainable development.
In addition to the income generated by the purchase of
ingredients and benefit sharing, Natura believes that its relations
have a positive impact on the supplier communities by increasing
their technical capacity and encouraging them to exchange
experience and knowledge with other producers and to form
partnerships with other companies.
In 2013, the company maintained relations with 32 such
communities around the country. Of these, 27 are raw material
suppliers, whereas relations with the other five are institutional in
nature. This represented a reduction compared with the previous
year, because relations with four communities were discontinued
and no new partnerships were established during the year.
The communities with which relations were discontinued were
Palmeira do Piauí (Piauí), Escolas de Parintins (Amazonas), CTM
(São Paulo) and the Chico Mendes Extractivist Reserve (AC).
In the Piauí community, the supply and payment of shared
benefits was concluded, with ingredient supplies now coming
from another community. The company also finalized its support
for the art schools. With respect to CTM, the category of
the company’s relationship was altered from community to
individual producer because only three of the producers supply
Natura. Lastly, the Natura Government Relations area is still in
negotiation with the Chico Mendes Extractivist Reserve with
respect to access to biological resources.
As a result, the number of families involved in this process
decreased to 3,117. Whenever the company terminates a
relationship, this is done gradually after assessment of potential
impacts and the implantation of a support program aimed at
ensuring the community’s long-term sustainability.
In 2013, the funds allocated in this area decreased by 7%
compared with the previous year, totaling R$ 11.2 million.
This drop was the result of the decision to utilize stocks of
social biodiversity ingredients built up over recent years. These
stocks met production requirements without the need for new
purchases. Investments in studies and technical assistance were
also lower. As a result, the company did not reach its target of
distributing R$ 13.6 million to supplier communities in 2013.
However, Natura is already implementing initiatives and projects
to ensure it achieves its target of involving ten thousand families
and obtaining 30% of ingredients from the Amazon region by
2020 (the current rate is 13.4%).
Relationships are governed by the Natura Policy for the
Sustainable Use of Social Biodiversity Products and Services,
reviewed in 2013 (read more on page 54), and the Principles
of Relationship with Supplier Communities, which establish
guidelines for the company dealings with these communities,
encompassing respect for their culture and understanding of
their way of life and social organization.
112
GRI G4-EC8
Communities with which Natura relates¹
Families benefiting in the supplier communities
Unit
2011
2012
2013
Un.
35
3,235
36
3,571
32
3,117
2011
2012
2013
6,749
6,303
3,435
1,597
3,099
4,350
1,002
1,524
1,459
22
69
-
1 The number of communities was revised in 2011 and the data were restated..
GRI G4-EC7
Funding¹
Unit
Supply²
Access and benefit sharing and associated traditional
knowledge3
Funds and support4
R$ 000s
Image rights
5
Training
133
301
350
7
Certification and stewardship
21
29
-
Studies and advisory services
8
512
749
1,590
10,037
12,074
11,184
6
TOTAL
1 Direct amounts in courses, infrastructure, studies, local advisory and technical services. The funds are paid in kind for the purchase of raw
materials, benefit sharing (if included in contract) and use of image rights. 2 Amount paid by processors or by the Benevides plant for raw materials
used in Natura’s products. 3 Amounts paid to communities as benefit sharing from the access to genetic heritage and/or traditional knowledge
associated with Brazilian biodiversity species. 4 Natura voluntary sustainable development funds and agreements, with disbursement linked to the
execution of projects or sponsorship of infrastructure improvements. 5 Amounts paid for the use of images of community members in institutional
or marketing materials. 6 Workshops and courses paid by the company to improve sustainable production techniques. 7 Amounts invested in
certification and stewardship plans for areas under cultivation. 8 These include studies conducted by anthropologists, lawyers, economists, NGOs
and other professionals contracted by Natura to work in the supplier communities. They also include studies for structuring production chains.
GRI G4-EC8
Funds allocated per family, per year
Unit
Direct funds
1
Supply
2
R$ 000s
2011
2012
2013
2.9
3.1
3,.0
2.2
1.8
1.1
1 These include funds effectively received by the communities: ingredients supply, sharing of benefits, image rights, funds and support.
2 Sub-item of direct funds, detailing the funds received by raw materials supplied.
113
Relationship and loyalty
Measured on an annual basis, in 2013 the loyalty rate for the
supplier communities increased from 23% to 28%. This improved
performance was due to the expansion of partnerships and the
increase in investment in training and infrastructure and a more
effective field presence on Natura’s part. In five communities in
the northeast of Pará, however, the loyalty rate reached zero,
although the response to the item overall satisfaction – one
of the questions in the loyalty index - was positive (good and
excellent). GRI G4-PR5
At the beginning of 2014, Natura unified the two areas
working directly with the communities in the Relationship and
Social Biodiversity Nucleus (GRAS), linked with the company’s
Supplies area, which now centralizes ingredient purchase
processes and family and producer development measures;
the development measures were previously overseen by the
Sustainability area.
The change was designed to reinforce company relations
with these stakeholders. It was also in response to a demand
from the communities themselves, who had indicated difficulty
in communication with Natura as an area for improvement.
Although there is no record of significant negative impacts
resulting from company activities involving the supplier
communities, this and other isolated issues –financial difficulties
caused by delays in the payment of crop advances and
planning problems involving producer, cooperatives and Natura
–were mentioned in the loyalty survey. GRI G4-SO2
Loyalty of supplier
communities1 2
28%
23%
28%
2011
2012
2013
1 Loyalty is obtained based on the percentage of interviewees
attributing the top scores to three questions: overall satisfaction,
intention to continue relationship and recommendation. 2 In 2013, field
interviews were conducted by local agents trained by the Community
Relations area – 15 communities and 278 people interviewed.
114
Diagnosis in communities
With a view to improving company activities in the supplier
communities, an internal audit was conducted in 2013. This
identified four improvement areas to be worked on by Natura:
information management system; traceability of communities’
production; monitoring of environmental stewardship good
practices; and traceability of labor practices.
Short and medium term action plans were developed for
all of these issues. With respect to information management,
from mid-2014 a unified data management system covering
productivity, traceability, benefit sharing and social demands will
be implanted.
The company also conducted a diagnosis with 25 supplier
communities to map data related to the points raised in the
internal audit: good cultivation and environmental stewardship
practices, traceability, benefit sharing and labor practices.
Specifically in relationship to cultivation and stewardship
questions, the company identified the need to create a means
of recognizing and engaging the communities that maintain
good practices. In 2014, a new certification methodology
called the Natura Production Chain Verification system will be
developed in partnership with the UEBT (Union for Ethical
Biotrade) for monitoring and developing production chains.
In addition to mapping good stewardship practices for each
species, the standard will drive improved production traceability,
administrative management and labor relations.
To meet the demand for traceability in labor practices, the
company contracted a specialized consultancy to undertake
an analysis among the 25 supplier communities in the Amazon
and Southeast regions. The objective was to map the reality
of these communities and to discuss issues with community
members. No cases of child or slave labor were detected during
this process, but the involvement of children and adolescents
from the families in the production chains was identified. This is
a question of cultural tradition for some communities, and does
not characterize non-compliance with Natura principles. In 2013,
no incidents involving indigenous populations were recorded.
It should be noted that all Natura benefit sharing and supply
contracts contain human rights clauses related to child and slave
labor and degrading working conditions. The company promotes
dignified labor practices among the suppliers with whom it
maintains direct commercial relations and includes contract
clauses to ensure its partners do the same in their supply chains.
The company makes every effort to ensure that any involvement
of children and adolescents in these supply chains does not
hinder the children’s formal education and their right to leisure,
nor put their health or safety at risk, permitting the child to
develop under the influence of family activities having an
educational/cultural orientation rather than an economic finality,
so that these traditional forms of family organization may be
recognized by society as a whole.
In August 2013, the company presented the results of the
diagnosis in a workshop organized in the city of Mosqueiro
(Pará), attended by representatives of the communities studied.
Action plans were also agreed on to further understanding of
the supplier communities with respect to the involvement of
children and adolescents in the supply chains. The next step will
be the execution of the respective plans.
GRI G4-HR1/HR5/HR6/HR8
115
Community reinforcement
Natura works continually to promote the development of the
supplier communities through social reinforcement and training
projects that take their cultural identity and local opportunities
into account.
The Natura Leaders & Managers in Social Biodiversity
Communities program works on administrative management
and the development of leaders and community agents.
The initiative is aimed at enhancing interpersonal relations,
developing competencies and improving management
practices in the supplier communities with a view to
promoting development and long-term business prospects.
A total of 30 workshops were organized in 2013. Members
of 11 communities took part in the leadership module; seven
participated in the community agent module, as was the case
with the administrative management programs.
The company also organized technical training focused on
areas such as organic agriculture, seed collection, forest
seedling production, permaculture and forestry inventory
methods. In 2013, occupational health and safety was
introduced in the programs.
Natura also invests in social reinforcement measures aimed at
environmental conservation, cultural appreciation, the creation
of alternative sources of income, food security, articulation
between sectors and leadership development. One example is
the Mid Juruá Fund of the Conselho Nacional de Populações
Extrativistas (National Council of Extractivist Populations)
supported by ICMBio (Instituto Chico Mendes de Conservação
da Biodiversidade) and the Centro Estadual de Unidades
de Conservação do Estado do Amazonas (Amazonas State
Conservation Units Center). The fund supports projects in
four areas of activity: civic awareness, education and health; food
security and income generation; environmental conservation
and preservation; cooperation and association and market
diversification. In 2013, the Mid Juruá Fund contributed R$
200,000 to six local organizations.
One of the projects supported by Natura is developed by the
Fundação Amazonas Sustentável or FAS (Sustainable Amazonas
Foundation), which in 2013 inaugurated a school in the Mid Juruá
region to promote training oriented to local production chains,
with courses on fishing, extraction and other related activities.
There are 50 children enrolled in the school, whose premises are
used for training members of the cooperative when the children
are not in class.
Another community that Natura supports is the Reca
(Syndicated and Compacted Economic Reforestation) project of
the Roraima Association of Agroforestry Smallholders Farmers.
The company works with the Reca Agricultural Family Schools,
which adopt an alternating education system whereby the
children attending the schools live for part of the time at the
school and part of the time at home. The curriculum combines
regular content with knowledge and aptitudes based on the local
reality. In 2013, the Natura budget was dedicated to the winning
project from a selection organized at the school which involved
the organization of a student cooperative specialized in managing
local production chains.
116
BioQlicar program
Benefit sharing GRI G4-EC7/EC8
Natura adapted its Qlicar (Quality, Logistics, Innovation,
Competitiveness, Environment, Social and Relationship) supplier
program to the reality of the supplier communities, creating the
BioQlicar program. In addition to the Qlicar indicators, BioQlicar
tracks the human, social, physical, environmental and economic
resources the local community has access to in order promote
its development. The program is yet another tool used by
Natura to drive the development of supplier communities and
to prepare them for efficient and independent insertion in the
broader market.
Part of Natura’s earnings from the sustainable use of biological
resources from native species in Brazilian biomes and associated
traditional knowledge are passed on to the supplier communities
in a clear and transparent fashion as set forth in Natura Policy
for the Sustainable Use of Social Biodiversity Products and
Services. Benefit sharing occurs in accordance with contracts and
applicable legislation. The company works with the cooperatives
to help them to invest the funds in the most suitable fashion,
aligned with the principles set forth in company policy.
On an annual basis Natura asks the processing companies and
supplier communities to assess the program. There was a slight
drop in the index to 3.76 (on a scale from 0 to 5), compared
with 3.80 the previous year. The negative points indicated in the
assessment included deficiencies in the production models and
in labor practices, principally due to the informal nature of work
relations in the field. GRI G4-HR10
This is the second year in which the supplier communities
were included in the Qlicar Award, another manner found to
increase the communities’ engagement and motivation. In 2013,
the supplier communities gaining recognition were Reca, from
Rondônia, which had the highest score in the program, and
Coaprocor, in Paraná, which showed the greatest improvement
compared with the previous year.
With the funds from benefit sharing the Onça community in
Bahia invested in the purchase of land and machinery. In the
Mid Juruá, the funds were used for the purchase of rubber
tapping kits (consisting of bowls, knives and buckets), for the
refurbishment of seed dryers and for infrastructure improvements.
The Cabruca community in Bahia bought land upon which to
build the cooperative’s new headquarters, which are now under
construction. In the Campo Limpo community (Pará), the funds
were invested in the purchase of machinery, such as a small tractor,
as well as mowing and crushing equipment.
In May 2013, the Women’s Movement of the Belém Islands
cooperative inaugurated the headquarters for its Life and
Company project for the elderly in the region. In Boa Vista
(Pará), the APOBV (Boa Vista do Acará Producers’ Association)
also inaugurated its new headquarters, a key milestone in the
development of the tourist industry in the region.
117
Natura supplier
communities and relationships
Iratapuru
Brazil nut,
white pitch resin
AP
Baniwa Indians
Institutional
relationship
Wajãpi Indians
Institutional
relationship
Am
AP
Mid Juruá
Andiroba palm oil,
murumuru
butter
Boa Vista Piri piri root, Peru balsam
leaves/Cotijuba Piri piri root
Campo Limpo Piri piri root, Peru balsam leaves/
Camta Cupuaçu butter, passion
flower oil, andiroba oil/
Cofruta Açaí cherry, murumuru
butter, ucuuba seed, andiroba seed/
Ver-as-Ervas No supply/Caepim Andiroba
seeds/Coomar Murumuru nut/
Copoam Cocoa seeds/Camtauá Tucumã fruit,
Andiroba seeds, murumuru seeds Associação
Jauari Andiroba
seeds, murumuru seeds/Coopcao/
Copops/Copotran/Copoxim/
Copobom Cocoa seeds
PA
Am
Coopaesp
Babassu mesocarp flour
MA
Malvas
Palo santo
leaves
Ecuador
Onça
Research ingredients
BA
32
69
164
17
400
374
62
158
23
144
23
19
24 21
81
42 100 20
25
68
Cooprocam
Not supplying currently
120
101
BA
54
30
140
Cabruca
Cocoa seed,
non-fermented cocoa
seed
BA
140
30
176
96
Grande Sertão
Buriti palm oil
MG
364
Reca
Cupuaçu butter,
Brazil nut oil
RO
São Jerônimo
Does not supply
ingredients
Coopavam
Brazil nuts
MT
MT
Turvo (Coopaflora)
Dried mint leaves,
basil
PR
Coaprocor
Passion flower seed,
fruit
Number of families
PR
118
Surrounding
communities
GRI G4-EC7/ SO1/SO2
Natura recognizes the significant impacts its presence may
cause on the socio-economic and environmental dynamics
of the municipalities in which it operates. The company does
not currently have mechanisms to assess the negative impacts
caused by its operations, but as the company mission embraces
relationship with different stakeholders, Natura develops special
measures to contribute to local development in innovative and
collaborative ways.
Company strategy for local communities, revised in 2012, is
centered on building trust among residents, in particular local
leaders; on creating a positive agenda with public authorities;
in strengthening democratic participation; and in supporting
the construction of each individual’s identity. The aim is active
participation in different sectors of society and the development
of partnerships to respond to the needs of each region.
Currently, the company is most active in three municipalities which
host 66% of its operations in Brazil. These are Cajamar (São Paulo),
the company headquarters; São Paulo (São Paulo), where the
administrative and distribution center was opened in 2013; and
Benevides (Pará), also home to the newly-opened Ecoparque.
It should be noted that Natura discontinued its operation in
Itapecerica da Serra (São Paulo) in May 2013.
In the other cities in which the Natura operates, strategy involves
the Municipal Children’s and Adolescents’ Rights Councils
(CMDCA in the Portuguese acronym), which receive 1% of
the company’s income tax due. The intention is to reinforce
these councils, which may be considered legitimate spaces for
community representation given that they comprise public
administrators from diverse areas and civil society representatives.
In 2013, the income tax contribution was channeled to Cajamar
and São Paulo and two cities in which Natura has distribution
centers: Castanhal (Pará) and Jaboatão dos Guararapes
(Pernambuco). The company has not yet implemented
development plans for the communities surrounding its
In 2013, company spending on local suppliers increased from R$
139 million to R$ 196 million. This growth was due particularly
to the increase in production volumes at the company plants in
Benevides and Cajamar and to investment in the construction of
the Ecoparque, as well as expansion works on the Cajamar plant.
GRI G4-EC9
GRI G4-EC7
Investment in infrastructure and
services for public benefit
Unit
Investments in the communities surrounding Natura units –
Natura funds1 2
Investments – Believing is Seeing funds³
2011
2012
2013
822
729
326
96
130
0
R$ 000s
1 All investments are in non-governmental organizations which contribute to the implementation and execution of projects in each location. 2
In 2013, the amount invested in the Cajamar School Network project was taken into account. 3 In 2013, the Instituto Natura worked on the
development of projects in partnership with state and municipal education departments, as well as other institutes and foundations. These projects
impacted a large number of municipalities in all regions of Brazil. For this reason, it was not possible to specify the amounts channeled to the
communities surrounding company operations (São Paulo, Cajamar and Benevides). For these municipalities, the Instituto Natura is initiating its Rede
de Apoio à Educação -RAE (Education Support Network) - , which will start to receive funds as of 2014.
119
Employees from surrounding communities ¹ ²
Unit
2011
2012
2013
21
22
22
Benevides
60
91
85
Itapecerica da Serra³
n.a
4
n.a
São Paulo – Nasp
n.a
4
3
Cajamar
%
1 Cajamar surroundings: Cajamar, Campo Limpo, Santana de Parnaíba and Várzea Paulista. Benevides surroundings: Benevides, Barcarena, Belém,
Ananindeua and Marituba. Itapecerica da Serra surroundings: Itapecerica da Serra, Embu and Cotia. São Paulo – Nasp surroundings: the districts of
Barra Funda, Jaguara, Jaguaré, Lapa, Perdizes and Vila Leopoldina. 2 In previous years, young apprentices were also counted. Administration of this
group was outsourced as of 2012. 3 In 2011 and 2013, Itapecerica da Serra did not count employees from the surrounding community.
GRI G4-EC9
Purchases from suppliers in the communities surrounding company factories1 2
Unit
Cajamar
Itapecerica da Serra
R$ million
Benevides
Percentage of spending on suppliers from the surrounding
community in relation to total spending on suppliers
%
2011
2012
2013
62
57
83
3.0
1.4
1.2
64
81
112
3.8
4.0
4.9
1 The geographical definition of location takes into account the 2012 base, which encompasses all the purchases from suppliers located in the
municipalities of Cajamar and Itapecerica da Serra and suppliers from the state of Pará supplying any Natura unit. 2 The São Paulo unit is not
considered to be a manufacturing unit.
Cajamar
In 2013, Natura maintained its support for the implementation of the
participative management system for the Parque Natural Municipal
de Cajamar and the creation of a preservation unit inside the city’s
environmental protection area (APA). During the year the park
Management Committee was instituted, comprising representatives
of the public authorities and civil society. A stewardship plan was
prepared for the area considering the species existing in the region,
their relevance for the biome, as well as topography.
The stewardship plan was designed collaboratively after eight
workshops with the local community. This involved a proposal to
build a native seedling nursery, an environmental education and
research center and nature trails in the woods. The document will
be formalized in April 2014. Natura invested R$ 109,000 in this
project in 2013.
The company was also engaged in the preparation of the
municipal selective waste collection plan in partnership with the
NGOs Ipesa (Instituto de Projetos e Pesquisas Socioambientais)
and Mata Nativa. Due to delays in the schedule, the plan should
be prepared in 2014. GRI G4-EC7
The company was also engaged in improving job opportunities
for young people aged from 14 to 28 years in the region.
This was through the Rede Escola Cajamar (Cajamar School
Network), run by Rede Cidadã and Conexão in partnership
with the municipal government and other institutions and
companies in the region. Launched in 2012, the program
trained 316 young people to become administrative assistants
or production assistants in 2013. At total of 135 participants
(43%) found a job upon concluding the course – one of the
them being hired by Natura.
In 2013, Natura reinforced its partnerships with the main
companies in the region, finding new locations to give classes, as
well as adapting the course to meet the needs of different age
groups (14 to 17 years and 18 to 28 years); complementary
contents were included in the course such as human formation
and responsible sexuality. Natura also encouraged the Cajamar
School Network to obtain accreditation from the ministries
of Labor and Education to train participants in the Young
Apprentice program, leading to a significant increase in vacancies
and employability prospects.
120
São Paulo GRI G4-EC7
Benevides GRI G4-EC7
In February 2013, Natura inaugurated its new administrative
office and distribution center in the Vila Jaguara district in west
São Paulo. Work on building links with the local community
began in 2012, when the company organized dialog panels
with community members and local authorities. This led to the
identification of three critical questions: urban mobility, violence
and selective garbage collection. In this initial, phase the
company is preparing a local development plan for the region.
This also explains the considerable drop in Natura investments
in its surrounding communities during the year.
Although Natura has been active in the Amazon region for a
number of years as a result of its relations with the communities
supplying biodiversity ingredients, with the inauguration of the
new soap factory and the construction of the Ecoparque the
company felt the need to contribute to the city of Benevides.
In 2013, identification of local suppliers capable of meeting
demands from the Ecoparque was initiated. The company has
initiated talks with a cooperative in the Barcarena region to
study the possibility of provision of transportation, cleaning and
gardening services for the industrial complex (read more about
the Ecoparque on page 56).
During 2013, the company invested R$ 42,000 in developing
the Sustainable Consumption and Action in Solid Waste
program, developed by the Instituto 5 Elementos in the
Lapa district, which includes Vila Jaguara. The project, which
involves other organizations, companies and scavenger
cooperatives, entails a diagnosis of solid urban waste
management, followed by the preparation of a shared work
proposal to promote recycling and sustainable consumption
in the region.
Support for knowledge production
In addition to the project in Vila Jaguara, Natura supports
the publication Do Lixo à Cidadania (From garbage to civic
awareness), organized by the NGO Ipesa, the Movimento
Nacional de Catadores de Materiais Recicláveis or National
Recyclable Waste Scavenger Movement (MNCR) and a
group of specialists in the area.The document presents a
methodology for training cooperatives and guidelines for
organizing selective garbage collection systems in line with
national solid waste policy.
Distributed to all local governments in Brazil, the publication
is the result of a number of selective collection projects
organized recently, including the experiment sponsored by
Natura in Itapecerica da Serra. The document is available for
download at the address www.dolixoacidadania.org.br.
121
Shareholders
In 2014, we complete ten years on the capital market. What we
have learned during this period reinforces our commitment to
enhance relations with investors and analysts, driving increasingly
transparent conduct and clear, objective communication. We will
continue to improve dialog with the market and to strengthen
our differentiated values, our Essence and our brand with these
stakeholders.
We maintain an open channel with the market to share our
strategy, contextualize our performance and to reaffirm our
commitments and prospects, in a process led by the company’s
vice president of Finance, IR and Legal Affairs Roberto Pedote.
A major occasion for dialog is the annual Natura Day, when
our executives present the company’s plans for the future and
respond to analysts’ and investors’ questions and doubts. In 2013,
Natura Day was once again held at our headquarters in Cajamar
(São Paulo), the intention being to forge even closer relations
with these stakeholders. During the meeting, special emphasis
was laid on the main launch of the year, the Sou line.
The company seeks the same level of dialog in its Annual
General Shareholder Meeting, which in recent years has
attracted an impressive number of investors, in particular private
individuals. The 2013 meeting was held in April in Cajamar and
was attended by 346 people. Once again it was accompanied by
a meeting at Apimec-SP, (Associação dos Analistas Profissionais
de Investimento do Mercado de Capitais), the capital market
investment professionals association.
During the year the company promoted 622 face-to-face
meetings and teleconferences both in Brazil and abroad. Another
important communication tool for the area is the investor
internet page (www.natura.net/investidor).
As a fundamental company value, every effort is made
to transmit to the market the importance attributed to
sustainability and the care the company takes in incorporating
economic, social and environmental factors into its businesses.
This is also a way of encouraging the market to follow suit,
generating a transformation agenda for the future.
In 2013, Natura organized its first non deal road show in Asia,
visiting Singapore, Hong Kong, Peking (China) and Tokyo (Japan).
On this occasion, we visited a number of Natura shareholders
and potential investors, receiving highly positive feedback about
company’s performance and its value proposition.
During the year, Natura was recognized as the best in the
Investor Relations area in the consumer goods category, as
well as the best in socio-environmental sustainability in the IR
Magazine Brazil Awards, organized by IR Magazine, a specialized
publication for investors. Natura was placed second in the Best
Companies for Shareholders ranking in the category companies
with assets between R$ 5 billion and R$ 15 billion, published by
the magazine Capital Aberto.
Shareholder profile
Shareholder profile
2011
2012
2013
Private individuals
8,722
7,821
10,111
Brazilian legal entities
659
714
594
Foreign legal entities
867
926
781
10,248
9,461
11,486
Total
Shareholding structure
Shareholders
Share
Number of shares
59.83%
258,017,219
Treasury shares
0.49%
2,120,459
Management shares
0.57%
2,474,963
Outstanding shares
39.10%
168,626,623
100.00%
431,239,264
Majority shareholders
Total shares
122
Majority shareholders
Natura’s capital stock comprises only ordinary shares in
accordance with the BM&FBovespa Novo Mercado. The table
below shows the number of shares held by shareholders
owning 5% or more of the company’s stock and by board
members in 2013.
Shareholder
Number of ordinary shares
%
95,946,968
22.25
91,557,964
21.23
22,606,809
5.24
22,583,608
5.24
15,918,754
3.69
3,628,920
0.84
3,462,917
0.80
855,038
0.20
Anizio Pinotti
854,160
0.20
Ronuel Macedo de Mattos*
602,081
0.14
Lisis Participações S.A.
Controlled by Antonio Luiz da Cunha Seabra
Utopia Participações S.A.
Controlled by Guilherme Peirão Leal
Passos Participações S.A.
Controlled by Pedro Luiz Barreiros Passos
ANP Participações S.A.
Controlled by Anizio Pinotti
RM Futura Participações S.A.
Controlled by Ronuel Macedo de Mattos
*Estate of Ronuel Macedo de Mattos.
123
Share performance
In 2013, Natura stock depreciated 26.6% against a 15.5%
depreciation in the Ibovespa Index, the main BM&FBovespa
indicator. However, since the company went public the company’s
stock has significantly outperformed the index, as shown in the
following chart:
1.200
all prices presented ex-dividends.
1.000
bovesPa index
natu3
800
600
nATU3
30/12/2013
R$ 41.37
follow On
31/07/2009
R$ 22.47
base 100 = 25/05/2004
nATU3
25/05/2004
R$5.61
+638.1%
400
200
-
+173.3%
%
2004
nATU3: +87.3%
Ibov: +38.9%
2005
+38.0%
+27.7%
2006
+51.2%
+32.9%
2007
-41.4%
+43.7%
20082
+18.0%
-41.2%
0092
+77.7%
+63.9%
010
+36.7%
+1.1%
2011
-20.4%
-18.1%
2012
+69.0%
+7.3%
2013
-26.6%
%
-15.5%
Source: Bloomberg.
Average daily stock trading
volume (R$ 000s)1
2011
2012
2013
43,696
54,337
61,117
1 Source: Bloomberg.
Listed on the BM&FBovespa Novo Mercado, Natura is featured
on the main indices of the Brazilian stock market: Ibovespa, IBrX50 (which lists the most liquid shares on the BM&FBovespa), ISE
(Corporate Sustainability Index), Corporate Governance Index,
Tag Along Share Index, Morgan Stanley Composite Index and
ICO2 (BM&FBovespa Carbon Efficient Index).
124
Total volume traded (R$ millions)1
2011
10,953
2012
13,451
2013
15,157
1 Source: Bloomberg.
Dividend payments
On February 12, 2014, the Natura Board of Directors
approved a proposal for submission to the Annual General
Meeting to be held on April 16, 2014, for the payment of the
balance of dividends relative to 2013 results and interest on
own equity during the period of R$ 474.0 million and R$ 22.4
million (R$ 19.0 million net of income tax), respectively.
On August 15, 2013, interim dividends totaling R$ 337.3 million
and interest on own equity totaling R$ 23.4 million (net of
income tax) were paid.
The sum of these dividends and interest on own equity relative
to the results for 2013 represent net earnings of R$ 1.99 per
share, corresponding to 100% of the net profit1 for 2013.
1 End result of the sum of all revenues and expenditures in the year.
125
about the report
Committed to providing our relationship network with
comprehensive information about company management
and performance and striving to continually improve the
way in which this is communicated, we present our 14th
consecutive annual sustainability report in accordance with
Global Reporting Initiative (GRI) guidelines. For 12 years,
we have also published the company’s sustainability and
annual (financial) reports in a single document. Company
strategy for disclosing results includes a web version and
a summarized print version, which use a single language
and a comprehensive approach to company performance,
encompassing economic-financial, social and environmental
aspects (see table below). GRI G4-29/30
In the 2013 report, the company website is the main vehicle
for communicating performance, presenting the content in
a more interactive manner and introducing new features
to make reading easier. The print version summarizes the
highlights of the year. In the two formats, the structure is
based on the three pillars underpinning Natura’s value
Wide-ranging communication
proposition: business behavior, products and concepts and
relationship networks.
With a view to maintaining the consistency of the report,
we continue to publish the complete report, detailing more
than one hundred indicators that we track periodically,
available in PDF version on the website www.natura.net/
relatorio (read more in Technical information, below). Here
the structure is also underpinned by our value proposition,
which adopts a transversal approach to company
performance in the priority sustainability topics set forth
in the materiality matrix (water, education, sustainable
entrepreneurship, climate change, quality in relationships,
waste and social biodiversity), in addition to the most
relevant data about relations with our stakeholders,
encompassing employees, consultants and NCAs ,
consumers, suppliers, supplier communities, surrounding
communities and shareholders. GRI G4-18
In 2014, we are publishing an abridged version of our new
Sustainability Vision, which will be announced and presented
to stakeholders in the first half of the year, containing our
commitments and ambitions for 2020.
Management Report – the main performance data for the
year published in the newspaper Valor Econômico and in the
Diário Oficial on February 12, 2013.
Natura Report (print version) – in a summarized
format, with objective information and concise, dynamic
language, the version also includes some accounts and
opinions of stakeholders.
Website – reformulated to offer expanded content,
greater interaction and more features than the print
version, with videos and links to other company
documents and publications, using the principle of
information connectivity. The address is www.natura.
net/relatorio. The website is also adapted for tablets and
smartphones.
Natura Report (complete version) – available for
download in PDF format on the website www.natura.
net/relatorio, the complete report content provides
comprehensive, detailed information in accordance with
GRI guidelines.
All versions are available in Portuguese, English and Spanish.
Quarterly releases – our quarterly releases, mandatory for
publicly traded companies, replicate the same integrated
format, providing information on Natura’s performance in
the main socio-environmental indicators.
126
about the report
Integrated reporting
Technical information
The evolution in our reporting process seeks to bring the
company closer to integrated reporting, a global trend
aimed not only at unifying financial and non-financial data in
the same publication, but reflecting a business strategy that
effectively incorporates all dimensions of the business into
management practice.
The 2013 Natura Report (complete version) is in accordance
with the comprehensive option of the GRI G4 guidelines,
which means the company has reported on all the general
contents regarding company profile, governance, stakeholder
engagement and data about the elaboration of the report,
as well as all the indicators for each GRI aspect considered
relevant for Natura (read more ahead). The data refer to
the period from January 1st to December 31st, 2013, and
the entire process of disclosing results is monitored by our
vice president of Finance and Institutional Relations. Once
again, the 2013 annual report was assured by EY Auditores
Independentes S.S. GRI G4-28/32/48
In this reporting process, we have adopted some of the
guidelines of the Integrated Reporting framework, launched
in December 2013 by the IIRC (International Integrated
Reporting Council) – a multistakeholder council comprising
global business leaders, investors, representatives of academia,
industry, regulators and standard setters engaged in creating a
global standard for reporting results and analyzing performance.
Among other advances, Natura has enhanced representation
of its business model, which incorporates all aspects of value
creation over a period of three years, and which was included for
the first time ever in the Natura Management Report, published
in February 2014.
To learn more and to continue to evolve in this area, the company
has participated in the main global forums discussing this question.
In the GRI, of which we are an organizational stakeholder, we
sponsored the fourth generation of indicators (G4), which
also promotes greater integration of financial and non-financial
information. Natura is one of the group of companies engaged in
the IIRC pilot project and is also a member of the GRI Stakeholder
Council and of the IIRC Council.
The information in our Financial Statements encompasses
all operations, including Aesop, an Australian company
acquired at the beginning of 2013. In the annual report, the
scope of the information concerning GRI indicators relates
principally to Natura activities in Brazil, where the major part
of company production is concentrated and, consequently,
the most part of its social and environmental impacts. The
company intends to increase the number of indicators for
its International Operations year on year through expanded
monitoring. GRI G4-17
In the main environmental impacts – water and energy
consumption and waste generation –, the calculations take into
account data reported by our outsourced suppliers (companies
manufacturing finished products in Natura’s name). This has
enabled the company to provide a more detailed picture of the
impacts caused by its operations.
Any significant changes in the data reported in the previous
years and alterations in the calculation base or indicator
measurement techniques are indicated throughout the text and
the tables in the report. GRI G4-22/23
For further information about this report, contact the team
responsible for producing it at [email protected]. To
promote ongoing dialog, stakeholders are invited to give their
opinion about our performance and our relationship and
management practices at this email address and in our social
networks, as well as at face-to-face meetings. GRI G4-31
127
about the report
Review of the materiality matrix
What we call the materiality matrix is the graphical
representation of the priority topics which represent Natura’s
significant economic, environmental and/or social impacts
which may significantly influence management assessments and
decisions and our stakeholders.
Our current materiality matrix is the result of a process
conducted between 2010 and 2011, involving dialogs with
our main stakeholder groups in Brazil and in our International
Operations – employees, suppliers, NCs, specialists in a
number of areas, the press, government and non-government
organizations, as well as the company’s senior management.
The combination of external and internal views lead to the
identification of the following areas as relevant topics: water,
education, sustainable entrepreneurship, climate change, quality
in relationships, waste and social biodiversity (see following chart).
GRI G4-26/27
In 2013, we initiated the review of the materiality matrix, with
the conclusion scheduled to occur in 2014. As the first stage in
this process and in order to adapt it to GRI-G4 guidelines, we
organized an engagement dynamic with strategic Natura areas,
the objective being to identify and assess the impacts of each of
the relevant topics for our priority stakeholder groups and for
each of our operations.
Based on this analysis, we consolidated a list of relevant topics
and GRI aspects and the respective impacts on each of our
stakeholder groups and operations (see ahead).
It is our expectation to continue to evolve in the data reported,
based on the consolidation of our 2020 Sustainability Vision.
Underpinned by Natura’s strategic choices described in the
vision, we will engage our stakeholder groups to conclude the
review of our materiality process.
Due to the revision of the materiality process to promote
alignment with GRI G4 and Integrated Reporting guidelines –
which are still under development –, we do not report on all
management approaches in a complete fashion. It is, however,
our understanding that the most critical aspects for the
organization, such as supply chain and environmental criteria,
have been addressed.
GRI G4-19
Natura materiality
matrix
External
Stakeholder interest
Education
Waste
Water
Climate change
Quality of relationships
Social biodiversity
Sustainable
entrepreneurship
Internal
Importance for Natura
128
about the report
Topics X stakeholder groups and
Natura operations GRI G4-20/21
Correlation between company priority sustainability
topics and impacts on our stakeholder groups and
our operations:
Quality of relationships
Press
NCs and NCAs
Opinion
formers
Chapters:
Profile/Quality
of relationships/
Employees/Suppliers/
Supplier communities/
Consumers/ Surrounding
communities/
Engagement with
government and
society/ Social
biodiversity
All operations
Employees
Government
Consumers
Supplier
communities
Suppliers
Surrounding
communities
Correlation with GRI aspect
Economic dimension (Market presence/Economic performance/Indirect economic
impacts/Procurement practices) Environmental dimension (Environmental assessment of suppliers/Biodiversity/Complaint and grievance mechanisms related to environmental impacts) Social dimension – Labor (Employment/Labor relations/Occupational health and safety/Training and education/Diversity and equality of opportunity/
Equal remuneration for women and men/Assessment of suppliers’ labor practices/
Complaint and grievance mechanisms related to labor practices) Social dimension
– Human rights (Investments/Non- discrimination/Freedom of association and collective bargaining/Child labor/Forced or slave labor/Safety practices/Indigenous rights/
Assessment/Assessment of human rights at suppliers/Complaint and grievance mechanisms related to human rights) Social dimension – Society (Local communities/
Public policies/Anticompetitive practices/Assessment of suppliers’ impacts on society/
Complaint and grievance mechanisms related to societal impacts) Social dimension
– Products (Customer health and safety/Product and service labeling/Marketing communications/Customer privacy/Compliance)
Climate change
Social Biodiversity
Chapters:
Climate change/
Energy
Press
Chapters:
Social biodiversity/
Press
NCs and NCAs
Opinion
formers
NCs and NCA
Opinion
formers
All operations,
except distribution
centers and hubs
All operations, except
Instituto Natura
Employees
Government
Government
Consumers
Consumers
Employees
Supplier
communities
Suppliers
Suppliers
Economic dimension (Economic performance) Environmental dimension (Energy/Emissions/Compliance/Transport/General)
Environmental dimension (Materials/Biodiversity/General)
129
about the report
Waste
Water
Chapters:
Waste/Product
life cycle
Chapters:
Water
Press
Press
NCs and NCAs
NCs and NCAs
Opinion
formers
Opinion
formers
Instituto Natura
Government
Employees
Instituto Natura
Consumers
Surrounding
communities
Employees
Government
Suppliers
Consumers
Surrounding
communities
Suppliers
Environmental dimension (Effluents and waste/Materials/
Products and services/General)
Environmental dimension (Water/Effluents and waste/General)
Sustainable entrepreneurship
Education
Chapters:
Press
Press
NCs and NCAs
Opinion
formers
NCs and NCAs
Opinion
formers
All operations
Government
Employees
Supplier
communities
Chapters:
Consultants and
NCAs/Employees/
Engagement with
government and
society
All operations,
except hubs
Suppliers
Employees
Surrounding
communities
Supplier
communities
Surrounding
communities
Social dimension – Society (Local communities)
Social dimension – Labor (Training and education)
Social dimension – Society (Combating corruption)
130
about the report
Global
Compact
GRI G4-15
We are signatories to the Global Compact, a United Nations
Organization (UNO) initiative that unites companies,
workers and civil society in pursuit of sustainable growth
and civic awareness. We are also members of the Global
Compact Steering Committee and signatories to its Caring
for Climate program.
The Global Compact Principles
We are also on the Brazilian Global Compact Committee
(CBPG in the Portuguese acronym), whose foundation resulted
from a partnership between the Instituto Ethos and the United
Nations Development Program (UNDP) in 2003.
2. Prevent violations of human rights
The CBPG is a voluntary group comprising companies, United
Nations agencies in Brazil, trade bodies, academics and civil
organizations. It is dedicated to incorporating these principles
into business. For further information on the initiative, please
access www.pactoglobal.org.br.
See the GRI aspects related to the Global Pact
principles from the next page (Remissive index):
1. Respect and protect human rights
3. Support freedom of association at work
4. Abolish forced labor
5. Abolish child labor
6. Eliminate discrimination at work
7. Support a precautionary approach to environmental challenges
8. Promote environmental responsibility
9. Encourage environmentally friendly technologies
10. Combat corruption in all its forms, including extortion
and bribery
131
GRI-G4 Remissive index
GRI G4-32
OVERALL CONTENT
Description
Omission
External
assurance
Page/
response
Strategy and analysis
G4-1
Message from president
172
4, 5
G4-2
Description of key impacts, risks and opportunities
172
4, 5, 24
Ambiental
G4-3
Name of organization
172
6
G4-4
Primary brands, products, and services
172
6
G4-5
Location of organization’s headquarters
172
6
G4-6
Countries where the organization has significant
operations or that are specifically relevant to the
sustainability topics covered in the report
172
6
G4-7
Nature of ownership and legal form
172
18
G4-8
Markets served
172
6
G4-9
Scale of organization
172
6
G4-10
Employee profile
172
74, 75, 88
G4-11
Percentage of employees covered by collective bargaining
agreements UNGC1
172
84
G4-12
Description of organization’s supply chain
172
108
172
6
172
107
172
131
172
38
G4-13
G4-14
G4-15
G4-16
Significant changes in organization’s size, structure,
ownership and supply chain
Description of how the precautionary approach or
principle is addressed by the organization
Charters, principles or other externally
developed initiatives
Membership of associations and national or international
advocacy organizations
Material aspects identified and boundaries
G4-17
Entities included in the consolidated financial statements
and entities not covered by the report
172
127
G4-18
Process for defining the report content
172
126
G4-19
List of material aspects
172
128
G4-20
Boundary, within organization, for each material aspect
172
129, 130
G4-21
Boundary, outside organization, for each material aspect
172
129, 130
G4-22
Restatement of information provided in previous reports
172
127
G4-23
Significant changes in scope and boundaries of material
aspects compared with previous reports
172
127
132
Description
Omission
External
Page/
assurance response
Stakeholder engagement
G4-24
G4-25
List of stakeholder groups engaged by the
organization
Basis for identification and selection of stakeholders
with whom to engage
172
71
172
71
G4-26
Approach to stakeholder engagement
172
71, 128
G4-27
Key topics and concerned raised through
stakeholder engagement, by stakeholder group
172
71, 128
Report profile
G4-28
Reporting period
172
127
G4-29
Date of most recent previous report
172
126
G4-30
Reporting cycle
172
126
172
127
172
127,132
172
172
172
18, 19, 20,
21, 28
172
20
172
20
172
19, 20
G4-31
G4-32
G4-33
Point of contact for questions regarding the report
or its content
Option of application of guidelines and location of
GRI table
Policy and current practice with regard to seeking
external assurance for the report
Governance
G4-34
G4-35
G4-36
G4-37
Governance structure in the organization
Process for delegating authority for economic,
environmental and social topics from the highest
governance body to senior executives and other
employees
Executive level positions with responsibility for
economic, environmental and social topics
Processes for consultation between stakeholders
and the highest governance body on economic,
environmental and social topics
G4-38
Composition of the highest governance body and
its committees
172
18, 19, 20,
21, 28
G4-39
Chair of the highest governance body
172
18
172
18
172
18
172
20
172
18, 20
172
20
G4-40
G4-41
G4-42
G4-43
G4-44
Nomination and selection processes and
criteria for the highest governance body and its
committees
Processes for avoiding and managing conflicts of
interest
Role of highest governance body and executives in
development of impact management policies and
targets
Measures taken to enhance highest governance
body’s knowledge of economic, environmental and
social topics
Performance self-assessment processes for highest
governance body
133
Description
G4-45
G4-46
G4-47
G4-48
G4-49
G4-50
G4-51
G4-52
G4-53
Omission
Responsibility for implementation of economic,
environmental and social policies
Role of governance in analysis of effectiveness
of organization’s risk management processes for
economic, environmental and social topics
Frequency with which highest governance body
reviews impacts, risks and opportunities
The highest position responsible for formally
approving the sustainability report and ensuring all
material aspects are covered
Process adopted for communicating critical
concerns to the highest governance body
Nature and total number of critical concerns
communicated to the highest governance body and
the mechanisms used to address them
Relationship between remuneration and
organizational performance, including social and
environmental aspects
Involvement of internal or independent consultants
in determining remuneration
Consultation of stakeholders about remuneration
and its application to organizational policies
G4-54
Ratio of highest salary to general median in the
organization, by country
G4-55
Ratio of proportional increase in highest salary to
median increase in the organization, by country
The way remuneration data
were monitored did not
permit us to report on this
item in accordance with
GRI guidelines.With the
introduction of the 2020
Sustainability Vision and the
revision of the materiality
matrix in 2014, we will review
the status of this item.
The way remuneration data
were monitored did not
permit us to report on this
item in accordance with
GRI guidelines.With the
introduction of the 2020
Sustainability Vision and the
revision of the materiality
matrix in 2014, we will review
the status of this item.
External
Page/
assurance response
172
19, 20
172
24
172
24
172
127
172
18, 19
172
18
172
26
172
26
172
26
172
172
Ethics and integrity
G4-56
G4-57
G4-58
Values, principles, standards and norms of behavior
in the organization
Internal and external mechanisms for guidance on
ethical behavior and compliance
Internal and external mechanisms for
communicating concerns about unethical conduct
172
3, 72
172
71
172
71
134
SPECIFIC CONTENT
Description
Omission
External
assurance
Page/
response
Economic category
Economic performance
G4-DMA
Management approach
172
7, 24
G4-EC1
Direct economic value generated and distributed
172
10
172
24
172
82, 84
172
37, 42
G4-EC2
Financial implications and other risks and
opportunities for organization’s activities due
to climate change
G4-EC3
Coverage of organization’s pension plan
obligations
G4-EC4
Significant financial help received from
government
Natura does not conduct
a specific analysis of the
effects of climate change
in the risk management
process. Important mitigation
projects for the impacts
generated by the business
are implemented throughout
company processes.
Natura voluntarily offsets its
CO² emissions (Carbon
Neutral program), but this
does not take into account
the financial implications
of risks arising from climate
change, such as adaptation.
Natura does not operate
with export credit agencies
Market presence
G4-DMA
Management approach
172
81
G4-EC5
Ratio of lowest salary in organization to local
minimum wage, by gender
172
84
G4-EC6
Local hiring
172
81, 82
Indirect economic impacts
G4-DMA
Management approach
172
G4-EC7
Impact of infrastructure investments offered
for public benefit
172
54, 112,
117, 119
32, 33, 34,
112, 113,
117, 119,
120, 121
135
Description
G4-EC8
Omission
Description of significant indirect economic
impacts
External
assurance
Page/
response
172
32, 33, 34,
95, 112,
113, 117
Procurement practices
G4-DMA
Management approach
172
54, 108,
112, 119
G4-EC9
Policies, practices and proportion of spending
on local suppliers
172
119, 120
172
68
172
70
Environmental category UNGC1
Materials
G4-DMA
Management approach
The company
reports the total
direct materials
used by weight
and volume, but
information on
stratification by nonrenewable materials
is not available.
This will be
reported in 2015.
G4-EN1
Materials used, by weight or volume
G4-EN2
Percentage of materials used that are recycled
input materials
172
70
G4-DMA
Management approach
172
46, 48, 49
G4-EN3
Energy consumption within the organization
172
51, 52, 53
G4-EN4
Energy consumption outside the organization
172
53
G4-EN5
Energy intensity
172
51, 53
G4-EN6
Reduction of energy consumption
172
51, 53
Energy
136
Description
G4-EN7
Reductions in energy requirements of
products and services
Omission
This indicator is considered
non-applicable because the
Natura portfolio does not
contain products that consume
energy directly. However, on
a more systemic level some
company products may be
considered to require the
consumption of indirect energy
(e.g.: shower/bath products),
but clear, recognized
methodologies to quantify
energy consumption for these
products do not yet exist.
External
assurance
Page/
response
172
Water
G4-DMA
Management approach
172
64
G4-EN8
Total water withdrawal by source
172
64, 65, 66
172
65
172
66
172
54
172
57, 58
172
54, 57
172
49, 57
Total number of species on IUCN red list and
other conservation lists
172
58
Management approach
172
46, 48, 49
172
48
172
48
G4-EN17 Other indirect greenhouse gas emissions
172
48
G4-EN18 Greenhouse gas emission intensity
172
48
G4-EN19 Reduction of greenhouse gas emissions
172
49
G4-EN20 Emissions of ozone-depleting substances
172
51
Water sources significantly affected by water
withdrawal
Percentage and total volume of water
G4-EN10
recycled and reused
G4-EN9
Biodiversity
G4-DMA
Management approach
G4-EN11 Location and size of areas owned
G4-EN12
Significant impacts of activities, products and
services on biodiversity
G4-EN13 Habitats protected or restored
G4-EN14
Emissions
G4-DMA
G4-EN15 Direct greenhouse gas emissions
G4-EN16
Indirect greenhouse gas emissions from the
acquisition of energy
137
Description
Omission
G4-EN21 NOx, SOx and other significant emissions
External
assurance
Page/
response
172
51
Effluents and waste
G4-DMA
Management approach
172
61
G4-EN22
Total water discharge by quality and
destination
172
66, 67
172
62, 63
172
65
172
63
172
65
172
46, 61, 68
172
49, 50, 58,
59, 60, 68,
69
172
62
G4-EN23
Total weight of waste by type and disposal
method
The company does not
consider the concept of waste
reuse, only recycling. In this case,
there may be waste that could
be reused (e.g. drums), but this
involves processes controlled
by the companies receiving the
waste. Additionally, the company
does not use underground
injection to dispose of waste,
neither does it stock waste
temporarily awaiting
proper destination.
G4-EN24 Total number and volume of significant spills
G4-EN25
G4-EN26
Weight of waste transported deemed
hazardous
Protection and biodiversity rate of water
bodies and habitats
Natura reports on the
water bodies impacted by its
discharges, but information
about the dimensions and
biodiversity value of these
water bodies is not available.
This will be reported in 2015.
Products and services
G4-DMA
Management approach
G4-EN27 Initiatives to mitigate environmental impacts
G4-EN28
Percentage of products sold and packaging
materials reclaimed, by category
The company reports on
diverse initiatives to mitigate
the environmental impacts
caused by its products and
services.The mitigation
measures for noise impacts
were not reported because this
is not a material topic in the
company materiality matrix.
Natura will initiate a new
project to promote reverse
logistics for post-consumption
packaging.This project is not
only aimed at compliance with
national solid waste policy but
is also socially, economically and
environmentally more adequate.
Information is not yet available
and will be reported in 2015.
138
Description
Omission
External
assurance
Page/
response
Compliance
G4-DMA
Management approach
172
36
G4-EN29
Monetary value of fines and total number of
sanctions for non-compliance with laws
172
36
Transport
G4-DMA
Management approach
172
48, 49
G4-EN30
Significant environmental impacts from
transporting goods and workers
172
49
G4-DMA
Management approach
172
7
G4-EN31
Total environmental protection expenditures
and investments
172
7
172
108, 109,
117
172
109
172
109, 110
General
Supplier environmental assessment
G4-DMA
Management approach
Percentage of new suppliers screened using
environmental criteria
Significant actual and potential negative
G4-EN33
environmental impacts in supplier chain
G4-EN32
Environmental grievance mechanisms
G4-DMA
Management approach
172
71
G4-EN34
Number of grievances and complaints about
environmental impacts
172
72
172
74, 109
172
89, 90, 91
172
85
172
87, 89
Social category – labor practices and decent work UNGC1
Employment
G4-DMA
G4-LA1
G4-LA2
G4-LA3
Management approach
Total number and rates of new employee
hires and employee turnover
Comparison of benefits for full-time and
part-time and temporary workers
Return to work and retention rates after
paternal leave
Labor relations UNGC1
G4-DMA
Management approach
172
74, 84
G4-LA4
Minimum notice periods regarding
operational changes
172
84
Occupational health and safety
G4-DMA
Management approach
172
92
G4-LA5
Percentage of employees represented on
formal safety and health committees
172
92
139
Omission
External
assurance
Page/
response
The company reports a series
of data on occupational health
and safety, but these are not
discriminated by gender and
region. The company does not
consider this discrimination
relevant. However, if this
indicator is considered
relevant for the business after
the review of the materiality
matrix in 2014,
this position will be reviewed
and the data will be
discriminated according to
GRI criteria.
172
92, 93
172
92
172
92
Description
G4-LA6
G4-LA7
G4-LA8
Injury, disease and lost days rates
Workers with high incidence or high risk of
diseases related to their occupation
Health and safety topics covered in formal
agreements with trade unions
Training and education
G4-DMA
Management approach
172
77
G4-LA9
Average hours training per year
172
77, 78
172
77, 78, 79
172
82, 83
172
87
172
88
G4-LA10
G4-LA11
Programs for skills management and lifelong
learning
Percentage of employees receiving
performance reviews
Diversity and equal opportunity
G4-DMA
G4-LA12
Management approach
Composition of governance bodies and
breakdown of employees by functional
category
The breakdown of employees
is reported in accordance with
Natura’s view of diversity, but
the data is not segmented by
gender and age group. The
company does not consider
this discrimination relevant.
However, if this indicator is
considered relevant for the
business after the review of the
materiality matrix in 2014, this
position will be reviewed and
the data will be discriminated
according to GRI criteria.
Equal remuneration between women and men
G4-DMA
Management approach
172
82, 87
G4-LA13
Ratio of women's basic salary to men's by
functional category and relevant units
172
82, 83, 84
140
Description
Omission
External
assurance
Page/
response
172
108, 109,
117
172
109
172
109, 110
Screening of supplier labor practices
G4-DMA
G4-LA14
G4-LA15
Management approach
labor practice criteria
impacts for labor practices in the supply chain
Labor practices grievance mechanisms
G4-DMA
Management approach
172
71
G4-LA16
Number of grievances about labor practices
filed through formal mechanism
172
72
172
109
172
109, 115
172
79
Social category – human rights UNGC1
Investments
G4-DMA
G4-HR1
G4-HR2
Management approach
Significant investment agreements and
contracts that include human rights clauses
Total hours of employee training in human rights
policies and percentage of employees trained
Non-discrimination UNGC1
G4-DMA
Management approach
172
71
G4-HR3
Total number of incidents of discrimination
and corrective measures taken
172
71
Freedom of association and collective bargaining UNGC1
G4-DMA
Management approach
172
84
G4-HR4
Degree of application of right to free
association and operations and suppliers
identified as at risk
172
84, 109
Child labor UNGC1
G4-DMA
Management approach
172
115
G4-HR5
Operations and suppliers identified as
presenting significant risk of incidents of child
labor and measures taken
172
115
Forced or slave labor UNGC1
G4-DMA
Management approach
172
115
G4-HR6
Operations and suppliers identified as
presenting significant risk of incidents of
forced or slave labor and measures taken
172
115
141
Description
Omission
External
assurance
Page/
response
Security practices
G4-DMA
Management approach
172
109
G4-HR7
Percentage of security personnel trained in
human rights policies and procedures
172
109
Indigenous rights
G4-DMA
Management approach
172
54
G4-HR8
Total number of cases of violations of rights
of indigenous peoples and measures taken
172
115
Assessment
G4-DMA
Management approach
172
72
G4-HR9
Total number and percentage of operations
that have been subject to human rights reviews
172
72
172
108, 109
172
109, 117
172
109, 110
Supplier human rights assessment
G4-DMA
Management approach
human rights criteria
G4-HR11 human rights impacts in the supply chain and
measures taken
G4-HR10
Human rights grievance mechanisms
G4-DMA
Management approach
172
71
G4-HR12
Number of grievances about human rights
impacts filed, addressed and resolved
172
72, 73
172
54, 112,
114, 115,
119
172
119
172
114, 119
Social category – society
Local communities UNGC1
G4-DMA
G4-SO1
G4-SO2
Management approach
Percentage of operations with implemented
local community engagement, impact
assessment and development programs
Operations with significant actual and potential
negative impacts on local communities
142
Description
Omission
External
assurance
Page/
response
Anti-corruption UNGC1
G4-DMA
Management approach
172
36, 72, 79
G4-SO3
Units assessed for risks related to corruption
172
36
172
79
172
26, 109
G4-SO4
G4-SO5
Percentage of employees trained in
anti-corruption policies and procedures
Confirmed incidents of corruption and
measures taken
Public policies UNGC1
G4-DMA
Management approach
172
35, 36
G4-SO6
Policies related to financial contributions to
political parties, politicians or institutions
172
36
Anticompetitive behavior
G4-DMA
Management approach
172
36
G4-SO7
Total number of legal actions for anticompetitive behavior
172
36
Compliance
G4-DMA
Management approach
172
36
G4-SO8
Monetary value of significant fines and total
number of non-monetary sanctions
172
36
172
108, 109,
117
172
109
172
109, 110
Supplier assessment for impacts on society
G4-DMA
G4-SO9
G4-SO10
Management approach
criteria for impacts on society
Significant actual or potential negative impacts
of supply chain on society and measures taken
Grievance mechanisms for impacts on society
G4-DMA
Management approach
172
71
G4-SO11
Grievances about impacts on society filed,
addressed and resolved through formal
mechanisms
172
72
172
106
172
106
172
107
Social category – product responsibility
Customer health and safety
G4-DMA
G4-PR1
G4-PR2
Management approach
Assessment of health and safety impacts
during the product and service life cycle
Non-compliance related to product and
service impacts
143
Description
Omission
External
assurance
Page/
response
172
70, 104
172
59, 70
172
107
172
73, 75, 76,
97, 98, 105,
110, 114
Product and service labeling
G4-DMA
G4-PR3
G4-PR4
G4-PR5
Management approach
Type of product and service information
required by the organization’s labeling
procedures
Non-compliance related to product and
service labeling
Results of surveys measuring customer
satisfaction
Marketing communication
G4-DMA
Management approach
172
21, 104
G4-PR6
Sales of banned or disputed products
172
107
G4-PR7
Cases of non-compliance related to product
and service communication
172
104
Customer privacy
G4-DMA
Management approach
172
106
G4-PR8
Total of substantiated complaints regarding
breaches of customer privacy and losses of
customer data
172
106
Compliance
G4-DMA
Management approach
172
36
G4-PR9
Fines for non-compliance regarding the
provision and use of products and services
172
107
1 UNGC – Aspects/dimensions linked with the Ten United Nations Global Compact Principles.
144
NATURA COSMÉTICOS S.A.
For the year ended december 31, 2013
and Independent auditor’s report
financial statements
BALANCE SHEETS AS OF DECEMBER 31, 2013 AND
DECEMBER 31, 2012 AND JANUARY 1, 2012
(In thousands of Brazilian reais - R$)
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
___________________________
___________________________
ASSETS
20122012
Note
2013(Restated) 01/01/2012
2013(Restated) 01/01/2012
_________
__________________________________________________
CURRENT ASSETS
Cash and cash equivalents
5
99,535
72,767
166,007 1,016,293 1,144,390
515,610
Short-term investments
6
927,202
1,168,487
-293,015498,672
Trade receivables
7
668,903530,033 535,309807,001651,416 641,872
Inventories
8
162,290158,003 217,906799,521700,665 688,748
Recoverable taxes
9
23,800 23,417 69,417181,104144,459 201,620
Related parties
28.19,369
25,908
37,908-- Derivatives 4.2. 163,73280,271 28,184153,63480,928 28,626
Other
receivables
12 __________________________________________________
184,185130,532 115,328262,365157,787 126,783
Total
current assets 2,239,0162,189,418
1,170,0593,512,9333,378,317 2,203,259
__________________________________________________
NONCURRENT ASSETS
Long-term assets:
Recoverable taxes
9
24,660 12,952 12,299175,062151,350 111,239
Deferred income tax and
social contribution
10.a)
56,038
80,632
73,572
193,767
195,585
179,987
Escrow deposits
11
321,514267,598 244,938412,404349,537 295,839
Other noncurrent assets
12
19,05723,187 4,56237,16541,295 29,935
Investments
13
1,522,921
1,306,884
1,250,729-- Property, plant and equipment
14
551,696
357,443
332,215 1,439,704 1,012,089
800,434
Intangible
assets
14 __________________________________________________
303,866206,036 78,929477,286228,545 162,754
Total
noncurrent assets
2,799,7522,254,732
1,997,2442,735,3881,978,401 1,580,188
__________________________________________________
TOTAL
ASSETS
5,038,7684,444,150
3,167,3036,248,3215,356,718 3,783,447
__________________________________________________
__________________________________________________
_
The notes are an integral part of these statements.
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
___________________________
___________________________
LIABILITIES AND 20122012
SHAREHOLDERS’ EQUITYNote
2013(Restated) 01/01/2012
2013(Restated) 01/01/2012
_________ __________________________________________________
CURRENT LIABILITIES
Borrowings and financing
15
Trade and other payables
16
Suppliers - related parties
28.1.
Payroll, profit sharing
and related taxes
Taxes payable
17
Other
payables
576,841
271,722
276,518
844,261
252,318
254,535
66,424
183,317
293,024
693,117
706,586
-
999,462
649,887
-
168,962
488,980
-
99,247
98,351
58,551
177,636
211,814
132,045
397,642303,833 260,027659,309501,509 446,800
52,77544,820 29,35990,19252,040 37,932
__________________________________________________
Total
current liabilities
1,674,7451,798,118
890,7022,326,8402,414,712 1,274,719
__________________________________________________
NONCURRENT LIABILITIES
15
1,828,351 1,143,495
852,549 2,200,789 1,309,177 1,017,737
Taxes payable
17
141,411106,928 97,955215,647177,259 140,545
Provision for tax,
civil and labor risks 18
50,859
38,488
49,600
73,829
63,293
64,957
Others
provisions
19 __________________________________________________
197,765 69,686 35,818262,966104,841 44,809
Total
noncurrent liabilities
2,218,3861,358,597
1,035,9222,753,2311,654,570 1,268,048
__________________________________________________
SHAREHOLDERS' EQUITY
Capital
20.a) 427,073427,073 427,073427,073427,073 427,073
Treasury shares
20.c) (83,984)(66,105) 160,313(83,984)(66,105) 160,313
Capital reserves
150,442155,905 292,457150,442155,905 292,457
Earnings reserves
162,612311,669(112,414)162,612311,669(112,414)
Proposed additional dividend 20.b) 496,393491,343 490,885496,393491,343 490,885
Other
comprehensive losses
(6,899) (32,450)
(17,635)
(6,899) (32,450)
(17,635)
__________________________________________________
1,145,6371,287,435 1,240,6791,145,6371,287,435 1,240,679
__________________________________________________
Noncontrolling
interests
Total
shareholders’ equity -
-
22,613
1
1
__________________________________________________
1,145,6371,287,435
1,240,6791,168,2501,287,436 1,240,680
__________________________________________________
TOTAL LIABILITIES AND
SHAREHOLDERS’
EQUITY
5,038,7684,444,150
3,167,3036,248,3215,356,718 3,783,447
__________________________________________________
__________________________________________________
STATEMENTS OF INCOME
AS OF DECEMBER 31, 2013 AND DECEMBER 31, 2012
Company
Consolidated
(BR GAAP)
(BR GAAP and IFRS)
______________________ ______________________
20122012
Note
2013 (Restated)
2013 (Restated)
_________ __________ __________ __________ __________
NET REVENUE
22
6,342,870 6,249,0867,010,3116,345,669
Cost of sales
23
(2,379,802) (2,438,873) (2,089,785) (1,868,045)
__________ __________ __________ __________
GROSS PROFIT
3,963,068 3,810,2134,920,5264,477,624
OPERATING (EXPENSES) INCOME
Selling expenses 23
(1,479,892) (1,642,380)(2,470,730)(2,212,205)
Administrative and general expenses
23
(1,221,500)
(898,082)
(962,154)
Profit sharing
24.1
(26,083)
(29,555)
(61,943)
(90,799)
Management compensation 28.2
(18,554)
(20,739)
(18,554)
(20,739)
Equity in subsidiaries
13
99,537
59,912
-
-
Other operating (expenses) income, net
26
_
(771,538)
(17,168)
15,472
8,851
(11,643)
__________ __________ __________ __________
Company
Consolidated
(BR GAAP)
(BR
GAAP and IFRS)
______________________
______________________
20122012
_________
Note
2013 (Restated)
2013 (Restated)
__________
__________ __________
__________
INCOME FROM OPERATIONS BEFORE
FINANCIAL INCOME (EXPENSES) 1,299,408__________
1,294,8411,415,9961,370,700
__________
__________ __________
Financial income25
309,274 129,831364,222161,808
Financial expenses 25
(435,194) (197,781)(522,472)(234,157)
INCOME BEFORE INCOME TAX
AND SOCIAL CONTRIBUTION 1,173,488 1,226,891 1,257,746 1,298,351
Income tax and social contribution
10.b)
(330,880) __________
(352,515) __________
(409,940) __________
(423,975)
__________
NET INCOME 842,608 __________
874,376 __________
847,806 __________
874,376
__________
__________
__________ __________
__________
ATTRIBUTABLE TO
Owners of the Company
842,608
874,376
842,608
874,376
Noncontrolling
-
-
5,198
__________
__________
__________
__________
__________
__________
__________
__________
842,608
874,376
847,806
874,376
EARNINGS PER SHARE - R$
Basic 27.1.
1.9618 2.03881.96182.0388
__________
__________ __________
__________ __________
__________ __________
__________
Diluted
27.2.
1.9586
2.02851.95862.0285
__________
__________
__________ __________
__________ __________ __________
__________
STATEMENTS OF COMPREHENSIVE INCOME
Company
STATEMENTS OF VALUE ADDED
Consolidated
(BR GAAP)
(BR
GAAP and IFRS)
______________________
______________________
Note 2013 201220132012
_________ __________ (Restated)
__________ __________ (Restated)
__________
NET INCOME Other comprehensive income
to be reclassified to profit or
loss in subsequent periods:
Gains from translation of financial
statements of foreign subsidiaries
13
Other comprehensive income not reclassified
to profit or loss in subsequent periods:
Gain/Loss
Actuarial
19
842,608
874,376
847,806
874,376
Company (BR GAAP)
________________________
Note
Consolidated (BR GAAP)
________________________
2013201220132012
(Restated)
(Restated)
__________ ____________________________________
__________ ____________________________________
REVENUES 7,890,473
7,501,382
9,392,024
8,515,446
____________________________________
Sales of products and services
8,021,958
7,608,134
9,518,828
8,665,145
Allowance for
(333) __________
(10,199) __________
(333) __________
(10,199)
__________
doubtful accounts
7
(114,317)
(122,224)
(135,655)
(138,056)
26
(17,168)15,472 8,851
(11,643)
Other operating
(expenses)
25,883 __________
(22,251) __________
25,883 __________
(22,251)
__________
868,158
841,926873,356841,926
__________ __________
__________ __________
__________ __________
__________
__________
Total comprehensive income
ATTRIBUTABLE TO
Owners of the Company
868,158
841,926
868,158
841,926
Noncontrolling
-
-
5,198
__________
__________
__________
__________
868,158
841,926
873,356
841,926
__________
__________ __________
__________ __________
__________ __________
__________
_
income, net
INPUTS PURCHASED
FROM THIRD PARTIES(4,806,849)
(4,823,121)
(5,424,798)
(4,836,794)
____________________________________
Cost of sales and services
(2,770,923) (2,846,755) (2,931,519) (3,025,657)
Materials, electricity, services and others (2,035,926) (1,976,366) (2,493,279) (1,811,137)
____________________________________
GROSS VALUE ADDED 3,083,624
2,678,261
3,967,226
3,678,652
RETENTIONS (99,415)
(63,594)
(192,555)
(141,178)
____________________________________
Depreciation
and amortization
14
(99,415)
(63,594)
(192,555)
(141,178)
VALUE ADDED
GENERATED BY
THE COMPANY 2,984,209
2,614,667
3,774,671
3,537,474
TRANSFERRED
VALUE ADDED 408,811
189,211
364,222
161,805
____________________________________
Equity in subsidiaries 13
99,53759,380
-
-
Financial income includes inflation and
exchange rate variations
25 309,274
129,831
364,222
161,805
____________________________________
TOTAL VALUE ADDED
TO BE DISTRIBUTED 3,393,020
2,803,878
4,138,893
3,699,279
____________________________________
____________________________________
DISTRIBUTION
OF VALUE ADDED: (3,393,020) 100%(2,803,878) 100%(4,138,893) 100%(3,699,279) 100%
____________________________________
Employees and social charges
Taxes and contributions
(401,323)
12%
(333,466)
12%
(916,864)
22%
(802,966)
22%
(1,688,420) 50%(1,369,813) 49%(1,803,781) 44%(1,743,400) 46%
Financial expenses and rentals (460,669)
Dividends
(811,309)24% (796,531)28% (811,309)20% (796,531)22%
14%
(239,377)
9%
(570,442)
14%
(291,691)
8%
Interest on capital
(49,917)1% (58,347)2% (49,917)1% (58,347)2%
Net income atrtributable
to Noncontrolling
Retained earnings
-
-
0%(5,198)
-
0%
18,618-1% (6,344)0% 18,6180% (6,344)0%
_
Supplemental statement of value added information
The amounts recorded under “Taxes and contributions” in December 2013 and 2012, the amounts of R$ 697,526 and R$
541,669, respectively, refer to the Tax on Circulation of Goods and Services - Replacement Tax - ICMS - ST levied on the
presumed profit margin defined by the State Finance Secretariats obtained from sales made by (the) Consultants (the) Natura
for the end consumer.
For the analysis of this tax impact on value added statements, such amounts shall be deducted from those recorded under
“Sales of goods, products and services” and the heading itself “Taxes and contributions”, since the revenue figures of sales do
not include the estimated profit of (the) Consultants (the) Natura sale of the products in the amounts of R$ 3,390,338 and
R$ 3,210,727, in December 2013 and 2012, respectively, considering the estimated profit margin 30%.
STATEMENTS OF CASH FLOWS
Company
Consolidated
(BR GAAP)
(BR
GAAP and IFRS)
______________________
______________________
Note 2013 201220132012
_________ __________ (Restated)
__________ __________ (Restated)
__________
CASH FLOW FROM
OPERATING ACTIVITIES
Net income
842,608
874,376
847,806
874,376
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization
14
99,415
63,594
192,998
141,178
Provision (reversal ) for losses
on transactions with derivative
contracts “swap” and “forward”
(73,210)
(52,087)
(100,474)
(52,302)
Provision (reversal ) for tax,
civil and labor contingencies
18
19,385
(5,176)
18,006
4,623
Monetary restatement of escrow deposits
(14,614)
(17,371)
(21,264)
(21,049)
10.a)
330,880
352,515
409,939
423,975
Loss on sale and disposal of fixed
and intangible assets
9,406
(2,098)
(2,554)
15,692
Equity income
(99,537)
(59,912)
-
Interest and exchange variation
on loans and financing
25
281,576
145,660
311,609
163,228
Exchange variation on other
assets and liabilities
1,507
691
3,267
9,101
Expenses related to the grant of
options to purchase shares
7,331
2,712
12,491
10,844
Provision (reversal ) discount on
sale of ICMS credits
-
-
(3,323)
807
Provision ( reversal) for doubtful accounts
7
20,676
2,776
26,986
7,942
Provision (reversal ) for losses on inventories
8
464
(1,460)
27,556
(23,842)
Provision of health care plan and carbon credits
19
24,981
10,691
29,859
21,901
Net income attributable to non-controlling
-
-
(5,198)
Belated recognition of tax credit
(2,736)
(7,311)
(6,769)
(11,617)
Recognition of tax credit lawsuit
-
(715)
-(1,665)
__________
__________
__________
__________
1,448,132 __________
1,306,885 __________
1,740,935 __________
1,563,192
__________
(INCREASE) DECREASE IN ASSETS
Trade receivables
(159,546)
2,500
(182,571)
(17,486)
Inventories
(4,751) 61,363(126,412) 11,925
Recoverable taxes
(9,355)
55,394
(50,265)
29,525
Other receivables
(32,982)
(13,068)(100,449)
(48,570)
__________
__________
__________ __________
Subtotal __________
(206,634)
106,189(459,697)
(24,606)
__________
__________ __________
INCREASE (DECREASE) IN LIABILITIES
Domestic and foreign suppliers
17,894
68,310
54,859
162,102
Payroll, profit sharing and related taxes, net
896
39,800
(34,178)
79,769
Taxes payable
709
1,623
28,018
(2,650)
Other payables
(2,168)
(23,028)
7,200
14,108
Payments of provision for tax, civil
and labor contingencies
(7,014)
(5,936)(7,470)(6,287)
__________
__________
__________ __________
Subtotal 10,317
80,769
48,429247,042
__________
__________
__________
__________
CASH GENERATED BY
1,251,815__________
1,493,8431,329,6671,785,628
__________
__________ __________
OTHER CASH FLOWS FROM
Payments of income tax and social contribution
(178,703)
(293,751)
(239,951)
(320,805)
Withdrawal (payment) of escrow deposits
(39,302)
(5,289)
(41,603)
(32,649)
Payments of derivatives
(10,251)
(23,428)
27,768
(18,488)
Payment of interest on borrowings and financing
(74,290) __________
(87,480) __________
(96,866) __________
(104,332)
__________
Company
Consolidated
Nota
(BR GAAP)
(BR GAAP e IFRS)
______________________
______________________
explicativa2013
2012
2013
2012
_________ __________ __________
__________
__________
(Restated) (Restated)
NET CASH GENERATED
BY OPERATING ACTIVITIES
CASH FLOW FROM
INVESTING ACTIVITIES
Acquisition of property, plant
and equipment and intangible assets 14
Proceeds from sale of property, plant and
equipment and intangible assets
Redemption of short-term investments
Dividends received from subsidiaries
Capital increase in subsidiaries
13
Noncontrolling interest
NET CASH USED IN
INVESTING
ACTIVITIES CASH FLOW FROM
Repayments of borrowings and financing - principal
Proceeds from borrowings and financing
Sale of treasury shares
due to exercise of stock options
Repurchase of treasury shares
Payment of dividends and interest
on capital of the prior year
Anticipation of dividends and interest
on working capital of the current year
NET CASH GENERATED (USED)
IN
FINANCING ACTIVITIES
Gains (losses) arising on translating foreign
currency cash and cash equivalents
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
Cash and cash equivalents at the
beginning of the year/period
Cash and cash equivalents at the
end of the year/period
DECREASE IN CASH
AND CASH EQUIVALENTS
ADDITIONAL STATEMENTS OF
CASH FLOWS INFORMATION:
Restricted cash Bank overdrafts - unused
Non cash itens
Reserve for acquisition of non - controlling
Capitalization of financial leasing _
949,269__________
1,083,895__________
979,0151,309,354
__________
__________
(216,965)
(215,929)
(553,854)
(437,451)
1,913
2,098
21,166
3,135
(3,387,585) (3,015,724) (4,698,796) (4,213,731)
3,628,870
1,847,237
4,904,453
3,715,059
96,080
66,148
-
(202,874)
(48,843)
-
- __________
- __________
(128,972) ____________________
(80,561)(1,365,013)
(456,003) __________
(932,988)
__________
__________ __________
(898,279)
937,147
(462,885)
1,474,413
(1,029,434)
1,257,569
(629,650)
1,708,574
35,540
(60,172)
30,834
-
35,540
(60,172)
30,834
-
(491,343)
(490,951)
(491,343)
(490,951)
(364,833) __________
(363,533) __________
(364,833) __________
(363,533)
__________
(841,940)__________
187,878(652,673)
255,274
__________
__________ __________
-
-
1,564
(2,860)
26,768 (93,240)(128,097) 628,780
72,767
166,007
1,144,390
515,610
99,535 __________
72,767 __________
1,016,293 __________
1,144,390
__________
26,768__________
(93,240)(128,097)
628,780
__________
__________ __________
-
117,900
-
299,500
-
117,900
7,059
343,600
141,640
185,851
-
-
141,640
185,851
-
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands of Brazilian reais - R$, except dividends per share)
Capital reserves
Earnings reserves
Tax incentive
Equity
Non
reserve Reserve for attributable controlling
_____________
Additional
acquisition Proposed
Other
to owners interests in
Total
Treasury
Share
Investment
paid-in
Tax
of minority Retained
Retained additional comprehensive
of the subsidiaries’shareholders’
Note
Capital _________
shares ________
premium _____________
grants _________
capital _______
Legal _________
Incentives ___________
interest ________
earnings __________
earnings _________
dividend ___________
losses __________
Company __________
equity _________
equity
_________
_______
BALANCES AS OF
DECEMBER 31, 2011
427,073(102,849)103,24317,37839,69218,65014,611
-249,632__________
-490,885(17,635)1,240,680
11,240,681
_______
_______ _________
_________ ________
________ _____________
_____________ _________
_________ _______
_______ _________
_________ ___________
___________ ________
________ __________ _________
_________ ___________
___________ __________
__________ __________
__________ _________
_________
Net income- ---
- -
-- -
874,376 - -
874,376 -
874,376
Other comprehensive
income
20.g)
- --
- -
- -
-- - -7,4377,437
-7,437
Total comprehensive
income- ---
- -
-- -
874,376 -
7,437
881,813 -
881,813
2011 Dividends and interest
on capital approved
at the Annual Shareholders’
Meeting of April 13, 2012
-
-
-
-
-
-
-
-
(66)
- (490,885)
-
(490,951)
- (490,951)
Sale of treasury shares
by exercise of options
to purchase shares
20.c)
-
36,744
(5,910)
-
-
-
-
-
-
-
-
-
30,834
-
30,834
Changes in stock
option plans of actions:
Grant of stock options
24.2
-
-
-
-
10,844
-
-
-
-
-
-
-
10,844
-
10,844
Exercise of stock options
24.2
-
-
-
-
(9,342)
-
-
-
9,342
-
-
-
-
-
Allocation of net income:
Reserve tax incentive Constitution
-
-
-
-
-
-
6,346
-
-
(6,346)
-
-
-
-
Anticipation of dividends
and interest on working capital -
-
-
-
-
-
-
-
-
(363,533)
-
-
(363,533)
- (363,533)
Dividends declared on
February 6, 2013
-
-
-
-
-
-
-
-
- (469,512)
469,512
-
-
-
Interest on equity declared
on February 6, 2013
-
-
-
-
-
-
-
-
-
(21,831)
21,831
-
-
-
Retained earnings of
subsidiaries Book -
- --
- -
- -
-- -
(2,021)
(2,021) -
(2,021)
Retained
profit booking
- _________
- ________
- _____________
- _________
- _______
- _________
- ___________
- ________
13,154 __________
(13,154) _________
- ___________
(20,230) __________
(20,230) __________
- _________
(20,230)
_______
BALANCES AS OF
DECEMBER 31, 2012
Net income for the year
Other comprehensive
income
20.g)
Total comprehensive
income for the year
Dividends and interest on
shareholders’ equity for the
period 2012 approved at
the AGM of April 12, 2013 -
Interim dividends
and interest on capital
Acquisition of treasury shares
Sale of treasury shares for
the period of options
to purchase shares
20.d)
Changes in stock
option plans of actions:
Grant of stock options
24.2.
Exercise of stock options
24.2.
Reserve for acquisition
of minority interest
19.b)
Health care plan
Dividends declared on
February 12, 2014
Interest on equity
declared on
February 12, 2014
Retained Earnings Reserve
Minority interest in shareholders’
equity
of subsidiaries
BALANCES AS OF
DECEMBER 31, 2013
427,073(66,105)97,33317,37841,19418,65020,957
-272,062__________
-491,343(32,449)1,287,436
11,287,437
_______
_______ _________
_________ ________
________ _____________
_____________ _________
_________ _______
_______ _________
_________ ___________
___________ ________
________ __________ _________
_________ ___________
___________ __________
__________ __________
__________ _________
_________
-
-
-
-
-
-
-
-
-
842,608
-
-
842,608
5,198
847,806
-
--
-
-
-
-
--
-
-
25,55025,550
-25,550
_______
_________
________ _____________
_________
_______
_________
___________
________ __________
_________
___________
__________ __________
_________
-
-
-
-
-
-
-
-
-
842,608
-
25,550
868,158
5,198
873,356
-
-
-
-
-
-
-
-
-
(491,343)
-
(491,343)
-
(491,343)
-
-
-
(60,172)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(364,833)
-
-
-
-
-
(364,833)
(60,172)
-
-
(364,833)
(60,172)
-
42,293
(6,753)
-
-
-
-
-
-
-
-
-
35,540
-
35,540
-
-
-
-
-
-
-
-
12,491
(9,624)
-
-
-
-
-
-
-
9,624
-
-
-
-
-
-
12,491
-
-
-
12,491
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(141,640)
-
-
-
-
-
-
-
-
-
(141,640)
-
-
-
(141,640)
-
-
-
-
-
-
-
-
-
-
(474,004)
474,004
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(18,618)
(22,389)
18,618
22,389
-
-
-
-
-
-
-
-
- _________
- ________
- _____________
- _________
- _______
- _________
- ___________
- ________
- __________
- _________
- ___________
- __________
- __________
17,414 _________
17,414
_______
427,073(83,984)90,58017,37844,06118,65020,957(141,640)263,068
-496,393(6,899)1,145,63722,6131,168,250
_______
_______ _________
_________ ________
________ _____________
_____________ _________
_________ _______
_______ _________
_________ ___________
___________ ________
________ __________
__________ _________
_________ ___________
___________ __________
__________ __________
__________ _________
_________
_
NOTES TO THE INDIVIDUAL AND CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
1. GENERAL INFORMATION
Natura Cosméticos S.A. (“Company”) is a publicly-traded company, registered in the special trading
segment called “Novo Mercado” in the São Paulo Stock Exchange (BM&FBOVESPA), under the ticker
“NATU3”, and headquartered in São Paulo, Alexandre Colares Avenue, 1188, Vila Jaguara, Postal Code
05106-000, State of São Paulo.
The Company’s and its subsidiaries’ activities (“Natura Group” or “Group”) include the development,
production, distribution and sale of cosmetics, fragrances, and hygiene products, substantially through direct sales by Natura Beauty Consultants. The Company also holds equity interests in other companies in
Brazil and abroad.
On February 28, 2013, Natura Cosméticos S.A. entered into a purchase and sale agreement, subject to
certain conditions precedent, for the acquisition of 65% of Emeis Holdings Pty Ltd., an Australian manufacturer of premium cosmetics and beauty products that operates under the brand name “Aesop” in Australia, Asia, Europe and North America. The price of the acquisition agreed by the parties was AU$71.104
thousand, subject to certain adjustments.
2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
2.1. Statement of compliance and basis of preparation
The Company’s financial statements include:
• The consolidated financial statements prepared in accordance with the International Financial Reporting
Standards (IFRSs), issued by the International Accounting Standards Board (IASB), and the accounting
practices adopted in Brazil, identified as Consolidated - IFRS and BR GAAP.
• The Parent’s individual financial statements prepared in accordance accounting practices adopted in
Brazil, identified as Company - BR GAAP.
The accounting practices adopted in Brazil include those established in the Brazilian Corporate Law as
well as the Pronouncements, Instructions and Interpretations issued by the Accounting Pronouncements
Committee (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM).
The individual financial statements present the valuation of investments in subsidiaries, joint ventures
and associates which are measured by the equity method, as required by legislation prevailing in Brazil.
Therefore, these individual financial statements are not fully compliant with IFRS, which requires that these
investments be carried at fair value or acquisition cost.
Since there is no difference between the consolidated shareholders’ equity and the consolidated net income attributable to owners of the Company recorded in the consolidated financial statements prepared
in accordance with IFRS and accounting practices adopted in Brazil and the Company’s shareholders’ equity and net income disclosed in the individual financial statements prepared in accordance with accounting
practices adopted in Brazil, the Company elected to present the individual and the consolidated financial
statements as a single set, placed side-by-side.
The financial statements have been prepared based on the historical cost basis except for certain
financial instruments that are measured at their fair values, as described in the accounting policies
below. The historical cost is generally based on the fair value of the consideration paid in exchange
for an asset.
The significant accounting practices applied to the preparation of these consolidated financial statements
are presented below.These policies have been consistently applied in the previous annual reporting period
presented, except as otherwise indicated.
2.2. Consolidation
a) Subsidiaries and joint-controlled entities
Subsidiaries are all entities in which the company is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the
investee and in which there is usually a shareholding exceeding 50%. Where applicable, the existence
and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date
on which control is transferred to the Company and cease to be consolidated, where applicable, from
the date that control ceases.
b) Companies include in the consolidated financial statements
Equity interest - %
__________________
Direct interest:
Indústria e Comércio de Cosméticos Natura Ltda.
Natura Biosphera Comércio de Cosméticos e Serviços Ltda.
Natura Cosméticos S.A. - Chile
Natura Cosméticos S.A. - Peru
Natura Cosméticos S.A. - Argentina
Natura Inovação e Tecnologia de Produtos Ltda.
Natura Cosméticos y Servicios de Mexico, S.A. de C.V.
Natura Cosméticos de Mexico, S.A. de C.V.
Natura Distribuidora de Mexico, S.A. de C.V.
Natura Cosméticos Ltda. - Colombia
Natura Cosméticos España S.L. - Spain
Natura (Brasil) International B.V. - The Netherlands
Natura Brazil Pty Ltd - Australia
Equity interest - %
__________________
Sintonia Investment Fund
Essencial Investment Fund
Indirect interest:
Via Indústria e Comércio de Cosméticos Natura Ltda.:
Natura Logística e Serviços Ltda. - Brasil
Via Natura Inovação e Tecnologia de Produtos Ltda.:
Natura Innovation et Technologie de Produits SAS - France
Via Natura (Brazil) International B.V. - The Netherlands:
Natura Europa SAS - France
Natura Brasil Inc. - EUA - Delaware
Via Brasil Inc. - EUA - Delaware
Natura International Inc. - EUA - Nova York
Via Natura Brazil Pty Ltda:
Natura Cosmetics Australia Pty Ltd. - Australia
Via Natura Cosmetics Australia Pty Ltd. - Australia:
Emeis Holdings Pty Lty - Australia
2013
_______
2012
_______
100.00
100.00
100.00
100.00
99.99
99.99
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
65,00-
The consolidated financial statements have been prepared based on the financial statements as of the
same date and consistent with the Company’s accounting policies. Investments in subsidiaries have been
eliminated proportionately to the investor’s interests in the subsidiaries’ shareholders’ equity and net
income or loss, intergroup balances and transactions and unrealized profits, net of taxes.
The operations of the direct and indirect subsidiaries are as follows:
• Indústria e Comércio de Cosméticos Natura Ltda.: engaged principally in the production and sale of
Natura products to Natura Cosméticos S.A. - Brazil, Natura Cosméticos S.A. - Chile, Natura Cosméticos
S.A. - Peru, Natura Cosméticos S.A. - Argentina, Natura Cosméticos Ltda. - Colombia, Natura Europa SAS
- France, and Natura Cosméticos de Mexico S.A. de C.V.
• Natura Biosphera Comércio de Cosméticos e Serviços Ltda.: engaged in trading, including by electronic
means, of products from Natura brand.
• Natura Cosméticos S.A. - Chile, Natura Cosméticos S.A. - Peru, Natura Cosméticos S.A. - Argentina,
Natura Cosméticos Ltda. - Colombia and Natura Distribuidora de Mexico, S.A. de C.V.: their activities are
an extension of the activities conducted by the parent company Natura Cosméticos S.A. - Brazil.
• Natura Inovação e Tecnologia de Produtos Ltda.: it is engaged in product and technology development
and market research. It is the only owner of Natura Innovation et Technologie de Products SAS - France,
a research and technology satellite center opened in 2007 in Paris.
• Natura Cosméticos de Mexico, S.A. de C.V.: engaged in the import and sale of cosmetics, fragrances in
general, and hygiene products to Natura Distribuidora de Mexico, S.A. de C.V.
• Natura Cosméticos España S.L.: company in start-up stage and its activities will be an extension of the
activities carried out by its parent company Natura Cosméticos S.A. - Brazil.
• Natura (Brazil) International B.V - Netherlands.: holding controller of the Natura Europe SAS – France,
Natura Brazil Inc. and Natura International Inc.
• Natura Logística e Serviços Ltda.: engaged in the provision of administrative and logistics services to
Natura Group companies based in Brazil.
• Natura Innovation et Technologie de Produits SAS - France: engaged mainly in research activities developed for in vitro testing as an alternative to animals testing, for to the safety and efficiency of test active
compounds, skincare products and new packaging materials.
• Natura Brazil Inc.: Holding controller of Natura International Inc.
• Natura International Inc: Holding controller of Natura Europe SAS.
• Natura Europa SAS – France, Natura Brazil Inc. e Natura International Inc.: in January 2009 the shares of
these subsidiaries were assigned as a capital contribution to the holding company Natura (Brazil) International B.V. - The Netherlands, and the Company became the indirect holder of such interests through this
company headquartered in The Netherlands.
• Natura Brazil Pty Ltd – Holding controller of Natura Cosmetics Australia Pty Ltd operations.
2013
_______
2012
_______
99.99
99.99
99.99
99.94
99.97
99.99
99.99
99.99
99.99
99.99
100.00
100.00
99.99
99.99
99.99
99.94
99.97
99.99
99.99
99.99
99.99
99.99
100.00
100.00
100.00
-
• Natura Cosmetics Australia Pty Ltd – Holding controller of Emeis Holdings Pty Ltd.
• Emeis Holdings Pty Ltda: Activities focused on developing manufacturing and marketing of premium
cosmetics, which operates under the brand of “Aesop”.
• Sintonia and Essencial Investiment Fund: refer to fixed income funds of private credit.
2.3. Segment reporting
Information per operating segments is consistent with the internal report provided to the chief operating
decision maker. The chief operating decision maker, responsible for allocating resources to the operating
segments and assessing their performance, is the Company’s Executive Committee.
2.4. Translation of foreign currency
a) Functional currency
Items included in the financial statements of the Company and each one of the subsidiaries included in
the consolidated financial statements is measured using the currency of the main economic environment
in which the companies operate (“functional currency”).
b) Foreign currency transactions and balances
Foreign currency-denominated transactions are translated into the Company’s functional currency – Brazilian reais (R$) - at the exchange rates prevailing on the dates of the transactions. Balance sheet accounts
are translated at the exchange rates prevailing at the end of the reporting period. Foreign exchange gains
and losses arising on the settlement of such transactions and the translation of monetary assets and
monetary liabilities denominated in foreign currency are recognized in profit or loss, in line items “Financial
income” and “Financial expenses”.
c) Presentation currency and translation of financial statements
The financial statements are presented in Brazilian reais (R$), which corresponds to the Group’s presentation currency.
In preparing the consolidated financial statements, the statements income statement and the statement of
cash flows, and all other changes in foreign subsidiaries’ assets and liabilities, whose functional currency is
the local currency, are translated into Brazilian reais at the average monthly exchange rate, which approximates the exchange rate prevailing at the date of the underlying transactions. Balance sheets are translated
into Brazilian reais at the exchange rates prevailing at yearend.
The effects of exchange differences resulting from these translations are presented in line item ‘Other
comprehensive income’ and in shareholders’ equity.
2.5. Cash and cash equivalents
Cash equivalents are held for the purpose of meeting short term commitments box, rather than for
investment or other purposes. Include cash, demand deposits and short-term investments redeemable
within up to 90 days from the investment date, highly liquid or convertible to a known cash amount and
subject to immaterial change in value, which are recorded at cost plus income earned through the end of
the reporting period and do not exceed their fair or realizable values.
2.6. Financial instruments
2.6.1. Categories
The category depends on the purpose for which financial assets and financial liabilities were acquired or
contracted and is determined on the initial recognition of the financial instruments.
Financial assets held by the Company are classified into the following categories:
Financial assets measured at fair value through profit or loss
Consist of financial assets held for trading, when acquired for such purpose, principally in the short term.
These assets are measured at fair value at the end of the reporting period and any differences are recognized in profit or loss. Derivative financial instruments are also classified in this category. Assets in this
category are classified in current assets.
In the case of the Company, this category includes only derivative financial instruments. The balances of
outstanding derivatives are measured at their fair values at the end of the reporting period and classified in
current assets or current liabilities, and changes in fair value are recorded in “Financial income” or “Financial
expenses”, respectively.
Held-to-maturity financial assets
Comprise investments in certain financial assets classified by treasury at their origination as held to maturity, and are measured at amortized cost using the effective interest method, less losses due to reduction of
the recoverable amount. The Society does not have investments held to maturity during the years ended
December 31, 2013 and 2012.
Available-for-sale financial assets
When applicable, this category includes non-derivative financial assets that either designated as available for sale or are not classified into any of the other categories, such as (a) loans and receivables; (b)
held-to-maturity investments; or (c) financial assets at fair value through profit and loss. These financial
assets include shares of investment funds and government debt securities. In this category are registered
instruments which are held for an indefinite period and may be sold to meet liquidity needs or changes
in market conditions.
Loans and receivables
Include non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are recorded in current assets, except for maturities greater than 12 months after the
end of the reporting period, when applicable, which are classified as noncurrent assets. After initial measurement, these financial assets are accounted for at amortized cost, using the effective interest method
(effective interest rate), less loss by decrease in recoverable value. Amortized cost is calculated taking into
account any discount or premium on acquisition and fees or costs incurred. In December 31, 2013 and
2012 include trade accounts receivable (note 7).
Financial liabilities held by the Company are classified into the following categories:
Financial liabilities at fair value through profit or loss
They are classified as fair value through profit or loss when the financial liability is either held for trading
or it is designated as fair value through profit or loss.
Other financial liabilities
They are measured at the amortized cost using the effective interest method. As of December 31, 2013
and 2012, in the case of the Company, comprise borrowings and financing (note 15) and domestic and
foreign trade payables.
2.6.2. Measurement
Regular purchases and sales of financial assets are recognized on the transaction date, i.e., on the date the
Company agrees to buy or sell the asset. Loans and receivables and held-to-maturity financial assets are
measured at amortized cost.
Financial assets at fair value through profit or loss are initially recognized at their fair value and transaction
costs are recognized in the income statement. Gains or losses resulting from changes in the fair value of
financial assets at fair value through profit or loss are recognized in the income statement, in “Finance
income” or “Finance costs”, respectively, for the period in which they occur. Changes in financial assets
classified as “Available for sale”, when applicable, are recorded in “Other comprehensive income” and
shareholders’ equity until the financial assets are settled, when they are ultimately reclassified to profit or
loss for the year.
2.6.3. Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet
when there is a legally enforceable right to set off recognized amounts and the intent to either settle them
on a net basis, or to recognize the asset and settle the liability simultaneously.
2.6.4. Derecognition of financial instruments
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is downloaded when:
The rights to receive cash flows from the asset have expired;
The company transferred its rights or risk receiving the cash flows of the asset or has assumed an obligation to pay the received cash flows in full.
2.6.5. Derivative instruments and hedge accounting
Derivative transactions contracted by the Group consist of swaps and non-deliverable forwards (NDFs)
intended exclusively to hedge against the foreign exchange risks related to the positions in balance sheets
and projected cash outflows in foreign currency for capital increases in foreign subsidiaries.
They are measured at fair value, and changes in fair value are recognized through profit or loss, except
when they are designated as cash flow hedges, to which changes in fair value are recorded in “Other
comprehensive income” within shareholders’ equity.
The fair value of derivatives are measured by the Company’s treasury department based on information
on each contracted transaction and related market inputs at the end of the reporting period, such as interest rates and exchange coupon. When applicable, these inputs are compared with the positions reported
by the trading desks of each involved financial institution.
Even though the Group uses derivatives for hedging purposes, it does not apply hedge accounting.
On December 9, 2013 was approved by the Board of Directors of Natura the practice of accounting “hedge accounting” for derivative financial instruments contracted protection: (i) loans contracted in
foreign currency, subject to variable interest rate, or (ii) the loans contracted in the functional currency
(Real), subject to interest fixed rate. Protected risks are, respectively, (i) risk of changes in future cash flows
resulting from changes in exchange rates, accounting “hedge” cash flow and (ii) risk of interest rate being
applicable, and applicable accounting the “hedge” fair value.
From January 1, 2014, Natura intends to adopt the new accounting practice for new lending and the
related hedging instruments, having to date of approval of these financial statements no name “hedge”
was performed.
The fair values of derivatives are disclosed in note 4.
2.6.6. Effective interest method
Used to calculate the amortized cost of a debt instrument and allocate its interest income over the related
period.The effective interest rate is the rate that exactly discounts estimated future cash receipts (including
all fees and points paid or received that form an integral part of the effective interest rate, transaction costs
and other premiums or discounts) through the expected life of the debt instrument or, where appropriate,
a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets
classified as fair value through profit or loss.
2.7. Trade receivables and allowance for doubtful debts
Trade receivables are stated at their nominal amount, less the allowance for doubtful debts, which is recognized based on the history of losses using an aging list, in an amount considered sufficient by management
to cover possible losses, as described in note 7.
2.8. Inventories
Carried at the lower of average cost of purchase or production and net realizable value. Details are
disclosed in note 8.
The Company considers the following when determining its provision for inventory losses: discontinued
products, products with slow turnover, products with expired validity and products that do not meet
quality standards.
2.9. Carbon Credits – Carbon Neutral Program
In 2007, the Company assumed with its employees, customers, suppliers and shareholders committed
to be a Carbon Neutral company, which is to neutralize their emissions of Greenhouse Gas - GHG, in
its complete production chain, from extraction of raw materials to post- consumption. This commitment,
though not a legal obligation, since Brazil despite being a signatory to the Kyoto Protocol has no reduction target, is considered a constructive obligation under IAS 37 - Provisions, Contingent Liabilities and
Contingent Assets, which requires the recognition of a provision in the financial statements if it is subject
to disbursement and measurable.
The ERP system purchase and implementation costs are capitalized as intangible assets when there is
evidence that future economic benefits will flow into the Company, taking into consideration its economic
and technologic viability. Expenses on software development recognized as assets are amortized under
the straight-line method over its estimated useful life. The expenses related to software maintenance are
expensed when incurred.
2.12.2. Trademarks and patents
Separately purchased trademarks and patents are stated at their historic cost. Trademarks and patents
acquired in a business combination are recognized at fair value on the acquisition date. Amortization is
calculated on a straight-line basis at the annual rates described in note 14.
2.12.3. Intangible assets with indefinite useful lives
The liability is estimated audited through the inventories of carbon held annually and valued based on
the market price for the acquisition of licenses for neutralization. On December 31, 2013, the balance
recorded in the caption “ Other provisions “ (see note 12), refers to the total carbon emissions in the
period 2007 to 2013 that have not yet been offset by corresponding projects therefore no execution of
the certificate of carbon.
Are not amortized but are tested annually for losses due to impairment either individually or at the level
of the cash generating unit. The assessment of indefinite life is reviewed annually to determine whether
this assessment continues to be supportable. Otherwise, the change in useful life from indefinite to finite
is made on a prospective basis.
In line with their beliefs and principles, the Company elected to make some purchases carbon credits by
investing in projects with environmental benefits arising from the voluntary market. Thus, the costs will
generate carbon credits after completion or maturation of these projects.
Gains and losses arising from derecognition of an intangible asset are measured as the difference between
the net from the sale and the carrying amount of the asset and are recognized in the income statement
upon disposal of the asset.
During these exercises, these expenses were recorded at fair value as other assets (see note 12). At the
moment their carbon certificates are effectively delivered to the Company, the obligation to be Carbon
Neutral is effectively enforced, therefore the balances of assets are offset against the liability balances.
2.13. Research and product development expenses
In view of the high level of innovation and the turnover rate of the products in the Company’s sales
portfolio, the Company adopts the accounting policy of recognizing product research and development
expenditure as expenses for the year, when incurred.
The difference between the carrying amounts of assets and liabilities at December 31, 2013 refers to the
amount of cash that the Company also will pay for future generation or acquisition of certificates.
2.10. Investments in subsidiaries, associates and jointly controlled entities
The Company holds interest only in subsidiaries.
Subsidiaries are entities in which the Company, directly or through other subsidiaries, has ownership
rights that provide it with the ability to direct the subsidiaries’ activities and to elect the majority of the
subsidiaries’ management members on a permanent basis. Subsidiaries are the companies over which the
Company has control. Control is the power to govern the financial and operating policies of an entity so
as to obtain benefits from its activities, which in general consists of the ability to exercise the majority of
the voting rights. Potential voting rights considered when assessing the control exercised by the Company
over the other entity, when they can be exercised at the time of the assessment.
Investments in subsidiaries are accounted for by the equity method of accounting.The financial statements
of subsidiaries are prepared for the same reporting date of the Company. Adjustments are made, if necessary, to conform their accounting policies to those adopted by the Company.
Under the equity method of accounting, the share attributable to the Company of the profit or loss for
the period of such investments is accounted for in the income statement, in line item “Equity in investees”.
Unrealized gains and losses arising on transactions between the Company and the investees are eliminated
based in the percentage interest held in such investees. The other comprehensive income of subsidiaries,
associates and jointly controlled entities is recorded directly in the Company’s shareholders’ equity, in line
item “Other comprehensive income”.
2.11. Property, plant and equipment
Stated at cost of purchase or construction, plus interest capitalized during construction period, when
applicable, for the case of eligible assets, and reduced by accumulated depreciation and impairment losses,
if applicable.
Rights in tangible assets that are maintained or used in the operations of the Group, originated from
finance leases, are recorded as purchase financing, and a fixed asset and a financing liability are recognized
at the beginning of each transaction, where assets are also submitted to depreciation calculated based on
the estimated useful lives of the assets.
Land is not depreciated. Depreciation of the other assets is calculated under the straight-line method to
distribute their cost over their useful lives, as follows:
Years
_____
Buildings25
Machinery and equipment13
Molds3
Facilities and leasehold improvements 5 - 13
Furniture and fixtures 14
Vehicles 3
The useful lives are reviewed annually.
Gains and losses on disposals are calculated by comparing the proceeds from the sale with the carrying
amount, and are recognized in the income statement.
2.12. Intangible assets
2.12.1. Software
Software and ERP systems licenses purchased are also capitalized and amortized at the rates also described in note 14, and expenses on the software maintenance are recognized as expenses when incurred.
2.14. Leases
Lease classification is made at the inception of the lease. Leases where the lessor does not retain substantially all the risks and rewards incidental to ownership are classified as operating leases. Lease payments
under an operating lease are recognized as an expense on a straight-line basis over the lease term.
Leases where the Group retains substantially all the risks and rewards incidental to ownership are classified as finance leases. These leases are capitalized in balance sheet at the commencement of the lease
term at the lower fair value of the leased asset and the present value of minimum lease payments.
Each lease payment is apportioned between liabilities and the finance charges so as to permit obtaining a
constant effective interest rate on the outstanding liability. The corresponding obligations, less the finance
charge, are classified in current liabilities and noncurrent liabilities, according to the lease term. Property,
plant and equipment items purchased through finance leases are depreciated over their useful lives, as
described in note 2.11, or over the lease term, when it is shorter.
2.15. Capitalization of Interest
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily requires a significant effort to be ready for its intended use or sale are capitalized as part of the
cost of the corresponding asset. All other borrowing costs are expensed in the period they are incurred.
Borrowing costs consist of interest and other costs incurred by an entity related to the loan.
2.16. Impairment assessment
Property, plant and equipment, intangible assets and, when applicable, other noncurrent assets are annually
tested to identify evidences of impairment, or also significant events or changes in circumstances that indicate the carrying value of an asset may not be recoverable. Where applicable, when there is a loss, arising
from situations where the carrying amount of an asset exceeds its recoverable amount, defined as the
higher of its value in use and its fair value less costs to sell, this loss is recognized in the income statement.
For impairment assessment purposes, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units, or CGUs).
The recoverable amount of an asset or cash-generating unit is determined defined as being the larger of
the value in use and the net selling value. In the estimation of the value in use of the asset, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects the
weighted average cost of capital for the industry in which it operates the cash-generating unit. The net
selling value is determined, whenever possible, on the basis of the contract of sale firm in a transaction in
commutative bases, between knowledgeable and interested parties, adjusted for expenses attributable to
the sale of the asset, or, where there is no contract of sale firm, based on the market price of an active
market, or in the price of the most recent transaction with similar assets.
2.17. Trade payables
These are initially recognized at their nominal amounts, plus interest, inflation adjustments and exchange
differences through the end of the reporting period, when applicable.
2.18. Borrowings and financing
Initially recognized at fair value of proceeds received less transaction costs, plus charges, interest, adjustments and exchange differences incurred through the end of the reporting period, as shown in note 15.
2.19. Provision for tax, civil, and labor contingencies
The provisions for contingent liabilities are recognized when the Group has a legal or constructive obligation as a result of past events, and it is probable that disbursements will be required to settle the obligation,
and its value can be reliably estimated. Provisions are quantified at the present value of the expected
disbursement to settle the obligation using the appropriate discount rate, according to related risks.
Adjusted for inflation through the end of the reporting period to cover probable losses, based on the
nature of contingencies and the opinion of the Company’s legal counsel. The bases for and nature of the
provisions for tax, civil, and labor contingencies are described in note 18.
2.20. Current and deferred income tax and social contribution
Recognized in the income statement, except, when applicable, in the proportion related to items recognized directly in shareholders’ equity. In this case, taxes are recognized directly in shareholders’ equity, in
line item “Other comprehensive income”.
Except for the foreign subsidiaries, which apply the tax rates prevailing in each one of the countries where
they are located, income tax and social contribution on the Company’s and its Brazilian subsidiaries’ profits
are calculated at the tax rates of 25% and 9%, respectively.
Current income tax and social contribution expenses are calculated using the laws and regulations enacted by the end of the reporting period, pursuant to Brazilian tax regulations. Management periodically
measures the positions assumed in the income tax return regarding the situations where applicable tax
law is subject to possibly different interpretations and, when appropriate, recognizes provisions based on
the amounts it expects to pay tax authorities.
Deferred income tax and social contribution are calculated on temporary differences between the tax
base of assets and liabilities and their carrying amounts. Deferred income tax and social contribution are
calculated using the tax rates enacted on the end of the reporting period and that must be applied when
the corresponding deferred income tax and social contribution assets are realized or deferred income tax
and social contribution liabilities are settled.
Deferred income tax and social contribution assets are recognized only to the extent that there is a
reasonable certainty that future taxable income will be available and against which temporary differences
can be offset.
The amounts of deferred income tax and social contribution assets and liabilities are only utilized when
there is a legally enforceable right to offset current tax assets against tax liabilities and/or when current
deferred income tax and social contribution assets and liabilities are related to the income tax and social
contribution levied by the same tax authorities on the taxable entity or different taxable entities, where
there is intention to settle the net balances. Details are disclosed in note 10.
2.21. Stock option plan
The Company offers equity-settled share-based compensation plans to its executives.
The stock option plan is measured at fair value on grant date and is expensed during the vesting period as
a balancing item to “Additional paid-in capital”, in shareholders’ equity. At the end of the reporting period,
the Company’s management reviews its estimates on the number of options vesting based on the conditions fulfilled and, when applicable, recognizes in the income statement the effect arising from the revision
of the initial estimates as a balancing item to shareholders’ equity. The details are disclosed in note 24.2.
The cost of transactions settled with equity securities is recognized, together with a corresponding increase in equity under the heading “additional paid-in Capital”, throughout the period in which the performance and/or service conditions are fulfilled, ending on the date on which the employee acquires the full
right to prize (date of acquisition).The cumulative expense recognized for equity instruments transactions
settled on each base date up to the date of acquisition reflects the extent to which the vesting period has
expired and the best estimate of the number of equity securities Company to be acquired.The expense or
credit in the statement of income of the period is recorded under the heading “administrative expenses”.
When an award of equity instruments settlement is cancelled, it is treated as if it had been acquired on
the date of cancellation, and any expense not recognized award is registered immediately. This includes
any award where non-vesting conditions within the control of the company or the counterparty were not
met. All cancellations of transactions settled with equity securities are treated in the same way.
The dilution effect of options open is reflected as additional share dilution in the calculation of diluted
earnings per share (Note 27.2).
2.22. Profit sharing
The Company recognizes a profit sharing liability and an expense based on a formula that takes into
consideration the net income attributable to the owners of the Company after certain adjustments, which
is linked to the achievement of operational goals and specific objectives, established and approved at the
beginning of each year.
2.23. Dividends and interest on capital
The proposed distribution of dividends and interest on capital made by the Company’s management
included in the portion equivalent to the mandatory minimum dividends is recognized in line item “Other
payables” in current liabilities, as it is considered as a legal obligation provided for by the Company’s bylaws;
however, the portion of dividends exceeding minimum dividends declared by management after the
reporting period but before the authorization date for issuance of these financial statements is recognized
in line item “Proposed additional dividends” and their effects are disclosed in note 20.(b).
For corporate and accounting purposes, interest on capital is stated as allocation of income directly in
shareholders’ equity.
2.24. Treasury shares
Own equity instruments which are reacquired (Treasury shares) and recognized at acquisition cost and
deducted from shareholders ‘ equity. No gain or loss is recognized in the income statement on the purchase, sale, issue or cancellation of the company’s own equity instruments. Any difference between the
book value and the consideration is recognized in other capital reserves.
2.25. Actuarial gains and losses of healthcare plan and
other costs related to employees benefit plans
The Company also provides certain benefits to extend medical assistance to retired employees who had
acquired the money by April 2010. Costs relating to contributions made by the Company and its subsidiaries to the plans are recognized on an accrual basis. The cost of benefits under the defined benefit plans
is established separately for each plan using the projected unit credit method.
2.26. Revenue and expense recognition
Sales revenue is recognized when all risks and rewards of ownership of the product are transferred to the
customers and there are recognized on an accrual basis.
Revenues are recognized to the extent in which it is probable that the economic benefits associated with
the transaction will accrue to the Company, and when such benefits can be reliably measured. Sales revenues are primarily generated through sales made by the Natura Beauty Consultants (our clients), measured based on the fair value of the consideration received (or to be received), excluding any discounts,
rebates and taxes or charges with respect to such sales. Sales revenue is recognized when the significant
risks and rewards of title to products have been transferred to the client, which generally occurs upon
delivery thereof to the Natura Beauty Consultants.
Sales revenue is generated and accumulates initially in the subsidiary sales ledger of the Company, as of the
moment in which the proof of shipping is issued in the name of our clients. However, as our revenues are
recorded for accounting purposes only when the final delivery of products has occurred, the Company
makes a provision to eliminate the amount of revenues with respect to products shipped but not yet received by the Natura Beauty Consultants as of the closing date of the financial statements for each period.
Income from tax incentives, received in the form of a monetary asset, is recognized in the income statement when received as a balancing item to costs and investment already incurred by the Company in
the jurisdiction where the tax incentive is granted. There are no established conditions to be met by the
Company that might affect the recognition of tax incentives.
The portion of tax incentives recognized in the income statement is allocated to the tax incentive reserves, in the “Earnings reserves”, in shareholders’ equity.
2.27. Business Combination
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured based on the fair value at the acquisition date, and the value of any noncontrolling interest in the acquiree. For each business combination,
the acquirer shall measure a non-controlling interest in the acquiree at fair value or based on its interest
in the acquiree’s identifiable net assets. Costs directly attributable to the acquisition must be expensed
when incurred.
When acquiring a business, the Company assesses the financial assets and liabilities assumed in order to
classify them and allocate them according to the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date, which includes segregation, by the acquiree, on existing contracts
acquired in embedded derivatives.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes in fair value of contingent consideration as an asset or a liability should
be recognized in accordance with CPC 38 in the income statement or other comprehensive income.
When there is excess of the consideration paid for the net assets acquired, this value is recorded as
goodwill, and otherwise the value is recognized as a gain in the income statement. After initial recognition,
goodwill is measured at cost less any accumulated impairment losses.
2.28. Statement of value added
The purpose of this statement is to disclose the wealth created by the Company and its distribution during
a certain reporting period, and is presented by the Company, as required by the Brazilian Corporate Law,
as an integral part of its individual financial statements, and as additional disclosure of the consolidated
financial statements, since this statement is not required by IFRSs.
The statement of value added was prepared using information obtained in the same accounting records
used to prepare the financial statements and pursuant to the provisions of CPC 09 - Statement of Value
Added. The first part of this statement includes the wealth created by the Company, represented by
revenue (gross sales revenue, including taxes levied thereon, other income, and the effects of the allowance for doubtful accounts), inputs acquired from third parties (cost of sales and purchase of materials,
electricity, and services from third parties, including taxes levied at the time of the acquisition, the effects
of impairment losses, and depreciation and amortization), and the value added received from third parties
(equity in investees, financial income, and other income).The second part of the statement of value added
presents the distribution of wealth among personnel, taxes, fees and contributions, lenders and lessors,
and shareholders.
2.29. New and revised standards and interpretations
The Company has applied for the first time, the changes of IAS 19 - Employee Benefits which required
the restatement of previous financial statements.
Additionally other changes apply for the first time in 2013, but did not affect the individual and consolidated financial statements of the Company. These changes include IFRS10 - Consolidated Financial
Statements, IFRS 11 - Business Set, IFRS 12 - Disclosure of Interests in Other Entities, IFRS 13 - Fair Value
Measurement, IAS 27 - Consolidated and Separate Financial Statements (Revised in 2011), IAS 28 - Investments in Associates and Joint Control (Revised 2011), Amendments to IAS 1 - Presentation of Financial
Statements and Amendments to IAS 16 - Property, plant.
The impacts of each of the new standards and amendments are outlined below:
From January 1, 2013 came into force the amendments to IAS 19 that brought the elimination of the
corridor approach, with that actuarial gains or losses are now recognized as other comprehensive income
(previously recognized in income) for the plans pension and results for other long-term benefits when
incurred, among other changes, based on an actuarial calculation prepared by an independent actuary, as
detailed in note 19.
Early on 1 January 2012 and comparative information for the year ended December 31, 2012
balances have been restated in the consolidated financial statements. The impacts are restated in
the boxes below:
Balance Sheet:
Company Consolidated
(BR GAAP)
(BR GAAP and IFRS)
__________________________ __________________________
12/2012 12/2012
ASSETS
12/2012 Adjusts(Restated) 12/2012Ajustes(Restated)
__________________________________________________
Total of current assets
2,189,418 - 2,189,418 3,378,317 - 3,378,317
__________________________________________________
Income tax and social contributionss
94,813 (14,181)
80,632
214,246 (18,661)
195,585
Other noncurrent assets
303,737
-
303,737
542,182
-
542,182
Investments 1,311,364 (4,480) 1,306,884
-
-
Fixed Assets 357,443
-
357,443 1,012,089
- 1,012,089
Intangible
206,036
-
206,036228,545
-
228,545
____________________________________
Total of noncurrent assets
2,273,393 (18,661) 2,254,7321,997,062 (18,661) 1,978,401
____________________________________
TOTAL OF ASSETS
4,462,811 (18.661) 4,444,1505,375,379 (18.661) 5,356,718
____________________________________
____________________________________
LIABILITIES AND EQUITY
Total of current liabilities
1,798,118
1,798,1182,414,712
2,414,712
____________________________________
Total of noncurrent liabilities
1,358,597
1,358,5971,654,570
1,654,570
____________________________________
EQUITY
Capital 427,073427,073427,073427,073
Treasury shares (66,105)
(66,105)
(66,105)
(66,105)
Capital reserves
155,905155,905155,905155,905
Earnings reserve
308,0793,590311,669308,0793,590311,669
Proposed additional dividends
491,343
491,343
491,343
491,343
Other comprehensive losses
(10,199) (22,251)
(32,450)
(10,199) (22,251)
(32,450)
Total equity attributable to
owners of the company
1,306,096 (18,661) 1,287,4351,306,096 (18,661) 1,287,435
____________________________________
Equity of the company
-
-
1
1
TOTAL OF LIABILITIES
AND EQUITY
4,462,811 (18,661) 4,444,1505,375,379 (18,661) 5,356,718
____________________________________
____________________________________
Impact on Income Statement:
Company
Consolidated
(BR GAAP)
__________________________
(BR GAAP and IFRS)
__________________________
12/2012 12/2012
12/2012 Adjusts (Restaded) 12/2012Adjusts (Restated)
__________________________________________________
GROSS PROFIT
3,810,2133,810,2134,477,6244,477,624
OPERATING (EXPENSE) INCOME
Selling expenses
Administrative and general expenses
(1,642,380)
-(1,642,380)(2,212,205)
-(2,212,205)
(928,683)
1,046
(927,637)
(863,487)
1,150
(862,337)
(20,739)
-
(20,739)
(20,739)
-
(20,739)
Equity in investments 59,380
532
59.912
-
-
-
Other operating income (expense)s, net
15,472
-
15,472
(11,643)
-
(11,643)
Employee profit sharing
INCOME FROM OPERATIONS BEFORE
FINANCIAL INCOME (EXPENSES)1,293,263
1,294,8411,369,550
1,370,700
____________________________________
Financial Income
Financial Expenses
129,831
-129,831161,808
-161,808
(216,965) 19,184(197,781)(255,258)21,101(234,157)
INCOME BEFORE INCOME TAX
AND SOCIAL CONTRIBUTION
Income tax and social contribution Net income
1.206.129
1.226.8911.276.100
1.298.351
____________________________________
(344,907)
(7,608)
(352,515)
(414,878) (9,097)
(423,975)
861,222 13,154 874,376 861,222 13,154 874,376
____________________________________
____________________________________
Earnings per share R$
Basic
2.0081
2.03882.0081 2.0388
____________________________________
____________________________________
Diluted
1.9980
2.02851.9980 2.0285
____________________________________
____________________________________
Impacts on cash flow statement:
Company
Consolidated
(BR GAAP)
(BR
GAAP and IFRS)
__________________________
__________________________
12/2012 12/2012
12/2012Adjusts(Restated) 12/2012Adjusts(Restated)
__________________________________________________
CASH
FLOW FROM
Net Income
861,22213,154874,376861,222
13,154874,376
344,907
7,608
352,515
414,878
9,097
423,975
Equity in investee
(59,380)
(532)
(59,912)
-
-
Interest and exchange rate changes on
borrowings and financing and other liabilities
145,660 (19,184)
126,476
163,228 (21,101)
142,127
Provision for healthcare
plan and carbon credits
32,942 (1,046)
31,896
44,152 (1,150)
43,002
Other
(16,445)
-
(16,445)79,712
-
79,712
adjusts to net income
____________________________________
1,308,906
1,308,9061,563,192
1,563,192
____________________________________
(INCREASE) DECREASE
OF
104,168
104,168 (24,606)
(24,606)
ASSETS
____________________________________
INCREASE (DECREASE)
OF LIABILITIES
CASH GENERATED BY
OTHER CASH FLOWS FROM
OPERATING
ACTIVITIES
NET CASH GENERATED BY
OPERATING
ACTIVITIES
NET CASH USED
IN
CASH FLOW FROM
FINANCING ACTIVITIES
80,769
80,769247,042
247,042
____________________________________
1,493,843
1,493,8431,785,628
1,785,628
____________________________________
(404,659)(404,659)(443,625)
(443,625)
____________________________________
1,342,003
1,089,184
1,089,1841,342,003
____________________________________
(1,370,302)
(1,370,302)(965,637)
(965,637)
____________________________________
187,878
187,878255,274
255,274
____________________________________
Gains (losses) arising on translating
foreign currency cash and cash equivalents
-
- _________
(2,860)
_________
(2,860)
_________
_________
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ____________________________________
(93,240)
(93,240)628,780
628,780
____________________________________
at beginning of year
166,007
166,007
515,610
515,610
at end of year
72,767
72,767 1,144,390 1,144,390
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ____________________________________
(93,240)
- (93,240)628,780
- 628,780
____________________________________
2.30. New standards, amendments and interpretations to existing standards
The standards and interpretations that have been issued by the IASB but were not in force until the date
of issuance of the financial statements of the Company are disclosed below.
IFRS 9 Financial Instruments
IFRS 9 as issued reflects the first phase of the work of the IASB to replace IAS 39 and applies to classification and measurement of financial assets and liabilities as defined in IAS 39.The announcement was initially
applied to fiscal years beginning on or after January 1, 2013, but the pronouncement Amendments to IFRS
9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, has postponed
its term to January 1, 2015. In subsequent phases, the IASB will address issues such as accounting hedges
and provision for losses of financial assets.The adoption of the first phase of IFRS 9 will have an impact on
the classification and valuation of the Company’s financial assets, but will not impact on the classification
and measurement of financial liabilities.The Company will quantify the effect in conjunction with the effects
of the remaining phases of the IASB’s project, once the final rule is issued consolidated.
Investment Entities (Revisions of IFRS 10 IFRS 12 and IAS 27)
The revisions will be effective for periods beginning on or after January 1, 2014 and provide an exception
to the consolidation requirements for entities that meet the definition of investment entity in accordance
with IFRS 10.This exception requires entities to record the investment of investments in subsidiaries at fair
value in earnings. The Company does not expect these reviews to be relevant to its financial statements,
since none of its entities qualify as investment entity.
IAS 32 Offsetting Financial Assets and Financial Liabilities - Revised IAS 32
These revisions clarify the meaning of “currently has a legally enforceable right off the recognized amounts”
and the criteria that would make the settlement mechanisms not simultaneous clearing houses to qualify
for compensation. Such revisions shall be effective for fiscal years beginning on or after January 1, 2014.The
Company does not expect these reviews to be relevant in its financial statements.
IFRIC 21 Tributes.
IFRIC 21 clarifies when an entity should recognize a liability for a tax when the event that triggers payment
occurs. For a tax that requires your payment originates due to the achievement of some metric, the interpretation indicates that no liability shall be recognized until the metric is achieved. IFRIC 21 is effective
for financial years ending on or after January 1, 2014. The Company does not expect IFRIC 21 to have a
material impact on its financial statements.
Replacement of IAS 39 Derivatives and Hedge Accounting Continued - Revised IAS 39
This review eases the discontinuation of hedge accounting when the renewal of a derivative designated
as a hedge meets certain criteria. These revisions are effective for annual periods beginning on or after
January 1, 2014. The Company did not renew its derivatives during the current year. However, this review
will be implemented in future renewals of derivatives.
The Company intends to adopt those standards when they come into force by disseminating and recognizing the impact on the Financial information that may occur when the application of such adoptions.
a) Market risks
The Group is exposed to market risks arising from their business activities. These risks mainly comprise
possible changes in exchange and interest rates.
i) Foreign exchange risk
There are no other standards and interpretations issued but not yet adopted that, in management’s opinion, have a significant impact on the income or equity issued by the Company.
The Group is exposed to the foreign exchange risk arising from financial instruments denominated in
currencies different from their functional currencies. To reduce this exposure, the Group implanted a policy to hedge against the foreign exchange risk that establishes exposure limits linked to this risk (Foreign
Exchange Hedging Policy).
3. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The treasury area’s procedures defined based on the current policy include monthly projection and
assessment of the Company’s and its subsidiaries’ foreign exchange exposure, on which management’s
decision-making is based.
The preparation of financial statements requires the use of certain critical accounting estimates and the
exercise of judgment by the Company’s management in the process of application of accounting policies.
The accounting estimates and underlying assumptions are reviewed on an ongoing basis and are based
on historical experience and other factors that are considered to be relevant in the circumstances. Actual
results may differ from those estimates. The effects resulting from the revision of accounting estimates are
recognized in the revision period.
These significant assumptions and accounting estimates are follows:
a) Income tax, social contribution, and other taxes
The Company recognizes deferred tax assets and liabilities based on differences between the carrying
amount stated in the financial statements and the tax base assets and liabilities using statutory tax rates.
The Company reviews regularly deferred tax assets in terms of possible recovery, considering the history
of earnings generated and projected future taxable income, based on a technical feasibility study.
b) Provision for tax, civil, and labor contingencies
The Company is a party to several lawsuits and administrative proceedings, as described in note 18. Provisions are recognized for all contingent liabilities arising from lawsuits that represent probable losses and
can be reliably estimated. The probability assessment includes assessing available evidences, the hierarchy
of laws, available previous decisions, most recent court decisions and their relevance within the legal system, and the assessment of the outside legal counsel. Management believes that these provisions for tax,
civil and labor contingencies are fairly presented in the financial statements.
c) Retirees’ healthcare plan
The current amount of the retirees’ healthcare plan is contingent to a series of factors determined based
on actuarial calculations that update a series of assumptions, for example, the discount and other rates,
which are disclosed in note 19. The change in one of these estimates could impact the results presented.
d) Stock option plan
The stock option plan is measured at fair value on grant date and is expensed during the vesting period as
a balancing item to “Additional paid-in capital”, in shareholders’ equity. At the end of the reporting period,
the Company’s management reviews its estimates on the number of options vesting based on the conditions fulfilled and, when applicable, recognizes in the income statement the effect arising from the revision
of the initial estimates as a balancing item to shareholders’ equity. The details are disclosed in note 24.2.
e) Fair Value measurement of contingent consideration
Contingent, from a business combination is measured at fair value at the acquisition date as part of the
business combination. If the contingent consideration is classified a financial liability shall be subsequently
remeasured to fair value at the balance sheet date. The fair value is based on discounted cash flow. The
main assumptions consider the probability of achieving each objective and the discount factor.
4. FINANCIAL RISK MANAGEMENT
4.1. General considerations and policies
Risks and the financial instruments are managed through the definition of policies and strategies and
implementation of control systems, defined by the Company’s Treasury Committee and approved by
the Board of Directors. The compliance of the treasury area’s positions in financial instruments, including
derivatives, in relation to these policies, is presented and assessed on a monthly basis by the Treasury
Committee and subsequently submitted to the analysis of the Audit Committee, the Executive Committee and the Board of Directors.
Risk management is performed by the Company’s general treasury function, which is also responsible
for approving the short-term investments and loan transactions conducted by the Group’s subsidiaries.
4.2. Financial risk factors
The Group’s activities expose them to several financial risks: market risk (including currency and interest
risks), credit risk and liquidity risk. The Company’s overall risk management program is focused on the
unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance, using derivatives to protect certain risk exposures.
Exchange rate Protection Policy considers the values of foreign currency receivables and Payables balances of commitments already made and recorded in the financial statements from the operations of the
Company and its subsidiaries, as well as future cash flows, with an average of six months, still not recorded
in the balance sheet.
As of December 31, 2013 and 2012, the Group is basically exposed to risks of fluctuations in the U.S. dollar and particularly as of December 31, 2012, the Company’s is basically exposed to risks of fluctuations in
the Australian dollar.To hedge against foreign exchange exposures, the Group contracts derivative (swaps)
and non-deliverable forward (NDF) transactions. The Foreign Exchange Hedging Policy establishes that
the derivatives contracted by the Group should limit loss due to exchange rate depreciation related to
the net income estimated for the current year considering the expected depreciation of the Brazilian real
against the U.S. dollar. This limit sets the cap on the maximum foreign exchange exposure that the Group
can undertake in relation to the U.S. dollar.
As of December 31, 2013, the Company’s and the consolidated balance sheets include accounts denominated in foreign currency which, in the aggregate, represent net liabilities of R$2,096,564 and R$2,106,255,
respectively (R$1,510,721 and R$1,515,328 as of December 31, 2012, respectively). These accounts are
substantially represented by borrowings and financing which, as of December 31, 2013 and December 31,
2012, are hedged by swap arrangements.
Derivatives to hedge foreign exchange risk
The Company classifies derivatives into “financial” and “operating”. “Financial” derivatives include swaps or
forwards contracted to hedge against the foreign exchange risk associated with foreign-currency-denominated borrowings and financing. “Operating” derivatives (usually forwards) include derivatives contracted
to hedge against the foreign exchange risk on the business’s operating cash flows.
As of December 31, 2013, outstanding swap and forward contracts, with maturities between April 2013
and July 2020, were entered into the counterparties represented by the banks Bank of America (34%),
HSBC (21%), Itaú (19%), Bradesco (9%), Citibank (9%), and Tokyo Bank (8%), broken down as follows:
Financial swaps – Company
Principal
Fair value
Gain for the year
___________________
___________________
___________________
Type of transaction
_________
Swap contracts (1)
Asset position:
Long position – U.S. dollar
Liability position:
CDI floating rate:
Short position in CDI
201320122013201220132012
______________________________________________________
1,897,430
1,411,816
2,115,870
1,531,596
163,732
80,624
1,897,430
1,411,816
1.952.138
1.450.972
-
-
Financial swaps – Consolidated
Type of transaction
_________
Swap contracts (1)
Asset position:
Long position – U.S. dollar
Liability position:
CDI floating rate:
Principal
Fair value
Gain for the year
___________________
___________________
___________________
201320122013201220132012
______________________________________________________
1,907,095
1,418,092
2,127,095
1,538,307
165,569
81,281
1,907,095
1,418,092
1,961,526 1,457,026
-
-
Operating forwards - Company and consolidated
Gain (loss)
Notional amount ___________________
Fair value
for the year
___________________
___________________
Type of transaction
_________
Forward contracts (2):
Asset position:
Long position - Australian dollar
Real position of purchase
Liability position
Fixed rates:
Short position in Australian dollar
Real position of purchase
201320122013201220132012
______________________________________________________
-
7,500
147,522
-
-
6,346
147,522
-
-
(1,154)
(353)
-
-
7,500
147,522
-
-
7,500
147,875
-
-
-
-
(1) Swap transactions consist of swapping the exchange rate fluctuation for a percentage of the floating rate Interbank
Deposit Rate (CDI).
(2) Forward transactions establish a future parity between the Brazilian real and the foreign currency based on their equivalence when contracted, adjusted by a fixed interest rate..
The notional amount represents the amounts of the contracted derivatives. Fair value refers to the value of
outstanding contracted derivatives recognized in balance sheets.
For derivatives maintained by the Group as of December 31, 2012 and December 31, 2011, due to the fact
contracts are directly entered into with the financial institutions and not through São Paulo Stock Exchange
(BM&FBOVESPA), there are no margin calls deposited as guarantee of the related transactions.
Sensitivity analysis
For the sensitivity analysis of derivatives, the Company’s management understands it is necessary to take
into consideration corresponding assets and liabilities with exposure to exchange rates recorded in the
balance sheet.
Loans and financing in foreign currency (*)
Receivables in foreign currency
Accounts payable in foreign currencies
Value
of the “financial” derivatives
Net passive exposure
Company Consolidated
_______________________
2,096,565
2,106,255
-
(5,034)
6,429
11,396
(2,081,609)(2,086,609)
_______________________
21,38526,008
_______________________
The tables below show the gain (loss) that would have been recognized in profit or loss for the year ended December 31, 2012 based on the following scenarios:
Description
__________
Net
liability exposure
Description
__________
Net
liability exposure
Company
______________________________________
Company’s ProbableScenario Scenario
risk scenario
II
III
_________________________________
Us dollar appreciation______________________
(328)(5,346)(10,692)
Consolidated
______________________________________
Company’s ProbableScenario Scenario
riskscenario
II
III
_________________________________
Us dollar appreciation______________________
(648)(6,502)(13,004)
During the year ended December 31, 2013, there were no changes in any of the levels of the fair value
estimates.
The probable scenario considers future U.S. dollar rates obtained at BM&FBOVESPA for the maturity
dates of the financial instruments exposed to foreign exchange risks. Scenarios II and III consider a 25%
(R$ 2.93/US$1.00) and 50% (R$3.51/US$1.00) appreciation of U.S. dollar, respectively. Probable scenarios
II and III are presented as required by CVM Instruction 475/08. In assessing possible changes in exchange
rates, management uses the probable scenario, which is being presented for compliance with IFRS 7 –
Financial Instruments: Disclosures.
The Group does not use derivatives for speculative purposes.
ii) Interest rate risk
The interest rate risk arises from short-term investments and loans. Financial instruments issued at floating
rates expose the Group to cash flow risks associated with the interest rate. Financial instruments issued at
fixed rates expose the Group to fair value risks associated with the interest rate.
The Company’s cash flow risk associated with the interest rate arises from short-term investments and
short- and long-term loans and financing issued at floating rates. The Company’s management adopts
the policy of maintaining its rates of exposure to asset and liability interest rates pegged to floating rates.
Short-term investments are adjusted by the Interbank Deposit Rate (CDI) whereas borrowings and
financing are adjusted based on the Long-term Interest Rate (TJLP), CDI and fixed rates, according to the
contracts made with the related financial institutions, and trading securities with investors in this market.
Management believes that the risk of significant changes in the CDI and TJLP in the next 12 months is
low taking into consideration the stability achieved with the current monetary policy implemented by the
Federal Government, in addition to the history of adjustments in Brazilian policy rate over the past years.
For this reason, the Company has not conduct derivative transactions to hedge against this risk.
The Group contracts swap transactions to mitigate risks on borrowing and financing transactions subject
to an index other than CDI, TJLP or fixed rates. However, as of December 31, 2013 and December 31,
2012, the Group did not have this type of derivative as they assessed the related risk as very low, as
described above.
On December 31, 2013, consolidated balance sheet includes loans issued at higher fixed rates level TJLP
represent a liability of R$206,131 (December 31, 2012, there were loans issued at higher fixed rates TJLP).
Such funding submitted in December 31, 2013, is protected derivative of the “swap”.
Derivative instruments to hedge the risk of interest rate
On December 31, 2013, outstanding contracts “swap” mature between February 2016 and March 2016,
were entered into with counterparties represented by Itaú (63%) and HSBC (37%) and are as follows.
Derivative “swap” – Consolidated
Gain (loss)
Notional
amount
Fair value
for the year
___________________________________________________
Description
201320122013201220132012
__________________________________________________________
“swap” contracts (3):
Asset position:
Long position
Fixed rate
202,500-
195,107--Liabilities position:
CDI rate post fixed:
202,500
- 205,888
- (10,781)
(3)The operations of financial “swap” involving the exchange of an interest rate pre-set by a related to a percentage of the
variation of the Interbank Deposit Correction - postfix CDI.
Sensitivity analysis
As described in the foreign exchange risk section above, as of December 31, 2013 almost all foreign-currency-denominated borrowings and financing are hedged by swap arrangements that exchange the foreign-currency liability
index for the CDI rate fluctuation, in light of the Company’s policy to hedge such risks.The Company is, therefore,
exposed to CDI fluctuation.The table below presents the exposure to interest rate risks of transactions pegged to
CDI and TJLP, including derivative transactions:
Total borrowings and financing - in local currency (note 15)
Derivatives pegged to CDI/TJLP Short-term investments (notes 5, 6 and 12)
Net liability exposure
CompanyConsolidated
_______________________
(308,628)
(787,651)
(2.,096,564)
(2,106,255)
941.327
1.068.918
________,____,___,___
(1,463,865)
(1,824,988)
The sensitivity analysis considers the exposure of borrowings and financing pegged to CDI and TJLP rates, net of
short-term investments, also pegged to the CDI rate (notes 5 and 6).
The tables below show the loss (gain) that would have been recognized in profit or loss for the year ended December 31, 2013 based on the following scenarios:
Company
______________________________________
Company’sProbableScenario Scenario
Description
riskscenario
II
III
__________
_________________________________
liabilities
Interest rate increase
(4,099)(35,755)(71,510)
______________________
Net
______________________
Consolidated
______________________________________
Company’s Probable Scenario Scenario
Description
risk scenario II
III
__________
_________________________________
liabilities
Interest rate increase
(5,110)(44,575)(89,151)
Net
____,_________________
______________________
The probable scenario considers future interest rates obtained at BM&FBOVESPA for the maturity dates
of the financial instruments exposed to interest rate risks. Scenarios II and III consider an increase in the
interest rate of 25% (12.2% per year) and 50% (14.7% per year), respectively.
b) Credit risk
Credit risk refers to risk of a counterparty not complying with its contract obligations, which would result
in financial losses for the Company. Sales of the Group are made to a great number of sales representatives (Natura Beauty Consultants) and this risk is managed through a strict credit granting process. The
result of this management is reflected in the ‘Allowance for doubtful accounts’, as explained in note 7.
The Group is also subject to credit risks related to financial instruments contracted for the management
of its business, primarily represented by cash and cash equivalents, short-term investments and derivative
instruments.
The Company believes that the credit risk of transactions with financial institutions is low, as these are
considered by the market as prime banks.
The Policy for Short-term Investments adopted by the Company’s management establishes the financial
institutions with which the Group can do business and defines fund allocation limits and the amounts that
may be invested in each of these financial institutions.
c) Liquidity risk
Effectively managing liquidity risk implies to maintain enough cash and marketable securities, funds available
through credit facilities used and the ability to settle market positions.
Management monitors the Company’s consolidated liquidity level considering the expected cash flows
against unused credit facilities the carrying amounts of financial liabilities are measured at amortized cost,
and their corresponding maturities are as follows:
Company as of December 31, 2013
______________________
Circulante:
Borrowings and
financing
Trade payables
Financial instruments
Noncurrent:
Borrowings and
financing
Less More Fair Carrying
than one One to Two to than five value Discount amount
year two
years five
years
years ________________________
2012
effect
2012
________
________
________________
Consolidated as of December 31, 2013
______________________
Current:
Borrowings and
financing
Trade payables
Financial instruments
Noncurrent:
Borrowings and
financing
Less More
Fair Carrying
than one One to Two to than five
value Discount amount
year two
years five
years
years ________________________
2012
effect
2012
________
________
________________
650,397
-
-
- 650,397 (73,556) 576,841
548,240 - --
548,240-
548,240
160,799
-
-
- 160,799
2,933 163,732
- 1,175,546
624,079
296,729 2,096,354 (268,003) 1,828,351
791,216
-
-
- 791,216 (98,099) 693,117
735,466 - --
735,466-
735,466
161,641
-
-
- 161,641 (8,007) 153,634
- 1,288,466
907,718
313,870 2,510,054 (309,265) 2,200,789
4.3. Capital management
The Company’s objectives in managing its capital are to ensure that the Company is continuously capable
of offering return to its shareholders and benefits to other stakeholders, and maintain an optimal capital
structure to reduce this cost.
The Company monitors capital based on the financial leverage ratios. This ratio corresponds to the net
debt divided by the total capital. The net debt corresponds to total borrowings and financings (including
short- and long-term borrowings, as shown in the consolidated balance sheet), deducted from cash and
cash equivalents.
The consolidated financial leverage ratios as of December 31, 2013 and December 31, 2012 are as follows:
Short- and long-term borrowings and financing
Derivative financial instruments
Cash
and cash equivalents and Short-term investments
Net
debt
Shareholders’
equity
Financial leverage ratio
Company
Consolidated
__________________________________________
2013201220132012
________________________________________
2,405,192
1,987,756
2,893,906
2,308,639
(163,732)
(80,271)
(153,634)
(80,928)
(1,026,737)(1,241,254)(1,309,308)(1,643,062)
________________________________________
1,214,723666,2311,430,964584,649
________________________________________
________________________________________
1,145,6371,287,4351,168,2501,287,436
________________________________________
________________________________________
106.03%51.75%122.49%45.41%
________________________________________
________________________________________
Loans and financing of short and long term are reflected in the values of government grant in December
31, 2013, R$15,495 and R$59,341, consolidated, and December 31, 2012, to R$926 the Parent Company
and R$15,880, consolidated, in accordance with CPC 07 Grants and Government Assistance and IAS 20.
4.4. Fair value estimate
Financial instruments are measured at fair value at the end of the reporting period as prescribed by CPC
40 – Financial Instruments: Disclosures and according to the following hierarchy:
• Level 1: Prices quoted (unadjusted) in active markets for identical assets or liabilities. A market is considered active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency, and those prices represent actual and regularly occurring
market transactions on an arm’s-length basis.
• Level 2: Used for financial instruments that are not traded in active markets (for example, over-thecounter derivatives) and whose fair value is determined using valuation techniques that, in addition to the
quoted prices, included in Level 1, use other inputs adopted by the market for assets or liabilities, whether
directly (i.e., prices) or indirectly (i.e., derived from prices).
• Level 3: Inputs for assets or liabilities that are not based on the data adopted by the market (i.e., unobservable inputs).
As of December 31, 2013 and December 31, 2012, the measurement of all the Company’s and its subsidiaries’ derivatives falls under the Level 2 characteristics. The fair value of exchange rate derivatives (swap
and forwards) is determined based on the exchange rate at the end of the reporting period, with the
resulting amount being discounted to present value.
5. CASH AND CASH EQUIVALENTS
Company
Consolidated
__________________________
__________________________
2012
2012
2013 Restated
1/1/2012 _________
2013 Restated
_________
_______ _________
________1/1/2012
________
Cash and banks
Certificates of deposits CDB (a)
Repurchase
agreements (b)
85,410 51,732
27,929
240,390 144,011
98,208
14,125 21,035
138,078
345,842 965,777 417,402
-
-
-430.06134.602
__________________________________________________
99,53572,767
166,0071,016,2931,144,390515,610
_________________________________________________
__________________________________________________
(a) Investments in Bank Deposit Certificates are restated with yield interest ranging from 95.0% to 112.4% of CDI.
(b) Repurchase agreements are securities issued by banks with a commitment by the bank to repurchase the security, and by
the client to resell the security, at a fixed price (rate of interest) and within a predetermined term, which are backed by public
or private securities (depending on the bank) and are registered with the CETIP.
6. SHORT-TERM INVESTMENTS
Company
Consolidated
___________________________
__________________________
2012
2012
1/1/2012
2013 Restated1/1/2012
2013 Restated
_________
__________________________________________
Exclusives investments funds
927,202 1,168,487
-
-
-
Investments funds
25,254
Financial letters
-
-
-
141,514
-
Government security -
-
-126,247498672
_________
__________________________
_______________ 927,2021,168,487
-293,015498,672
_________ __________________________________________
__________________________________________
_________
The Company focuses most of its investments in exclusive investment funds. On December 31, 2013 and
December 31, 2012, the amount related to the exclusive investment fund is valued at fair value through
profit or loss. According to CVM Instruction n. 408/04, the financial investments in Investment Funds in
which the Company has an exclusive interest were consolidated.
The exclusive funds are as follows:
The Essential Investment Fund is a fund fixed income credit under private management, administration
and custody of Itaú Unibanco. Eligible assets in the portfolio are: government securities, time deposits,
financial bills and repurchase agreements. There is no grace period for redemption of shares that may be
redeemed at any time yield.
The tuning Investment Fund is a private fund fixed income credit under management, administration and
custody of BTG Pactual. There on December 31, 2013 the amount of R$104 in CDs. There is no grace
period for redemption of shares that may be redeemed at any time yield.
Breakdown of the exclusive fund portfolio at December 31, 2013 is as follows:
Floating rate bank certificates of deposits (CDBs)
Repurchase agreements Financial letters
Government
security (LFT)
The carrying amounts of the short-term investments approximate their fair values as transactions are
conducted at floating interest rates and can be immediately redeemable.
7. TRADE RECEIVABLES
The carrying amounts of borrowings and financing, except those pegged to a fixed rate, approximate their
fair values as they are pegged to a floating rate, the CDI fluctuation. The carrying amounts of financing
pegged to TJLP approximate their fair values as the TJLP is also pegged to CDI and is a floating rate.
The fair value of borrowings and financing contracted at fixed interest rates does not have significant
variation related to the book value disclosed in note 15.
Trade and other payables
It is estimated that the carrying amounts of trade receivables and trade payables approximate their fair
values in view of the short term of the transactions conducted.
Societies do not have any guarantee for the bonds in arrears.
Sintonia __________
Essencial __________
Total
__________
90
347,508
347,598
14
430,048
430,062
-
141,514
141,514
- __________
126,247126,247
__________
__________
1041,045,3171,045,421
__________
__________ __________
Company
Consolidated
__________________________
__________________________
2012
2012
2013 Restated 1/1/2012
2013 R
estated 1/1/2012
__________________________________________________
Trade receivables
748,526
588,980591,480906,918
724,347706,861
Allowance for doubtful accounts
(79,623)(58,947)(56,171)
(99,917)(72,931)(64,989)
__________________________________________________
668,903530,033535,309807,001651,416641,872
__________________________________________________
__________________________________________________
The aging list of trade receivables is as follows:
Company
Consolidated
__________________________
__________________________
2012
2012
2013 Restated 1/1/2012
2013 R
estated 1/1/2012
__________________________________________________
Current
599,649
463,023452,392696,840
567,207543,472
Past due:
Up to 30 days
66,117 54,489
102,107
100,037 72,145
117,560
31 to 60 days
22,726 23,020
14,029
27,654 26,481
16,254
61 to 90 days
16,526 14,448
9,950
20,585 17,708
13,306
91 to 180 days
43,50834,00013,00261,80240,80616,269
__________________________________________________
Allowance
for doubtful accounts
(79,623)(58,947)
(56,171)
(99,917)(72,931)
(64,989)
__________________________________________________
__________________________________________________
668,903530,033535,309807,001651,416641,872
__________________________________________________
__________________________________________________
The balance of trade receivables in Consolidated is basically denominated in Brazilian reais, and
approximately 83% of the outstanding balance as of December 31, 2013 refers to real-denominated
transactions (84% as of December 31, 2012).The remaining balance is denominated in several currencies
and refers to sales of foreign subsidiaries.
The changes in the allowance for doubtful accounts for the period ended December 31, 2013 and 2012 are
10. INCOME TAX AND SOCIAL CONTRIBUTION
as follows:
Company
Consolidated
________________________________________
_______________________________________
Balance at
Balance at Balance at Balance at
Additions (a) Reversals (b) 2013
2012 Additions (a) Reversals (b)2013
2012
_____________________________________
_____________________________________
(58,947)(114,317)93,641(79,623)(72,931)
(135,655)108,669(99,917)
_____________________________________
_____________________________________
_____________________________________
_____________________________________
Company
Consolidated
________________________________________
_______________________________________
Balance at Balance at Balance at Balance at
Additions (a) Reversals (b)2012
2011 Additions (a) R
eversals (b)2012
2011
_____________________________________
_____________________________________
(56,171)
(122,224)119,448(58,947)(64,989)(138,056)130,114(72,931)
_____________________________________
_____________________________________
_____________________________________
_____________________________________
(a) Allowance recognized according to note 2.7.
(b) Refers to accounts that are over 180 days past due that were written off due to uncollectible amounts.
The expense on the recognition of the allowance for doubtful accounts was recorded in ‘Selling expenses’
in the income statement. When recovery of additional cash is less than probable, the amounts credited
to line item ‘Allowance for doubtful accounts’ are in general reversed against the definite write-off of the
receivable and is recorded in net income or loss.
Maximum exposure to credit risk at the reporting date is the carrying amount of each aging range, net
of the allowance for doubtful accounts, as shown in the aging list above. The Group does not have any
guarantee for past-due receivables.
8. INVENTORIES
Company
Consolidated
__________________________
__________________________
2012
2012
2013Restated1/1/2012
__________________________________________________
Finished products
164,835
162,952219,626627,433
549,697565,739
Raw materials and packaging
-
-
-
189,742 150,167
149,806
Promotional material
16,739
13,87118,56062,883
52,27352,288
Work in progress
-
-
-
18.576 20.085
16.314
Allowance
for losses
(19,284)(18,820)(20,280)(99,113) (71,557)(95,399)
__________________________________________________
162,290158,003217,906799,521700,665688,748
__________________________________________________
__________________________________________________
The changes in the allowance for inventory losses for the year ended December 31, 2013 and 2012 are as
follows:
Company
Consolidated
________________________________________
_______________________________________
Balance Balance Balance Balance
at 2012 Additions (a) Reversals (b) at 2013
at 2012 Additions (a)Reversals (b) at 2013
_____________________________________
_____________________________________
(18,820)
(22,254)21,790(19,284) _____________________________________
(71,557)(111,164) 83,608
(99,113)
_____________________________________
_____________________________________
_____________________________________
Company
Consolidated
________________________________________
_______________________________________
BalanceBalance BalanceBalance
at 2011 Additions (a) Reversals (b) at 2012
at 2011 Additions (a)Reversals (b) at 2012
_____________________________________
_____________________________________
(20,280)(11,803)13,263(18,820)
(95,399)(86,894)110,736
(71,557)
_____________________________________
_____________________________________
_____________________________________
_____________________________________
(a) Refer basically to the recognition of the allowance for losses due to discontinuation, expiration and quality, to cover
expected losses on the realization of inventories, pursuant to the Group’s policy.
(b) Consist of write-offs of products discarded by the Company.
Company
__________________________
2013 Restated 1/1/2012
2013 Restated1/1/2012
__________________________________________________
ICMS on purchases of goods
Refundable ICMS - ST on interstate sales, SP -
-
-
4,395
3,693
8,296
4,395
3,693
8,296
-
-
-
38,187
23,676
22,170
6,353
12,812
15,428
27,497
21,992
24,318
Taxes - foreign subsidiaries
ICMS on purchases of fixed assets
218,058 208,907
154,942
PIS and COFINS on purchases of fixed assets
18,943
-
-
20,166
44
7,376
PIS and COFINS on purchase of goods
17,678
18,512
45,012
24,027
21,394
68,187
PIS and COFINS resulting from win on a lawsuit (a)
IRPJ and CSLL on freight
-
-
11,887
7,881
7,881
16,852
1,004
970
728
3,442
1,362
3,236
-
-
-
1,596
3,221
2,024
PIS, COFINS and CSLL - withheld at source
Other
87 382
365 11,5107,823
8,834
Provision for discount on sale of ICMS credits - -
-(593) (4,184)
(3,376)
__________________________________________________
48,46036,36981,716356,166295,809312,859
__________________________________________________
__________________________________________________
Current
23,80023,41769,417181,104144,459201,620
__________________________________________________
__________________________________________________
Noncurrent
24,66012,95212,299175,062151,350111,239
__________________________________________________
(a) The amount shown relates to the recognition of tax credits of Social Integration Program - PIS and Contribution to
Social Security Financing - COFINS the lawsuit challenging the constitutionality and legality of the tax base for calculating
contributions cited, established by Law No. 9.718/98. As the Company obtained authorization from the Federal Revenue of
Brazil to offset credits of the parent after the transit and trial of the case in 2012, the accounting recognition of credit in the
subsidiary remained for the year 2013. (B Letter in 2012)
Company
Consolidated
__________________________
__________________________
2012
2012
2013 Restated1/1/2012
2013Restated 1/1/2012
__________________________________________________
Tax loss carryfowards
-
-
-
10,430
-
Allowance for doubtful
accounts (note 7)
27,072
22,31619,09827,072
22,31619,098
Allowance for losses on
inventories realization (note 8)
6,556 6,399
6,895
28,512 20,039
28,219
Reserve for tax, civil and labor
contingencies (note 18)
17,164
14,16817,74339,699
36,27336,896
Non-inclusion of ICMS
in the PIS and COFINS
basis (note 18)
689
656
620
60,116 49,342
39,173
Allowance for losses
on swap and forward
contracts (note 25)
(55,669) (27,292)
(9,583) (52,628) (27,516)
(9,733)
Provision for ICMS – ST, PR, DF, MS,
MT and RJ States (note 17)
20,195 13,856
8,247
20,195 13,856
8,247
Allowances for losses on
advances to suppliers
1,982
2,0111,9922,703
2,6142,137
Accrued contractual obligations
5,459
7,8091,4398,069
10,3102,713
Provision for discount on
assignment of ICMS credits
-
-
-
202 1,422
1,148
Accrued benefits sharing
and partnerships
8,133
8,5106,1788,133
8,5106,178
Temporary differences of
foreign subsidiaries
-
-
-
11,482 10,019
9,681
Provision for profit sharing
10,598 15,412
3,955
15,666 31,016
10,947
Depreciation rate adjustments
to useful lives (RTT)
(287) 1,241
- (13,653) (9,605)
Other temporary differences
6,315 5,959
1,420
6,315 6,187
(6,989)
Allowance
for doubtful accounts (note 7)__________________________________________________
7,8319,58715,568
21,45420,80232,272
56,03880,63273,572193,767195,585179,987
__________________________________________________
__________________________________________________
Management, based on projections of future taxable income, estimates that the recorded tax credits will
be fully realized within five years.
Tax credits will be realized as follows:
Company
Consolidated
_______________________
2014
8,25663,643
2015
8,59226,973
2016
6,45170,374
2017 and thereafter
32,73932,777
_______________________
56,038193,767
_______________________
_______________________
Consolidated
__________________________
2012
2012
Deferred Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) result from temporary differences in the Company and in its subsidiaries. These credits are kept recorded in noncurrent
assets, as prescribed by CPC 26 (R1) – Presentation of Financial Statements. The amounts are as follows:
With respect to the Company’s foreign subsidiaries, except for the operation in Argentina and Peru
which reports taxable income, the other subsidiaries do not record tax credits on tax loss carry forwards
and temporary differences in their financial statements due to the absence of a history of taxable income
and taxable income projections for the coming fiscal years.
9. RECOVERABLE TAXES
a) Deferred
As of December 31, 2013, tax credits calculated at the prevailing tax rates in the countries where the
subsidiaries are located, are as follows:
Tax loss carry forwards:
Mexico207,731
Colombia110,722
France165,598
Tax credits on tax loss carry forwards generated by the subsidiaries can be carried forward indefinitely,
except for the subsidiary in Mexico, which expire the tax loss carry forwards as follows:
Mexico
________
201512,495
201617,349
2017
177,887
to 2022
________
207,731
________
________
b) Reconciliation of income tax and social contribution
Company
Consolidated
__________________________
__________________________
2012
2012
2013 Restated1/1/2012
2013 Restated1/1/2012
_________
________________ ________________________
Income before income
tax and social contribution
1,173,487 1,226,891 1,161,791
at the rate of 34%
(398,986) (417,143) (395,009)
Technological research and innovation
benefit - Law 11196/05 (*)
20,451
22,008 22,386
Tax incentives – donations
8,218
6,242
6,582
Equity in investees (note 13)
33,842
20,189 18,628
Unrecognized deferred taxes on tax losses
generated by foreign subsidiaries
-
-
-
Tax Transition Regime (RTT) Provisional Act 449/08
– Law 11,638/07 adjustments
(2,521)
1,352
(779)
Other permanent differences
(8,667) (12,668) 21,067
Income tax and social contribution expenses ________
16,78327,505(3,765)
________________
Income tax and social
contribution - deferred
(330,880)(352,515)(330,890)
_________
________________
_________
________________
Effective rate - %
(306,286) (359,575) (323,544)
Income before income
tax and social contribution
(24,594)
7,060 (7,346)
Income tax and social contribution 28.2
28.7
28.5
at the rate of 34%
11.ESCROW DEPOSITS
Represent Group’s restricted assets related to amounts deposited and held by the courts until the
litigation to which they are linked is resolved.
The Group’s escrow deposits as of December 31, 2013 and December 31, 2012 are as follows:
1,257,746 1,298,351 1,237,730
(427,634) (441,439) (420,828)
20,451
9,932
-
22,008
8,487
-
22,386
9,668
-
7,862 (11,345) (28,915)
(4,275) (1,413) (3,242)
(33,058) (28,284) 21,067
16,78328,011(6,965)
________________________
(409,939)(423,975)(406,829)
________________________
________________________
(408,121) (439,573) (416,122)
(1,818)
32.6
15,598
32.7
9,293
32.9
(*) Refers to the tax benefit established by Law 11196/05, which allows for the direct deduction from the calculation of taxable income and the social contribution tax basis of the amount corresponding to 60% of the total expenses on technological
research and innovation, observing the rules established in said Law.
The changes in income tax and social contribution for the year of 2013 were as follows:
Company
Consolidated
________________________________________
_______________________________________
Balance Charged/(credit)
Balance
Balance Charged/(credit) Balance
__________
at 2012
to
profit or loss __________
at 2013
at 2012
to
at 2013
______________
__________
______________
80,632(24,594)56,038
195,585(1,818)193,767
__________ ______________
______________
__________
__________ ______________
______________ __________
__________
__________
__________
__________
The changes in income tax and social contribution for the year of 2012 were as follows:
Company
Consolidated
________________________________________
_______________________________________
BalanceCharged/(credit) Balance BalanceCharged/(credit)Balance
at 2011
to
at 2012
at 2011
to
at 2012
__________
______________
__________
______________
__________
73,572
7,06080,632
179,987
15,598195,585
______________
__________
__________ ______________
______________ __________
__________
__________ ______________
__________
__________
Company
Consolidated
__________________________ __________________________
2012
2012
2013 Restated1/1/2012
2013
Restated1/1/2012
__________________________________________________
ICMS - ST (note 18.(a))
105,996 88,475
80,304
105,996 88,475
80,304
ICMS - ST suspended collection (note 17 (b)) 134,941 96,898
88,521
134,941 96,898
88,521
Other accrued tax obligations (note 17 (e) and (f)) 6,469 10,030
9,434
80,706 80,361
52,024
Other suspended tax obligations (noteº 18.(c))
11,704 11,351
10,955
11,704 11,351
10,955
Unaccrued tax lawsuits
43,479 36,576
34,373
54,322 42,337
38,254
Accrued tax lawsuits (note 18)
7,356
9,913
9,952
7,949 11,554
11,515
Unaccrued civil lawsuits
32
1,027
1,016
122
1,118
1,108
Accrued civil lawsuits (note 18)
2,078
2,056
1,886
2,194
2,167
1,992
Unaccrued labor lawsuits
4,750
8,241
5,844
7,456 10,123
6,999
Accrued labor lawsuits (note 18)
4,7093,0312,6537,0145,1534,167
__________________________________________________
321,514267,598244,938412,404349,537295,839
__________________________________________________
__________________________________________________
12. OTHER CURRENT AND NONCURRENT ASSETS
Company
Consolidated
__________________________
__________________________
2012
2012
2013Restated 1/1/2012
2013 Restated1/1/2012
__________________________________________________
Advances to advertisement services
Advances to trade payables
Advances to employee
Insurance
Import taxes
Asset held for sale (a)
Carbon Credit (b)
Contingence Liability
Others
Current
Non-current
151,913 138,149
111,690
164,150 136,373
112,666
23,347
2,548
2,504
49,532 7,872
3,643
6,043
3,666
3,867
8,559 5,479
5,750
2,867
2,1231,8293,661
2,6992,464
781
1,652
-
8,699 4,289
4,413
4,327
-
22,165 22,079
17,752
9,317
-
-
9,317
-
-
-
-
16,770
-
4,5611,254
-16,67720,29114,443
__________________________________________________
203,242153,719
119,890299,530199,082156,718
__________________________________________________
__________________________________________________
184,185130,532
115,328262,365157,787126,783
__________________________________________________
19,05723,187
4,56237,16541,29529,935
__________________________________________________
(a) This balance refers to assets which the company intends to sell one of the next 12 months as CPC 31-non-current assets
held for sale (IFRS 5). These assets are measured at the lower value between the carrying amount and fair value less costs to
sell. The company classifies these assets under this heading by considering selling highly probable and the assets are available
for immediate sale in its present condition. Once classified as intended for sale, the assets are not depreciated or amortized.
(b) Carbon Neutral program (see note 2.10).
13. INVESTMENTS
Company
_________________________________
2012
2013 ______________________
Restated1/1/2012
_________
Investments in subsidiaries and jointly controlled entities
1,522,9211,306,8841,250,729
_________
_________ ______________________
______________________
Information and changes in the balances for the year ended December 31, 2013 and 2012
Natura
Natura
(Brasil)
Natura
Indústria e Natura
Natura Inovação e
Natura
Interna-
Natura
Biosphera
Comércio de
Natura
Natura Cosméticos Cosméticos Tecnologia
Natura Cosméticos
tional B.V. Cosméticos Comércio de
Natura
Cosméticos Cosméticos Cosméticos
S.A. -
Ltda. - de Produtos Cosméticos de
Ltda. -
- The
Spain Cosméticos e
Brasil
Natura
Ltda. (*) S.A. - Chile ____________________________________________
S.A. - Peru
Argentina Venezuela
Ltda. (*) _____________
Mexico S.A. (*) ___________
Colombia Netherlands
(*) __________
S.L. Serviços
Ltda. Pty
Ltd (*)
Total
_______________________
___________
____________
___________________
Share capital
526,155
127,57450,41989,5865,6345,008 256,933
119,32738,864 606
100
153,931
1,374,137
Equity interest
99.99%99.99% 99.94%99.97%99.99%99.99% 99.99% 99.99%100.00%
100.00% 99.99%
100.00%
Subsidiaries’ shareholders’ equity
1.140.85962.543 15.57799.675 26234.993 8.227 7.050 15.606 606
26
157.849
1.543.273
Interest in shareholders’ equity
1.120.557
62.537
15.568
99.645
262
34.990
8.226
7.049
15.606
606
26
157.849
1.522.918
Subsidiaries’ net income
(loss) for the year
90,892
24,889
(8,765)
30,558
-
17,458
(25,727)
(15,387)
(18,199)
-
(63)
3,893
99,549
Carrying amount of investments
Balance as of January 01, 2012
1,057,677
20,383
1,485
72,825
306
28,473
47,596
13,434
8,444
106
-
-
1,250,729
Equity in investees
89,87211,756 (9,989)12,218
-16,269 (23,676)(21,756)(14,771)
-
(11) -59,912
Exchange rate change and other
adjustments on the translation of
investimentos das controladas
investments in foreign subsidiaries
-
4,394
(675)
(4,505)
28
170
6,293
1,988
(256)
-
-
7,437
Company’s contribution to the stock
options plan of subsidiaries’
executives and other reserves
5,755
-
-
-
-
2,377
-
-
-
-
-
-
8,132
Gain/Losses actuarial (1,681)- ---
(340) - - -- -
-
(2,021)
Profit distribution
(50,000)
-
-
-
-
(16,148)
-
-
-
-
-
-
(66,148)
Capital increases
-
-14,645---
-
17,19616,866
36
100
-48,843
_______________________
____________________________________________ _____________
___________
___________ __________
____________
___________________
Balance as of December
31, 2012
1,101,62336,5335,46680,538 33430,80130,21310,86210,283
142
89
-1,306,884
_______________________
_______________________ ____________________________________________
____________________________________________ _____________
_____________ ___________
___________ ___________
___________ __________
__________ ____________
____________ ___________________
___________________
Equity in investees
90,88324,887 (8,760)30,549
-17,456 (25,724)(15,385)(18,199)
-
(63)3,89399,537
Exchange rate change and other
adjustments on the translation of
investments in foreign
subsidiaries
49
1,117
(144)
(13,723)
(72)
776
3,737
362
2,174
-
-
5,391
(333)
Company’s contribution to the stock
options plan of subsidiaries’
executives and
other reserves
3,323- ---
1,837 - - -- -
5,160
Gain/Losses actuarial 4,679
200
4.879
Profit distribution
(80,000)
-
-
-
-
(16,080)
-
-
-
-
-
(96,080)
Capital increases
-
-19,0062,281--
-
11,21021,348
464
-148,565202,874
_______________________
____________________________________________ _____________
___________
___________ __________
____________
___________________
Balance as of December
31, 2013
1,120,55762,53715,56899,645 26234,9908,2267,04915,606
606
26157,8491,522,921
_______________________
_______________________ ____________________________________________
____________________________________________ _____________
_____________ ___________
___________ ___________
___________ __________
__________ ____________
____________ ___________________
___________________
(*) Consolidated information of the following companies: Natura Cosméticos de México S.A.: Natura Cosméticos y Servicios de México, S.A. de C.V., Natura Cosméticos de México, S.A. de C.V. and Natura Distribuidora de México, S.A. de C.V., Natura
(Brasil) International B.V. - The Netherlands: Natura (Brazil) International B.V. (The Netherlands), Natura Brazil Inc. (USA - Delaware), Natura International Inc. (USA - New York), Natura Europa SAS (France) and Natura Brasil SAS (France)., Natura Inovação
e Tecnologia de Produtos Ltda.: Ybios S.A (until June 29, 2012) and Natura Innovation et Technologie Produits S.A.S. - France
14. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
PROPERTY, PLANT AND EQUIPMENT
Company
__________________________________________________________________________________________________________
Bussiness Weighted
Reclassification/
average annual December, 31
capitalization combination/
depreciation
January, 1
of 2012 Derecog-
and Exchange
whitout
December, 31
cash effects
of 2013
rate - % ______________
of 2012
Restated Addiction
nition _______________
variation ______________
______________
________________
____________________
________________
Cost Value:
Vehicles
39,010
39,872 16,160(12,358)
815
-
44,489
Machinery and equipment
114,844
123,467
8,038
(1,434)
61,941
-
192,012
Improvements in third party properties
35,419
41,108
473
(7,957)
28,048
-
61,672
Buildings 56,694
56,694272 - 185,851
- 242,817
Furniture and fixtures
11,633
16,039
2,098
(3,922)
(64)
-
14,151
IT equipment
50,867
66,832
4,112
(42)
8,776
-
79,678
Projects
in progress ______________
70,034100,187
120,439 -(191,685)
-28,941
________________ ____________________
_______________ ______________
________________
378,501444,199
151,592(25,713)93,682
-663,760
______________
________________ ____________________
_______________ ______________
________________
Depreciation
Vehicles
33 (16,991)
(21,270)(9,499) 7,111
5,596
-
(18,062)
8
(7,421)
(16,251)
(14,663)
995
(1,063)
-
(30,982)
Improvements in third party properties 15
(11,844)
(24,247)
(4,332)
7,368
1
-
(21,210)
Buildings
-
-
-(2,537)
-
-
-
(2,537)
Furniture and fixtures
7
(3,006)
(5,131)
(1,067)
2,335
152
-
(3,711)
IT equipment
18
(7,024)
(19,857)
(16,028)
15
308
-
(35,562)
Projects
in progress
- ______________
-
- ____________________
-
- _______________
- ______________
-
________________
________________
(46,286)
(86,756)(48,126)
17,824
4,994
-
(112,064)
______________
________________
____________________
_______________
______________
________________
Total
332,215
357,443103,466(7,889)
98,676
-
551,696
______________
________________
____________________ _______________
______________
________________
Consolidated
__________________________________________________________________________________________________________
Bussiness Weighted
Reclassification/
depreciation
January, 1
of 2012 Derecog-
and Exchange
whitout
December, 31
cash effects
of 2013
rate - % ______________
of 2012
Restated Addiction
nition _______________
variation ______________
______________
________________
____________________
________________
Cost Value:
Vehicles
59,490
64,766 28,974(21,796)
(1,273)
144
70,815
Templates
116,068
137,492 38,572(1,167)
3,496
-
178,393
Tools and accessories
4,196
4,688
11,254
371
26,137
-
42,450
Facilities
132,919
144,089 7,758(1,639)
5,138
-
155,346
410,901
439,845
59,822
(2,122)
71,439
1,356
570,340
Improvements in third parties (a)
50,599
57,396
6,624
(9,168)
6,419
22,022
83,293
Buildings
207,836
207,836 895(8,443)
185,772
-
386,060
Furniture and fixture
32,976
39,445
5,115
(4,506)
(2,581)
3,159
40,632
Properties
27,214
27,484
-(1,372)
-
-
26,112
IT Equipment
76,305
93,910
6,556
(1,443)
7,226
2,163
108,412
Projects
in progress ______________
128,287
341,884 ____________________
301,923
- _______________
(195,633) ______________
-
448,174
________________
________________
Total 1,246,791
1,558,835
467,493(51,285)
106,140
28,844
2,110,027
______________
________________
____________________
_______________
______________
________________
Depreciation
Vehicles
33
(22,430)
(27,228)(15,901) 12,969
4,615
(148)
(25,693)
Templates
30
(87,966)
(105,197)(24,619) 1,167
2,992
-
(125,657)
Tools and accessories
3
(2,256)
(2,253)
(892)
140
(15,612)
-
(18,617)
Facilities
9
(73,512)
(81,451)(10,268) 664
(717)
-
(91,772)
6
(145,342)
(174,839)
(36,240)
1,590
(216)
(832)
(210,537)
Improvements in third parties (a)
15
(18,581)
(34,011)
(10,548)
8,578
(8,837)
(8,895)
(53,713)
Buildings
4 (60,400)
(66,028)(8,274) 4,419
(468)
-
(70,351)
Furniture and fixture
11
(11,937)
(15,738)
(4,323)
2,980
1,826
(1,567)
(16,822)
Properties
19
(23,933)
(40,001)(20,177)
1,734
2,479
(1,196)
(57,161)
______________ ________________ ____________________ _______________ ______________ ________________
(446,357)
(546,746)(131,242)
34,241
(13,938)
(12,638)
(670,323)
______________ ________________ ____________________ _______________ ______________ ________________
Total
800,434
1,012,089
336,251(17,044)
92,202
16,206
1,439,704
______________
________________
____________________
_______________
______________
________________
INTANGIBLE ASSETS
Company
__________________________________________________________________________________________________________
Bussiness Weighted
Reclassification/
depreciation
January, 1
of 2012 Derecog-
and Exchange
whitout
December, 31
cash effects
of 2013
rate - % ______________
of 2012
Restated Addiction
nition _______________
variation ______________
______________
________________
____________________
________________
Cost Value:
Software and others
88,848
238,840
65,374
(320)
91,181
-
395,075
Carbon credits ______________
7,437
9,664 ____________________
-
(9,664) _______________
- ______________
-
________________
________________
96,285
248,504
65,374(9,984)
91,181
-
395,075
______________
________________
____________________
_______________
______________
________________
Amortization:
Software and others
17
(17,356)
(42,468)
(51,289)
243
2,305
-
(91,209)
Carbon credits
-
-
-
-
-
-
(17,356)
(42,468)(51,289)
243
2,305
-
(91,209)
______________ ________________ ____________________ _______________ ______________ ________________
Total
78,929
206,036
14,085(9,741)
93,486
-
303,866
______________
________________
____________________
_______________
______________
________________
Consolidated
__________________________________________________________________________________________________________
Bussiness Weighted
Reclassification/
depreciation
January, 1
of 2012 Derecog-
and Exchange
whitout
December, 31
cash effects
of 2013
rate - % ______________
of 2012
Restated Addiction
nition _______________
variation ______________
______________
________________
____________________
________________
Cost value:
Software and others
182.890
276.824
85.513
(444)
95.842
4.332
462.067
Carbon credits
7.437
9.664
-
(9.664)
-
-
Trademarks and patents
1.652
936
848
-
423
53.364
55.571
Goodwill Emeis (Brazil PTY) (b)
-
-
-
-
382
73.748
74.130
Relationship with clients
-
-
-
-
4
862
866
Business lease – Natura Europa SAS – France (c) ______________
5.0745.600
--
(2.661)
-
2.939
________________ ____________________
_______________
______________
________________
Total ______________
197.053293.024
86.361(10.108)
93.990
132.306
595.573
________________ ____________________
_______________
______________
________________
Amortization:
Software and others
18
(32.676)
(63.596)
(59.887)
293
8.945
(250)
(114.495)
Trademarks and patents
4
(1.623)
(883)(1.789)
-
(1.040)
-
(3.712)
Relationship with clients
11
-
-
(80)
-
-
-
(80)
Cost value:
(34.299)(64.479)
(61.756)293
7.905
(250)
(118.287)
______________
________________ ____________________
_______________
______________
________________
Software and others
162.754228.545
24.605(9.815)
101.895
132.056
477.286
______________
________________ ____________________
_______________
______________
________________
(a) The amortization rates take into consideration the lease terms of leased properties, which range from three to seven years.
(b) Goodwill the acquisition of Emeis Holdings Pty Ltd as per Note 29.
(c) The business lease generated on the purchase of a commercial location where Natura Europa SAS - France operates is supported by an appraisal report issued by independent appraisers, attributable to the fact that it is an intangible, marketable asset,
the value of which does not decrease over time. The change in the balance between December 31, 2013 and December 31, 2012 is basically due to the effects of the exchange fluctuation for the period.
Additional information on property, plant and equipment:
15. BORROWINGS AND FINANCING
a) Assets pledged as collateral
_______________________________________________________________
CompanyConsolidated
2012
2012
2013 Restated1/1/2012Reference
________
_________________________________________________
Local currency
BNDES - EXIM
- ----
67,607
FINEP (Financing Agency
for Studies and Projects)
-
-
-
46,421
65,347
27,106
A
Debentures
- 352,240353,256
-352,240353,256
B
BNDES
59,002 76,992 21,708203,591197,649141,689
C
Working capital / NCE
-
-
48,613 206,131
72,448
48,613
D
BNDES - FINAME
-
-
-
17,253
5,220
7,336
E
Banco do Brasil - FAT
“Fomentar” (Workers’
Assistance Fund)
-
-
-
-1,3242,697
F
Financial lease
249,625 47,80356,729249,62547,80356,729
G
FINEP (Financing Agency
for Studies and Projects)
-
-
-1,647
705289 H
________
________________________________________
Total
308,627477,035
480,306724,668742,736705,322
in local currency
________
________________________________________
________
________________________________________
As of December 31, 2013, the Group has proper ty, plant and equipment items pledged as collateral
of bank financing and loan transactions, as well as items attached to the defense of lawsuits, as
shown below:
Vehicles
IT Equipment
Buildings
Properties
Total
CompanyConsolidated
____________
___________
362388
25
29
1
11
-2
-5
____________
___________
388435
____________
___________
____________
___________
b) Leases
In 2013 the Company entered into finance lease transactions to purchase property, plant and equipment
totaling R$185,851. As of December 31, 2013, the balance of lease payables, classified in line item “Borrowings and financing” (note 15) totals R$240,008 (R$69,263 as of December 31, 2012).
c) Balance of capitalized interest
Financial expenses recorded under “Buildings”
Balance at beginning of year
Capitalized
interest
Balance at year end
______________Consolidated
_____________
20132012
____________
___________
1,453
1,453
4,135____________
___________
5,5881,453
____________
___________
____________
___________
Foreign currency
BNDES
20,057 14,545 4,48629,74719,15210,713
I
Resolution 4131/62
2,076,508 1,474,716 411,2372,076,5081,474,716 411,237
J
International operation Peru
-
-
-10,98127,27836,483
K
International operation México
- --
40,007
2,117- L
International operation PTY
11,995-M
Machinery financing
-
-
-
-
21,180
Finantial lease
- 21,46022,944
-21,46022,944
Total
2,096,5651,510,721
438,6672,169,238 1,565,903481,377
in foreign currency
________
________________________________________
Grand
2,405,1921,987,756918,9732,893,9062,308,6391,186,699
total
________
________________________________________
________
________________________________________
Current
Noncurrent
576,841844,26166,424
693,117999,462168,962
________
________________________________________
________
________________________________________
1,828,3511,143,495852,549
2,200,7891,309,1771,017,737
________
________________________________________
________
________________________________________
ReferenceCurrency
Maturity
Charges
Collaterals
__________
______________________________________
_________________________________________________
_______________________________________________________________
___
A
Real
March 2013 and May 2019
TJLP (b) for the installment maturing in 2013 and
Guarantee of Natura Cosméticos S,A, and bank guarantee
interest of 5% for the installment maturing in May 2019 B
Real
May 2013
Interest of 108% of CDI maturing in May 2013
None
C
Real
Through September 2021
TJLP + interest of 0.5% p.y. a 3.96% p.y. and
Bank guarantee
contractos of 3.5% p.y. a 5% p.y. (PSI) (d) D
Real
Through August 2016
Interest of 8.0% p.y. (c)
Guarantee of Natura Cosméticos S,A
E
Real
Through September 2018
Interest of 4.5% p.y. + TJLP for contracts up to 2012 and
Leases are collateralized by the underlying assets
for contracts from 2013 to 3% p.y. (PSI) (d)
F
Real
February 2014
Interest of 4.4% p.y. + TJLP Chattel mortgage, guarantee of Natura Cosméticos S,A, and promissory notes
G
Real
Through August 2026
Interest of 108.0% of DI - CETIP (b)
H
Real
July 2015
none
none
I
Dollar
October 2020
Exchange fluctuation + interest of 1.8% to 2.3% p.y. + Resolutionº 635 (a)
J
Dollar
Through August 2016
Exchange fluctuation + Libor + Over Libor of 1.32% p.y. a 3.80% p.y. (a)
Guarantee of Indústria e Comércio de Cosméticos Natura Ltda.
K
Nuevo sol
January 2014
Interest of 4.9% p.y.
Bank guarantee
L
Mexican peso
June 2014
Interest of 0.98% p.y. + TIIE (e)
Guarantee of Natura Cosméticos S,A
M
Australian dollar
February 2016
Interest of 7% p.y
Bank guarantee
(a) Loans and financing for which swap contracts (CDI) were entered into. (b) DI - CETIP - daily index calculated based on the average DI, disclosed by Cetip S.A. (Brazilian clearinghouse and over-the-counter market). (c) Loans for which the financial
instruments of the type “swap” with the exchange of fixed rate for CDI were hired. (d) PSI-Investment Support Program. (e) TIIE-interest rate of interbank equilibrium Mexico.
Maturities of noncurrent liabilities are as follows:
2. Financing agreement with the FINEP
Company
Consolidated
___________________
__________________
2013
201220132012
________
________
________ ________
2014
- 252,691
-299,434
20151,111,358 806,435 1,201,342 864,748
2016489,100 26,513 708,664 47,045
201729,192 12,966 58,074 28,774
2018
and thereafter ________
198,70144,890232,70969,176
________ ________ ________
1,828,3511,143,4952,200,7891,309,177
________
________
________ ________
________ ________
________
________
The subsidiary Natura Inovação e Tecnologia de Produtos Ltda. has innovation programs aimed at the
development and acquisition of new technologies by means of partnerships with universities and research
centers in Brazil and abroad. These innovation programs have the support of FINEP’s research and technological development incentive programs, which facilitates and/or co-finances equipment, scientific grants
and research material for the participating universities.
A description of the outstanding bank loan agreements is as follows:
3. Machinery and Equipment Financing - FINAME
a) Description of bank loans
The Company benefits from a credit facility with the BNDES, related to FINAME onlendings, intended to
finance the purchase of new machinery and equipment manufactured in Brazil. Said onlending is carried out
by granting credit to subsidiary Indústria e Comércio de Cosméticos Natura Ltda., granting rights to receivables to the financial institution accredited as a financing agent, usually Banco Itaú Unibanco S.A. and Banco
do Brasil S.A., which enters into such said financing with Indústria e Comércio de Cosméticos Natura Ltda.
1. Financing agreements with the BNDES
The Company and its subsidiaries Indústria e Comércio de Cosméticos Natura Ltda. and Natura Inovação e Tecnologia de Produtos Ltda. have credit facility agreements with the BNDES to facilitate direct
investments in the Company and its subsidiaries in order to improve certain product lines, train research
and development employees, optimize operation product separation lines in the Cajamar, SP industrial
facilities, build new distribution centers an recently the deployment of an industrial plant in Benevides,
Para and investments at a distribution center in Parque Anhanguera in São Paulo, and projects related
to digital accessibility.
These funds were used to partially fund the investments made in the drafting of the “Technology Platforms
for New Cosmetics and Nutritional Supplements” and the “Research and Innovation for the Development
of New Cosmetics” projects.
These agreements are collateralized by assigning the fiduciary ownership of the assets described in the
related agreements. The subsidiary Indústria e Comércio de Cosméticos Natura Ltda. is the trustee and
the Company is the guarantor of these assets. In addition, the Group is required to meet the Provisions
Applicable to BNDES Agreements and the General Regulatory Terms and Conditions of FINAME-related Transactions.
4. Resolution nº 4.131/62
17. TAXES PAYABLE
Bank Credit Note - Onlending of funds raised abroad under law nº 4.131/62, through financial institutions.
Company
Consolidated
__________________________________________________________
2012
2012
2013
Restated1/1/2012
_________________
_________ _________
________ _________
5. NCE
Export Note (“Nota de Crédito à Exportação”) – Funds for use as working capital for export purposes.
6. Debentures
First issuance of simple debentures, nonconvertible into shares, totaling R$350,000, in single series, without guarantee and without financial covenants, with face value of R$1,000, in conformity with CVM
Instruction 476/09, issued on May 26, 2010 and subscribed and paid in May 28, with the payment of
semiannual interest in May and November, and principal maturing on May 26, 2013.
b) Finance lease obligations
Financial obligations are broken down as follows:
Consolidated
__________________
2013 ________
2012
________
Gross finance lease obligations - minimum lease payments:
Less than one year
More than one year and less than five years
More than five years
29,012
14,561
126,223
49,592
348,06470,718
________
________
Future
financing charges on finance leases
503,299 134,871
(253,674)(65,608)
________
________
Financial
lease obligations - accounting balance
249,62569,263
________
________
Accounting balance of property, plant
and equipment: leasing and ‘sale leaseback’
240,00877,924
________
________ ________
________
c) Capitalized Interest
The following table presents summary financial charges and capitalized in fixed assets under “Buildings” plot.
CompanyConsolidated
______________________________________
2013
20122013
2012
________
________________
________
67,423
85,307
103,293
102,416
-
-(4,135)(1,453)
________
________________
________
Total financial charges for the year
Capitalized
interest
Financial expenses (Note 25)
67,42385,30799,158100,963
________
________ ________________
________________ ________
________
Financial expenses are capitalized based on the rate of the loan to which the qualifying asset is directly
connected.
d) Contract Covenants
On December 31, 2013 and December 31, 2012, the majority of loans and financing held by the Company and its subsidiaries contract does not contain restrictive covenants that establish obligations regarding
the maintenance of financial ratios by the Company and its subsidiaries.
Contracts with BNDES from July 2011 have restrictive covenants establishing the following financial
indicators:
-EBITDA margin exceeding 15%; and
- Net debt / EBITDA less than or equal to 2.5 (two point five).
On December 31, 2013, the Company had fully complied with all such covenants.
16. TRADE AND OTHER PAYABLES
Company
Consolidated
__________________________________________________________
2012
2012
Restated1/1/2012
2013
_________________
_________ _________
________ _________
Domestic trade payables
Foreign trade payables (*)
Freight
payable
242,289 223,433
133,762
671,761
615,189
435,328
6,428
10,308
15,043
11,396
15,686
18,765
23,00518,577 _________
34,51223,42919,012
34,887
_________________
_________ ________ _________
271,722252,318
183,317706,586649,887
488,980
_________________
_________________ _________
_________ _________
_________ ________
________ _________
_________
(*) Refer mostly to US dollar-denominated amounts.
Taxes on revenue
(PIS/COFINS) (injunction) (a)
2,025
1,929
1,823
176,813
145,124
115,214
Ordinary ICMS
114,647 100,696
59,894
103,780
100,184
81,687
Regular and reverse charge ICMS (b)
134,941
96,898
89,301
134,941
96,898
89,301
IRPJ and CSLL
131,736
93,446
127,458
161,713
132,548
150,639
IRPJ and CSLL (injunction) (c)
133,594
88,105
56,941
133,594
88,105
56,941
IRPJ and CSLL (injunction - PAT)
-
4,630
2,656
-
8,693
6,029
INSS – suspension of the enforceability
2,290
-
7,621
9,233
-
11,974
Withholding income tax (IRRF)
-
-
-
46,870
44,766
42,432
IPI - exempt and zero-taxed products (d) 3,110
6,809
6,361
3,170
6,973
6,519
UFIR adjustment to federal taxes (e)
3,361
3,222
3,073
3,361
3,222
3,073
Action for annulment of INSS debt (f)
11,413
8,844
-
15,823
13,403
3,324
Withholding PIS/COFINS/CSLL
1,589
5,652
2,490
7,706
6,092
1,110
PIS/COFINS
-- - - - Taxes - foreign subsidiaries
-
-
-
76,467
30,709
17,888
Service tax (ISS)
347530
364
1,4852,0511,214
_________________
_________
_________
________ _________
Escrow deposits ((b), (e) and (f))
(note nº11)
Current
Noncurrent
539,053410,761357,982874,956678,768587,345
_________________
_________ _________ ________ _________
(141,411) (106,928) _________
(97,955) _________
(215,647) ________
(177,259)(140,545)
_________________
_________
_________________
_________ _________
________ _________
397,642303,833260,027659,309501,509
468,800
_________________ _________
_________ _________
_________ ________
________ _________
_________
_________________
141,411106,92897,955215,647177,259140,545
_________________
_________ _________
_________ ________
________ _________
_________
_________________
_________
(a) The Company and its subsidiary Indústria e Comércio de Cosméticos Natura Ltda. are challenging in court the inclusion
of ICMS in the tax basis of Integration Program Tax on Revenue (PIS) and Social Security Funding Tax on Revenue (COFINS).
In June 2007, the Company and its subsidiary were authorized by the court to pay PIS and COFINS without the inclusion of
ICMS in their tax basis, starting April 2007. The balances recognized as of December 31, 2013 refer to the unpaid amounts of
PIS and COFINS, from April 2007 to December 2013 adjusted using the SELIC (Central Bank’s policy rate), the collection of
which is on hold. Part of the balance, in the adjusted amount of R$27,304, is deposited in escrow.
(b) As of December 31, 2013, R$15,282, R$98,195, R$329 and R$21,135 of the total amount recognized refer to the ICMS
- ST of State of Paraná, Federal District, State of Mato Grosso and State of Rio de Janeiro, respectively. As of December 31,
2012, R$14,083, R$74,037, R$308,and R$8,470 of the total amount recognized refer to the ICMS - ST of State of Paraná,
Federal District, State of Mato Grosso do Sul, State of Mato Grosso and State of Rio de Janeiro, respectively. This unpaid
ICMS-ST amount is being questioned in court by the Company and is the subject matter of a monthly judicial deposit, as also
mentioned in note 18 ‘Contingent tax liabilities - possible risk’, (a).
On November 26, 2011, the Company entered into an arrangement, to be enforced after the end of the current reporting
period, with the State of Paraná to set the Value Added Margin (MVA) applicable to the calculation of ICMS-ST due on
transactions conducted by consultants of the State of Paraná.
The MVA applicable to taxable events prior to November 2011.
(c) On February 4, 2009, the Company was granted an injunction, subsequently confirmed by court decision, that suspended
the collection of income tax and social contribution on any amounts received as arrears interest, paid on late payment of
contractual obligations receivables to the Natura Beauty Consultants. The appeal filed by the Federal Government is awaiting
judgment.
(d) Refers to Federal VAT (IPI) on zero-taxed, untaxed and exempt raw materials and packaging materials. Subsidiary Indústria
e Comércio de Cosméticos Natura Ltda. filed a writ of mandamus and obtained an injunction granting the right to the credit.
On September 25, 2006, the injunction was revoked by a decision that considered the request invalid. The Company filed an
appeal for reconsideration of merits and reinstatement of the injunction. To suspend the payment of tax, in October 2006,
the Company made an escrow deposit in the amount offset under the injunction, whose adjusted balance totals R$46,870 as
of December 31, 2013 (R$44,766 as of December 31, 2012). In the fourth quarter of 2009, in order to utilize the benefits
granted under Provisional Act 470/09, which creates a program for the payment and payment in installments of tax debts,
the subsidiary filed a motion partially withdrawing the claims made in the injunction filed that maintains only the claim of
tax credits on tax-exempt products, thus dropping the lawsuits claiming IPI credits of zero-taxed and untaxed products (see
details in topic ‘Tax installment plans created under Provisional Act 470/09). On this date, after having met the requirements
to join the tax installment plan introduced by Provisional Act 470/09, the subsidiary awaits the tax authorities’ approval to
write off the suspended collection amounts and the corresponding escrow deposits. Subsequently, in December de 2011,
the subsidiary filed a motion to also drop the lawsuit claiming tax credits on tax-exempt products, which did not have any
amount involved. Thus, the subsidiary awaits the transfer to the State of the escrow deposits after a final and non-appealable
decision is issued regarding the credits on products acquired at IPI rate reduced to zero.
(e) Refers to the inflation adjustment of 1991 federal taxes on income (IRPJ/CSLL/ILL) based on the UFIR (fiscal reference
unit), discussed in a writ of mandamus.The amount involved is deposited in escrow. On February 26, 2010, the Company filed
a motion dropping this lawsuit to be able to utilize the benefits granted under Law 11.941/09, which creates a program for
the payment and payment in installments of tax debts and awaits the issue of a final and non-appealable decision.
(f) Refers to the social security contributions required by tax assessments issued by the National Social Security Institute INSS inspection process, which required the Company, acting as joint contributors, contribution amounts payable on services
rendered by third parties. Values are discussed in a tax debt annulment action and are deposited in escrow. On 1 March
2010, the Company filed a motion partially withdrawing the action, partially waiving its right, for purposes of adherence to
the benefits provided for in Law No. 11.941/09.
Tax installment program established by Law 11.941/09
On May 27, 2009, Federal Government enacted Law 11941, as a result of the conversion of Provisional Act 449/08, which,
among other changes to tax law, established the possibility of a tax debt installment plan managed by the Federal Revenue
Service, the National Social Security Institute and the National Treasury Attorney General (PGFN), including the remaining
balance of Consolidated debts in the REFIS (Law 9.964/00), Special Installment Plan (PAES) (Law 10.684/03) and the Exceptional Installment Plan (PAEX) (Provisional Act 303/06), in addition to the regular payments in installments provided for by
article 38 of Law 8.212/91 and article 10 of Law 10.522/02.
The entities that opted for paying or dividing into installments the debts under this Law, in the applicable cases, may settle the
amounts corresponding to default and automatic fines and late-payment interest, including those related to legally enforceable
debts to the Government, using tax loss carry forwards, and will benefit from reduced fines, interest and legal charges whose
reduction percentage depends on the installment plan chosen.
Pursuant to the established rules, for compliance with the first stage of installment payments, the Company and its subsidiaries,
after having filed motions at Court formalizing the withdrawal of lawsuits whose taxes would be paid in installments, applied
for installment payments, choosing installment plans and indicating the generic nature of tax debts, paying the respective initial
installments, pursuant to the provisions of Federal Revenue Service (SRF) and National Treasury Attorney General (PGFN)
Joint Administrative Rule.
The tax debts recorded for payment in installments by the Company and its subsidiaries, pursuant to Law
11.941/09, are as follows:
__________________________________________________________________
Company
Inflation
2012AdditionsReversals
Paymentsadjustment2013
_______
_______ _________ ___________
__________ ________
Action for annulment
of INSS debt (a)
3,222
-
-
-
139
3,361
IRPJ/CSLL/ILL
debts (b)
6,809
-(4,064)-
365 ________
3,110
_______
_______
_________ ___________ __________
10,031
-(4,064)-
504 ________
6,471
_______
_______
_________
___________
__________
_______ _______ _________ ___________ __________ ________
Consolidated
___________________________________________________________
Inflation
2012AdditionsReversals
Paymentsadjustment2013
_______
_______ _________ ___________
__________ ________
Action for annulment
of INSS debt (a)
3,222
-
(52)
-
-
3,170
IRPJ/CSLL/ILL
debts (b)
6,973
-(3,968)-
3563,361
_______
_______
_________ ___________ __________
________
10,195 -(4,020)
-
3566,531
_______
_______ _______
_______ _________
_________ ___________
___________ __________
__________ ________
________
(a) See item (f) on this note for details.
(b) See item (e) on this note for details.
Due to the lack of tax loss carry forwards, the Company will not offset them against the remaining balance
of the interest on installments.
The next steps of the Company’s and its subsidiaries’ tax installment plans, which are being discussed in
courts, depend on a decision about the consolidation of the related debts, which is expected in order to
settle such debts by transferring existing escrow deposits to the Federal Government.
Tax installment plans created under Provisional Act 470/09
On October 13, 2009, Provisional Act 470 was enacted introducing the tax debt payment and installment
plans arising from the undue use of an industry tax incentive, introduced by Article 1 of Law Decree 491,
of March 5, 1969, and the undue use of IPI credits, regulated by the Attorney General of the National
Treasury (PGFN) and Federal Revenue Service (RFB).
On November 3, 2009, the PGFN and the Federal Revenue Service published in the Federal Official
Gazette (DOU) Joint Administrative Rule 9, which establishes the debt payment and installment plan
addressed in Article 3 of Provisional Act 470/09. The debts arising from the undue utilization of industry
tax incentives introduced by Article 1 of Decree Law 491/69, and those arising from the undue utilization
of IPI credits challenged by the PGFN and Federal Revenue Service may be exceptionally paid at sight or
in installments to each agency by November 30, 2009.
As mentioned in item (d) above, subsidiary Indústria e Comércio de Cosméticos Natura Ltda. filed a
motion partially withdrawing from the injunction filed related to IPI credits claimed on products purchased
at zero tax rate or tax exempt.
Pending the conversion of part of the judicial deposit and the final payment of the remaining balance
survey, corresponding to low accounting records.
18. PROVISION FOR TAX, CIVIL AND LABOR CONTINGENCIES
The Company and its subsidiaries are parties to tax, labor and civil lawsuits and administrative tax proceedings and an arbitration proceeding. Management believes, based on the opinion and estimates of its legal
counsel, that the provision for tax, civil, and labor contingencies are sufficient to cover potential losses.This
provision is broken down as follows:
Company
Consolidated
__________________________________________________________
2012
2012
Restated1/1/2012
2013
_________________
_________ _________
________ _________
Tax
Civil
Labor
33,65723,903 27,612 43,857 36,211 33,850
11,90612,141 12,234 16,310 16,238 16,986
5,2962,4449,75413,662
10,84414,121
_________________
_________ _________ ________
_________
50,85938,48849,60073,829
63,29364,957
_________________
_________________ _________
_________ _________
_________ ________
________ _________
_________
Tax contingencies
Company
__________________________________________________________________
Inflation
2013
2012 Additions
_________
_________ Reversalsadjustment
_________ ___________ _________
Total provision for tax contingencies
Escrow
deposits (note 11)
821
Late payment fines on federal taxes
paid in arrears (a)
893
-
-
(39)
854
CSLL deductibility (Law 9316/96) (b)
-
12,292
(4,000)
77
8,369
IRPJ and CSLL tax assessment - attorney fees (c)
5,697
-
-
414
6,111
Tax assessment - 1990 IRPJ (d)
3,648
-
-
127
3,775
Attorney and other fees (f)
25,973 _________
7,327 _________
(9,563) ___________
1,011 _________
24,748
_________
Total provision for tax contingencies
36,211 _________
19,619 _________
(13,563) ___________
1,590 _________
43,857
_________
_________
_________ _________
___________ _________
Escrow
deposits
(note
11)
(11,554)
(6,342)
10,118
(171)
(7,949)
_________ _________ _________ ___________ _________
(a) Refers to fine for late payment of Federal taxes.
(b) Refers to CSLL that was addressed by an injunction that questions the constitutionality of Law 9.316/96, which
prohibited the deduction of CSLL from its own tax basis and the IRPJ basis. During the year, due to judgments in
similar cases, the chances of loss were reclassified from remote to possible, in accordance with the evaluation of the
Company’s legal advisors.
(c) Refers to attorney fees for the defense in the tax assessment notices issued against the Company in August 2003, December 2006 and December 2007 by the Federal Revenue Service, claiming the payment of income tax and social contribution
on the deductibility of the yield of debentures issued by the Company for fiscal years 1999, 2001 and 2002, respectively. The
tax assessment notices referring to 2001 and 2002 are pending from a final and non-appealable decision from the Board of
Tax Appeals (CARF) ruling. The legal counsel’s opinion is that the likelihood of unfavorable outcome in these tax assessment
notices is remote.
A final and non-appealable administrative decision on the tax assessment notice issued against the Company in August
2003 challenging the deductibility, in fiscal year 1999, was issued on January 2010 that maintains part of the income
tax assessed and the whole of the social contribution. After this decision, on April 7, 2010, the Company filed a lawsuit
to cancel the remaining installment of IRPJ and CSLL. The legal counsel considers that the likelihood of an unfavorable
outcome is remote.
(d) The balance relates to legal fees for defending the interests of the Company and its subsidiaries in tax proceedings.
The amounts provided: (i) R$8,419 refers to legal fees for preparation of defense in the infringement notices of income
tax and social contribution against the Company, issued on June 30, 2009 and August 30, 2013, whose object questioning
the deductibility of the amortization of goodwill arising from the merger of Natura Developments Natura Participações
SA and subsequent merger of both companies by Natura Cosmetics SA. In December 2012, the case concerning the tax
assessment of 2009 was dismissed by the Board of Tax Appeals (CARF) which ruled partially in favor of the Company
to reduce the fine aggravated. On the merits, the decision was unfavorable, which is why the Company is awaiting the
finalization of the judgment to appeal the Superior Chamber of Tax Appeals (CSRF). The related 2013 tax assessment
process was the subject of defense and is awaiting trial. It is noteworthy that similar cases of goodwill were judged favorably in CARF, representing important precedents for the Company. In the opinion of the legal advisors of the Company,
the transaction was structured as tax and its effects are defensible, why the risk of loss is classified as remote, (ii) R$7,309
refers to legal fees for defense in case of violation of IPI, PIS and COFINS issued against the subsidiary, in December 2012,
in respect of events that occurred in calendar year 2008. The main question of the tax authorities is that the subsidiary
would have practiced incorrectly priced sales for the Company. In May and June 2013, the cases were tried by the Federal
Revenue of Brazil Trial in Ribeirão Preto / SP, decided that (a) for the subsidiary to cancel the tax credit charged in the
assessment of PIS / COFINS and (b) contrary to the Controlled to keep the tax credit charged in the assessment of IPI.
Both decisions will be reconsidered on appeal stage the 2nd administrative level (Board of Tax Appeals - CARF). In the
opinion of the legal advisors of the Company, the transaction was structured as tax and its effects are defensible, why the
risk of loss is classified as remote.
(e) Refers to the writ of mandamus challenging the constitutionality of Law No. 9.316/96, which prohibited the deduction of
social contribution of its own tax base and the base of the income tax calculation. In the opinion of the legal advisors of the
Company, the likelihood of loss is probable, considering the current position of the STF.
Civil contingencies
Company
__________________________________________________________________
Inflation
2012Additions
Paymentsadjustment
2013
_______
_______ Reversals
_________ ___________
__________ ________
Several civil lawsuits (a)
6,531
8,417
(2,541)
(7,014)
117
5,510
Lawyer fees - environmental
civil lawsuit (b) 1,867
-
-
-
423
2,290
Civil lawsuits and lawyer
fees - Nova Flora
Participações Ltda. 3,743 _______
- _________
- ___________
- __________
363 ________
4,106
_______
Total
12,141 _______
8,417 _________
(2,541) ___________
(7,014) __________
903 ________
11,906
provision for civil contingencies _______
_______
_______
_________
___________
__________
________
Escrow
deposits (note 11)
(2,056) _______
(15) _________
4 ___________
- __________
(11) ________
(2,078)
_______
_______
_______
_________
___________
__________
________
Consolidated
__________________________________________________________________
Inflation
2012Additions
Paymentsadjustment
2013
_______
_______ Reversals
_________ ___________
__________ ________
Several civil lawsuits (a)
7,640
8,844
(2,534)
(7,464)
273
6,759
Lawyer fees - environmental
civil lawsuit (b) 2,063
-
(6)
(6)
443
2,494
Lawyer fees - IBAMA (c)
2,792
-
-
-
161
2,953
Civil lawsuits and lawyer
fees - Nova Flora
Participações Ltda
3,743 _______
- _________
- ___________
- __________
361 ________
4,104
_______
Total
16,238 _______
8,844 _________
(2,540) ___________
(7,470) __________
1,238 ________
16,310
provision for civil contingencies _______
_______
_______
_________
___________
__________
________
Escrow
deposits (note 11)
(2,167) _______
(15) _________
4 ___________
- __________
(12) ________
(2,190)
_______
_______
_______
_________
___________
__________
________
(a) As of December 31, 2013, the Company and its subsidiaries are parties to 2,106 civil lawsuits and administrative proceedings (2,247 as of December 31, 2012), of which 1,980 were filed with civil courts, special civil courts and the consumer
protection agency (PROCON) by Natura Beauty Consultants, consumers, suppliers and former employees, most of which
claiming compensation for damages.
(b) The provision includes R$1,646 with respect to legal fees, ad exitum, for the defense of the Company’s interests in the
public lawsuit filed by the Federal Public Prosecution Office of Acre against the Company and other institutions for alleged
access to the traditional knowledge associated to the asset (“murumuru”). Our legal counsel’s opinion is that the risk of
losses is remote.
The provision for tax contingencies is broken down as follows:
Late payment fines on federal taxes
paid in arrears (a)
IRPJ and CSLL tax assessment attorney fees (c)
Tax assessment - 1990 IRPJ (d)
Attorney and other fees (f)
CSLL deductibility (Law 9316/96) (b)
Consolidated
__________________________________________________________________
Inflation
2012 AdditionsReversalsadjustment
2013
_________
_________ _________ ___________ _________
-
5,697
-
3,648
-
13,737
5,691
- _________
8,292
_________
23,903
13,983
_________ _________
_________
_________
(9,913) _________
(6,342)
_________
_________ _________
-
33
854
-
414
-
127
(5,431)
551
- ___________
77
_________
(5,431)
1,202
_________ ___________
___________
_________
9,049 ___________
(150)
_________
_________ ___________
6,111
3,775
14,548
8,369
_________
33,657
_________
_________
(7,356)
_________
_________
(c) Refers to attorney fees for the defense in the tax assessment notice issued by “Instituto Brasileiro do Meio Ambiente
e dos Recursos Naturais Renováveis”, or IBAMA (Brazilian environmental agency) against the Company in 2010 and 2011
for alleged irregular access to biodiversity. Through December 2013, the Company had been imposed 70 fines by IBAMA,
totaling approximately R$21,955, and filed administrative defenses for all of them, two of the administrative proceedings
were subsequently cancelled. In the remaining cases, there was no definitive decision issued by IBAMA, which is why such
fines do not represent eligible credits. The Company’s management and its legal counsel consider the risk of loss in these
fines for the alleged non-sharing of benefits and the fines for the alleged irregular access to biodiversity as remote due to full
compliance with all the principles established in the Convention on Biological Diversity (“CBD”), an international treaty signed
during Rio-92 and of the illegality and unconstitutionality of the current legal framework, which incorporates the CBD in the
Brazilian legal system. Except for inputs from Federal Government land - which refuses to negotiate – despite having recently
established the Negotiation Committees, the Company shares benefits in 100% of the accesses in the use of biodiversity; it
is the first to share benefits with traditional communities and detains the most of the requests with the Regulatory Body for
authorization to have access to biodiversity as well as in relation to the authorizations already issued to private companies.
Labor contingencies
As of December 31, 2013, the Company and its subsidiaries are parties to 615 labor lawsuits filed by
former employees and third parties (589 as of December 31, 2012), claiming the payment of severance
amounts, salary premiums, overtime and other amounts due, as a result of joint liability. The provision is
periodically reviewed based on the progress of lawsuits and history of losses on labor claims to reflect
the best current estimate.
Company
___________________________________________________
Inflation
Additions Reversalsadjustment
2013
2012
_______________________________________________
Total
2,444
3,894
(1,048)
6
5,296
provision for labor contingencies
_______________________________________________
_______________________________________________
Escrow
deposits (note 11)
(3,031)
(1,678)
-
-
(4,709)
_______________________________________________
_______________________________________________
Consolidated
___________________________________________________
Inflation
2012
Additions Reversalsadjustment
2013
_______________________________________________
Total
10,8408,830
(7,043)1,03513,662
provision for labor contingencies
_______________________________________________
_______________________________________________
Escrow
deposits (note 11)
(5,153)
(1,861)
-
-(7,014)
_______________________________________________
_______________________________________________
(h) On April 9, 2012, Natura Cosmetics SA submitted to arbitration controversial issues of the Private Rental Atypical and
Other Covenants, entered into on December 21, 2010 with RB Capital Real Estate Investment Fund Anhanguera - IFI and
Marcacel holdings resulting from delay in delivery of the Enterprise, as well as bursts in construction spending much higher
values and that Natura recognizes as “ additional requests for scope” and amounting to R$11,780 (see financial leasing fixed
and intangible notes 14 and Borrowings 15. the total disputed amounts to nominal values , approximately R$50 million in
addition to fines and indemnities in minimum nominal amounts of £ 16 million that Natura snake in his favor. ‘s Terms of
Reference was signed by parties on 19 September 2012 and in November 5, 2012 Natura Cosmetics SA (“Applicant”) filed
its Initial claims. On December 18, 2012, RB Capital filed its reply and opposed his request and in 21 January 2013, Natura
presented its final manifestation. On February 26, 2013, RB Capital to submit a rejoinder and September 2013 occurred
instruction hearing. On November 26, 2013, the parties presented closing arguments. Waits up rendition of judgment by
arbitral tribunal within 90 days from the submission of final arguments legal counsel evaluate the possibility of loss as possible.
Contingent assets
The Company and its subsidiaries material contingent assets are as follows:
a) The Company and its subsidiaries Industry and Trade Cosmetics Natura Ltda., Natura Innovation and
Technology Products Ltda. and Natura Logistics and Services Ltda. plead the refund of the ICMS and
Service Tax - ISS included in the calculation basis of PIS and COFINS, collected from March 2004 to March
2007. The amounts of the refund claims, updated through December 31, 2013 amounted to R$147,220
(R$108,618 on December 31, 2012).The opinion of legal counsel is that the probability of loss is possible.
Contingent liabilities - possible risk
The Company and its subsidiaries do not recognize as its assets contingent assets listed above, as the
pronouncement CPC 25 - PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS.
The Company and its subsidiaries are parties to tax, civil and labor lawsuits, for which there is no reserve
for losses recorded, because the risk of loss is considered possible by management and their legal counsel.
These lawsuits are as follows:
19. OTHER PROVISIONS
Tax:
Declaratory Action - ICMS - ST (a)
IPI assessment notice Administrative proceeding - ICMS - ST assessment, DF (b)
Administrative proceeding - ICMS - ST assessment, PA (b)
Administrative proceeding - tax debt - ICMS - ST, RS (c)
Tax assessment notice – Rio Grande do Sul State
Department of Finance Tax assessment notice - São Paulo State
Department of Finance - ICMS audit (d)
Administrative proceeding – Offset - COFINS / Freight (e) Administrative proceeding - ICMS - ST assessment, PR (f)
Tax assessment - transfer pricing on loan
agreements with foreign related company
Administrative proceeding - tax debt - ICMS - ST –RS (g) Others
CompanyConsolidated
______________________________________
2013 ________
2012 ________
2013 ________
2012
________
705,112679,636 ________
754,696762,738
________
________ ________
________ ________ ________
________
Civil
Labor
105,996
-
9,489
571
10,535
88,475
2,929
9,652
571
9,950
105,996
-
9,489
571
10,535
88,475
2,929
9,652
571
9,950
-
-
-
10,719
152,380
36,502
104,739
145,351
34,576
101,383
152,380
36,502
104,739
145,351
34,576
101,383
-
1,915
-
1,915
34,292
34,815
34,292
34,815
145,055131,027
165,085147,116
________
________ ________
________
68,036 38,96168,505 39,334
37,51780,031
66,602135,952
________
________ ________
________
(a) As of December 31, 2013, the balance recorded is broken down as follows:
1. ICMS - ST - PR - R$47,499 (R$46,670 as of December 31, 2012) - lawsuit filed by the Company challenging the changes
in ICMS - ST tax basis introduced by Paraná Decree 7018/06. The amount discussed in the lawsuit, related to the period
from January 2007 to November 2011, is fully deposited in escrow, as mentioned in notes 11 and 17 (b), and its collection
is suspended.
2. ICMS - ST - DF - R$31,723 (R$23,904 as of December 31, 2012) - declaratory action filed by the Company to challenge
its liability for the payment of ICMS - ST due to the lack of a statute on and statutory criteria for the determination of the tax
base of this tax or, subsequently, the need to enter into an Agreement to set out the ICMS - ST tax basis. The amount under
litigation, related to the period from February 2009 to December 2013, is fully deposited in escrow, as referred to in notes
11 and 17 (b), and its collection is suspended.
3. ICMS - ST - MT – R$3,922 (R$3,674 as of December 31, 2012) - declaratory action filed by the Company to challenge its
liability for the payment of ICMS - ST to the State of Mato Grosso due to the lack of a statute on and statutory criteria for
the determination of the tax base of this tax or, subsequently, the need to enter into an Agreement to set out the ICMS - ST
tax basis. The amount under litigation, related to the period from October 2009 to July 2011, is fully deposited in escrow, as
referred to in notes 11 and 17 (b), and its collection is suspended.
4. ICMS - ST - SC – R$22,852 (R$14,227 as of December 31, 2012) - declaratory action filed by the Company to challenge its
liability for the payment of ICMS - ST to the State of Santa Catarina due to the lack of a statute on and statutory criteria for
the determination of the tax base of this tax or, subsequently, the need to enter into an Agreement to set out the ICMS - ST
tax basis.The amount under litigation, related to the period from July 2011 to August 2011 and February 2012 to March 2013,
is fully deposited in escrow, as referred to in notes 11 and 17 (b), and its collection is suspended.
(b) Tax assessment for ICMS - ST, required by the Federal District and the State of Pará, due to the alleged underpayment
related to the difference required as ICMS - ST.The Company presented its defense at the administrative level and is awaiting
the final judgment.
(c) Assessment notice for ICMS - ST, required by the state of Rio Grande do Sul, by reason of their status as tax substitute,
for the collection of ICMS allegedly, due to the alleged underpayment related to the difference required to as ICMS - ST. The
Company proposed annulment action to remove this requirement and awaits its final judgment.
(d) assessment notices issued by the State of Parana for alleged incorrectness of ICMS-ST due to the state in the period from
February to December 2007, January-April 2008, October 2008 to January 2009, March 2009 to September 2010, November 2010 and April-August 2011. The ICMS-SP charged by the state is filed in a lawsuit filed by the Society for discussing the
legality of the changes promoted by the calculation basis Paraná Decree 7.018/06, as mentioned in notes 11 and 17 (b). The
tax assessments are awaiting trial at the administrative level.
(e) Refers to the refusal of refund claimed the credit right order acknowledgment (COFINS), calculated (belatedly) on
expenditure incurred on freight in sales of products subject to taxation concentrated (single-phase) in the period between
May 2004 to October 2007, and therefore not approved the compensation declared. The Company filed a defense at the
administrative level and is awaiting their final judgment.
(f) Infraction notices by the Federal District for alleged incorrectness of ICMS-ST due to the State for the periods from
January 2007 to December 2011. The tax is levied by the State filed the lawsuits filed by the Company for discussing the
illegality of updates to base calculation promoted by the State, as mentioned in notes 11 and 17.The Company filed a defense
at the administrative level and is awaiting his trial.
(g) Annulment Action aiming cancel tax requirements object of automobiles Release No. 0018669050 and No. 0018669069,
which are demanded by the alleged differences in ICMS for the periods 01/01/2006 to 31/12/2006 and 01/01 / 2007 to
28/02/2008, to (I) use the benefit of reduced basis of ICMS-ST without a proportional reduction of their claims relating to
the inputs of goods (condition for enjoyment) argument, and (II) undue reduction of the internal rate when performing the
calculation of the tax payable by applying the percentage reduction benefit calculation base.
Company
Consolidated
__________________________________________________________
2012
2012
Restated1/1/2012
2013
_________________
_________ _________
________ _________
Retirees’ healthcare plan
Carbon credit (a)
Provision for acquisition of
noncontrolling interests (b)
Other
provisions
26,420
9,710
41,709
13,686
19,332
16,486
36,606
9,710
54,886
13,686
28,132
16,486
141,640
-
-
141,640
-
19,99514,291
-75,01036,269191
_________________
_________
_________ ________ _________
197,76569,686
35,818262,966104,84144,809
_________________
_________________ _________
_________ _________
_________ ________
________ _________
_________
a) The Company and its subsidiaries offer a group of paid staff who made inactive and fixed contributions
to the health care plan, the right to stay in the health plan after retirement by paying the average premium.
The recognition of actuarial gains and losses are recognized through other comprehensive income (OCI)
as mentioned in Note 2.25. On December 31, 2013, the weighted average life is 19 years and had 912 to
1,770 employees in the Company and Consolidated, respectively.
On December 31, 2013, the Company and its subsidiaries had a provision for actuarial liabilities related to
this plan in the amount of R$26,420 and R$36,608 in the parent company and Consolidated, respectively
(R$41,709 and R$54,886, respectively, in the Company and Consolidated at December 31, 2012).
During the year the consequences of this plan in income are related to the cost of service in the amount
of R$1,790 and R$2,433 in the Company and Consolidated, respectively, and the interest cost of R$3,938
and R$5,183 in the company and Consolidated, respectively.
The actuarial liability shown was calculated by an independent actuary considering the following main
assumptions:
Financial discount rate
Increase in medical expenses
Long-term inflation rate
Final rate of medical inflation – after 10 years
Rate of growth of medical costs for ageing costs
Rate of growth of medical costs for aging contributions
Invalidity table General mortality table Turnover table
Annual percentage
(in
nominal terms)
____________________
2013 _________
2012
_________
11.50
9.50
11.40 to 6.40 11.20 to 6.20
5.40
5.20
6.40
6.20
3.50
3.50
1.50
1.50
Wyatt 85
Wyatt 85
Class 1
Class 1
RP2000
RP2000
T-9 service T-9 service
table
table
The changes in the actuarial liability for the year ended December 31, 2013 are as follows:
Company current service cost
Cost of interest
Recognition
of actuarial Losses/(Gains) in OCI
CompanyConsolidated
______________________________________
2013 ________
2012 ________
2013 ________
2012
________
1,790
978
2,433
1,588
3,938
1,921
5,173
2,915
(21,015)20,230(25,883)22,251
________
________ ________ ________
(15,287)23,129(18,277)26,754
________
________ ________
________ ________
________
________
________
(b) Liability recorded as obligation signed the purchase and sale of Emeis Holdings Pty Ltd contract, which defines the
acquisition of non-controlling interest from 2015, with a maximum term in 2025. The payment will be made based on the
performance of the Company on the date of exercise of the option.
20. SHAREHOLDERS’ EQUITY
Dividends
Interest
on capital
a) Issued capital
As of December 31, 2013, the Company’s capital was R$427,073.
In the year of 2013 there was no change in capital, which is made up of 431,239,264 subscribed and
paid-up common registered shares. The Company is authorized to increase its capital, irrespective of an
amendment to the articles of incorporation, up to the limit of 441,310,125 (for hundred and forty-one
million, three hundred and ten thousand, one hundred and twenty-five) common shares with no par value
by resolution by the Board of Directors, which will lay down the issuance conditions, including price and
deadline for payment.
b) Dividend and interest on capital payment policy
The shareholders are entitled to receive every year a mandatory minimum dividend of 30% of net income,
considering principally the following adjustments:
• Increase in the amounts resulting from the reversal, in the period, of previously recognized reserves for
contingencies.
• Decrease in the amounts intended for the recognition, in the period, of the legal reserve and reserve
for contingencies.
• Whenever the amount of the minimum mandatory dividend exceeds the portion of the net income
realized for the year, management may propose, and the General Assembly approve, to allocate the excess
to the earnings reserve.
The bylaws allow the Company to prepare balance sheets and, based on these balance sheets, authorize
the payment of dividends upon approval by the Board of Directors.
On April 17, 2013 the Company paid dividends totaling R$469,512 and interest on capital in the total
gross amount of R$21,831 (R$18,557, net of withholding tax), as distribution recommended by the Board
of Directors on February 06 2013, and ratified at the Annual General Meeting held on April 12, 2013,
relating to the net profit of the year 2012, which added to R$327,018 of dividends and R$36,515 of interest on equity paid in August 2012 correspond to a distribution of approximately 100 % of net income
in fiscal 2012.
496,393491,343
________
________ ________
________
c) Treasury shares
The Company repurchased during the period of 2013 1,375,500 common shares, at the average price of
R$43, 74, in order to meet the exercise of options granted to the Company’s and its direct and indirect
subsidiaries’ management and employees.
As of December 31, 2012, line item ‘Treasury shares’ is broken down as follows:
______________________________________
2012
Number Average price
of Share ___________
R$’ 000 per
share - R$
___________
_____________
3,021,757
102,849
34.04
Used
(1,080,412) ___________
(36,744) _____________
34.01
___________
Balance at yearend
Repurchased
Used
Balance at yearend
d) Share premium
Additionally, on February 12, 2014, the Board of Directors approved “ ad referendum “ of the Annual General Meeting to be held on April 11, 2014, the proposal for payment of dividends and interest on capital,
amounts in R$474,004 and R$22,389 (R$19,031, net of withholding tax), respectively, relating to income
of 2013, which added to R$337,305 of dividends and R$27,528 of interest on equity paid in August 2013
results correspond to a distribution of approximately 100 % of net income for the year 2013.
e) Legal reserve
In November 2013 was published the Provisional Measure nº. 627 establishing that the tax exemption
for the payment of dividends only applies to profits calculated based on Brazilian accounting standards in
accordance with the provisions of Law nº 6.404/76 force in December 2007.
f) Retained earnings reserve
Dividends were calculated as follows:
Net income for the year Tax incentive reserve - investment grant
Calculation basis for minimum dividends
Mandatory minimum dividends
Annual minimum dividend
Proposed dividends
Interest on capital
IRRF
on interest on capital
Total
dividends and interest on capital, net of IRRF
Company
__________________
2013 ________
2012
________
842,608
861,223
18,618
(6,346)
861,226
854,877
30%
30%
258,368
256,463
811,309
796,531
49,917
58,347
(7,488) ________
(8,752)
________
853,738846,126
________
________
________
________
Amount
exceeding mandatory minimum dividend 595,370589,663
________
________ ________
________
Dividends per share - R$
1.8906
1.8559
Interest
on capital per share, net - R$0.09890.1156
________ ________
Total
1.98951.9715
________
________
dividends and interest on capital per share, net - R$
________
________
As referred to in note 2.21, the portion of dividends exceeding minimum dividends, declared by management after the reporting period but before the authorization date for issuance of these financial
statements, is not be recorded as a liability in the related financial statements and the effects of such
supplementary dividends must be disclosed in a note. As a result, as of December 31, 2013 and 2012, the
following portions of dividends exceeding mandatory minimum dividends were recorded in shareholders’
equity as ‘Proposed additional dividends’:
1,941,345 ___________
66,105 _____________
34.05
___________
___________
___________ _____________
As of December 31, 2013, line item ‘Treasury shares’ is broken down as follows::
On July 24, 2013, the Board of Directors approved the payment of interim dividends and interest on own
capital, referring to the income earned in the first half of 2013, amounting to R$337,305 (R$0.784050703
per share) and R$27,528 gross of withholding tax (R$0.063987094 gross per share), respectively.The total
amount of interim dividends and interest on capital equals 100 % of Consolidated net income in the first
half of 2013. The Company made the payment of such interim dividends and interest on own capital on
August 14, 2013.
For income earned in 2013 measures the change in legislation to deal with Provisional Measure, Natura
calculate the profit for dividend purposes were considered this changes.
Company
__________________
2013 ________
2012
________
474,004469,512
22,38921,831
________
________
2013
______________________________________
Number Average price
of Share ___________
R$’ 000 per
share - R$
___________
_____________
1,941,345
66,105
34.05
1,375,50060,172
43.75
(1,196,386)(42,293)
35.35
___________
___________ _____________
2,120,459 ___________
83,984 _____________
39.61
___________
___________ ___________ _____________
Refers to the premium generated on the issuance of 3,299 common shares resulting from the capitalization of debentures totaling R$100,000, occurred on March 2, 2004. During the period ended on December 31, 2013, the use of 1,196,386 treasury shares in connection with the stock option plan involved
premium of R$6,753.
Since the balance of legal reserve plus capital reserves, addressed by article 182, paragraph 1, of Law
6404/76, exceeded 30% of the capital, the Company decided, in accordance with article 193 of the same
Law, not to recognize a legal reserve on net income earned in the years from 2006.
On December 31, 2013 and 2012, the Company has not recognized a reserve for retained earnings in
accordance with Article 196 of Law No. 6.404/76.
The Annual General Meeting to approve the financial statements also performs the necessary decisions in
order to meet the legal requirements on the limit of the balance of profit booking.
g) Other comprehensive income
The Company recognizes in this account the effect of exchange rate fluctuations on investments in foreign
subsidiaries and actuarial gains and losses arising from employee benefit plan, as outlined in note 24. To
exchange differences accumulated effect will be reversed to the income statement as a gain or loss on the
disposal or write-off of investment. For Actuarial gains and losses, the amounts will be recognized at the
time of reassessment of actuarial liabilities.
21. SEGMENT INFORMATION
Segment reporting is consistent with management reports provided by the main operating decision
-maker to assess the performance of each segment and the allocation of funds. Although the main
decision-maker analyzes the information on revenue at its different levels, according to the reports
used by management to make decisions, the Company’s business is mainly segmented based on the
sales of cosmetics by geography, which are as follows: Brazil, Latin America (“LATAM”) and other
countries. In addition, LATAM is divided into two groups for analysis: (a) Argentina, Chile and Peru
(“Consolidating Operations”); and (b) Mexico and Colombia (“Operations in Implementation”). The
segments’ business features are similar and each segment offers similar products through the same
consumer access method.
(b) Breakdown of operating expenses and cost of sales by nature:
Net revenue by geography is as follows in 2013:
• Brazil: 84.0%
CompanyConsolidated
_______________________________________
2013 201220132012
_________ Restated
_________ _________ Restated
_________
• Consolidating Operations: 9.4%
• Operations under Implementation: 4.5%
• Other: 2.2%
The accounting practices for each segment are the same as those described in note 2, description of
Natura’s business and significant accounting policies. The performance of segments of The Company has
been evaluated on the basis of the information described in the table below.
The amounts provided to the Executive Committee related to net income and total assets are consistent
with the balances recorded in the financial statements and with the accounting policies applied.
2013
______________________________________________________
Depreciation Financial
Net Net
and
expenses Income
revenue _______________________________________
incomeamortization net
tax
_________
Brazil
Argentina, Chile and Peru
México,Venezuela and Colombia
Other (*)
5,886,357 868,110 (173,072) (148,372)(383,053)
659,037
46,680
(6,718)
(11,744)
(20,056)
312,191
(41,114)
(4,108)
(1,035)
(4,731)
158,859 _______________________________________
(32,058)
(8,657)
2,899
(1,590)
_________
Consolidated
7,010,311 841,618 (192,555) (158,252)(409,430)
_________
_________ _______________________________________
_______________________________________
______________________________________________________
2012 (Restated)
Depreciation Financial
Net Net
and
expenses Income
revenue _______________________________________
incomeamortization net
tax
_________
Brazil
México and Colombia
Other
(*)
Consolidated
5,614,178 907,359 (132,712) (90,920)(402,117)
487,171
13,985
(5,074)
(2,239)
(11,771)
226,713
(45,436)
(2,913)
(291)
(990)
17,607 _______________________________________
(14,686)
(479)
-
_________
6,345,669 861,222 (141,178) (93,450)(414,878)
_________
_________ _______________________________________
_______________________________________
2013
2012 (Restated)
______________________________________________________________
Noncurrent Current Total Noncurrent Current
Total
assets
liabilities
assets assets liabilities assets
_____________________________
_____________________________
Brazil
2,483,488 1,998,6335,453,787 1,919,5012,202,910 4,949,655
41,403
168,869
348,993
25,586
151,104
277,465
México,Venezuela and Colombia
17,551
95,469
151,013
14,271
54,177
97,875
Other
193,45563,869294,528 _____________________________
19,0436,52131,723
(*)
_____________________________
Consolidated
2,735,8972,326,8406,428,321
1,978,4012,414,7125,356,718
_____________________________
_____________________________ _____________________________
_____________________________
(*) Includes operations in France and Corporate LATAM and Aesop.
The Company has only on class of products that is sold to Natura Beauty Consultants which is classified
as “Cosmetics”. As such, disclosure of information by products and services is not applicable.
Cost of sales
Raw material/packaging Material
Workforce
Depreciation
Others
Marketing and selling expenses
2,379,802 _________
2,438,873 _________
2,089,785 _________
1,868,045
_________
2,379,802 2,438,873 1,718,757 1,548,593
-
-162,121150,355
-
-65,68948,849
-
-143,218120,248
1,479,892 _________
1,642,380 _________
2,470,730 _________
2,212,205
_________
Research and development
Other administrative expenditure
Depreciation
Management compensation (note 28.2)
-
-
183,234
158,870
1,156,101
853,945
679,169
543,190
65,399 44,13799,75169,478
26,083
29,555
61,943
90,799
18,554 _________
20,739 _________
18,554 _________
20,739
_________
Freight
Marketing, sales force and other sales expenses
Depreciation
General
and administrative expenses
Total
286,251 259,176291,583263,301
1,169,671 1,363,747 2,152,766 1,926,051
23,970 19,45726,38122,853
1,221,500 _________
898,082 _________
962,154 _________
771,538
_________
5,125,831_________
5,029,6295,603,1664,963,326
_________
_________ _________
_________
_________
_________ _________
24. EMPLOYEE BENEFITS
Payroll and bonuses
Pension Plan (note 24.2)
Employee profit sharing (note 24.1)
Executives’ compensation (note 24.2)
Taxes
payable
CompanyConsolidated
_______________________________________
2013
201220132012
_________ _________
_________ _________
277,894
230,801
675,269
521,149
3,338
3,368
5,012
4,849
30,433
37,709
66,293
90,799
7,331
2,711
12,491
10,844
106,340 _________
84,265 _________
170,836 _________
175,882
_________
425,336 358,854929,901803,523
_________
_________ _________
_________ _________
_________ _________
_________
24.1. Profit Sharing
The Company and its subsidiaries pay profit sharing to their employees and officers tied to the achievement of operating targets and specific goals, established and approved at the beginning of each year. As of
December 31, 2013 and 2012, the amounts below were recorded as profit sharing:
Employees
Officers (*)
CompanyConsolidated
_______________________________________
2013
201220132012
_________
_________
_________ _________
26,083 29,55561,94382,645
4,350 _________
8,154 _________
4,350 _________
8,154
_________
30,433
37,70966,29390,799
_________
_________
_________
_________
_________
_________ _________
_________
The Company has a diversified customer portfolio, with no concentration of revenue.
(*) Included in line item ‘Management compensation’.
The revenue from foreign related parties reported to the Executive Committee was measured in accordance with that presented in the income statement.
24.2. Executives’ compensation
22. NET REVENUE
The Board of Directors, upon granting of options, meets annually in order to establish the option granting
plan for the current year, on the basis approved by the General Meeting, indicating the directors and
managers who will receive the options and the total number to be distributed.
CompanyConsolidated
_______________________________________
2013
201220132012
_________
_________
_________ _________
Gross revenue:
Domestic market
8,039,201 7,627,373 8,037,618 7,626,061
Foreign market
-
- 1,412,804
938,623
Other sales
182 _________
- _________
1,281 _________
1,409
_________
Returns and cancellations
Taxes
on sales
Net revenue
7,627,373 9,451,703 8,566,093 8,039,383
(17,755)
(19,145)
(27,632)
(26,147)
(1,678,758) _________
(1,359,142) _________
(2,413,760) _________
(2,194,277)
_________
6,342,870 _________
6,249,086 _________
7,010,311 _________
6,345,669
_________
_________
_________ _________
_________
Under the program format valid until 2008, the options granted had maturity term of four years. Under
this format, 50% of the options matured at the end of the third year and the remaining 50% matured at
the end of the fourth year. The maximum option exercise term is of 6 years as from March 30 of the year
in which the related plan was approved.
In 2009, the program format was changed so that 100% of the options were considered to have matured
at the end of the fourth year, with the possibility of early maturity at the end of the third year, under the
condition of cancelation of 50% of the options granted in the plans. The maximum option exercise term
started to be of 8 years as from the Board of Directors Meeting that approved the plan.
In 2013 2,387,703 options were granted at an exercise price of R$51.95.
23. OPERATING EXPENSES AND COST OF SALES
(a) Breakdown of operating expenses and cost of sales by function:
CompanyConsolidated
_______________________________________
2013 201220132012
_________ Restated
_________ _________ Restated
_________
Cost of sales
Marketing and selling expenses
General and administrative expenses
Management
compensation (note 28.2)
Total
2,379,802 2,438,873 2,089,785 1,868,045
1,479,892 1,642,380 2,470,730 2,212,205
1,221,500
898,082
962,154
771,538
26,083
29,555
61,943
90,799
18,554 _________
20,739 _________
18,554 _________
20,739
_________
5,125,831_________
5,029,6295,603,1664,963,326
_________
_________
_________
_________ _________ _________ _________
The changes in the number of outstanding stock options and their related weighted-average prices are
as follows:
Granted
Cancelled
Exercised
Balance
at yearend
20132012
________________________
________________________
Average Average
exercise price Options exercise price Options
share - R$ (thousands)
per
share - R$ (thousands)
_____________
_________ per
_____________
_________
35.52
5,985
32.84
7,363
51.952,388
-
46.24(716)
34.34(298)
29.65 _________
(1,196) _____________
28.58 _________
(1,080)
_____________
43.97 _________
6,461 _____________
35.52 _________
5,985
_____________
_____________
_________ _____________
_________
Out of the 6,461,000 outstanding options as of December 31, 2013 (5,985,000 outstanding options as of
December 31, 2012), 2,374,000 outstanding options are vested (1,670,000 outstanding options as of December 31, 2012). The Options exercised in 2013 resulted in the use of 1,196,000 shares of outstanding
treasury shares (1,080,000 shares for the year ended December 31, 2012).
The expense related to the fair value of the options granted during the year ended December 31, 2013,
according to the elapsed vesting period, was R$7,331 and R$12,491, Company and on a Consolidated
basis, respectively (R$2,711 Company and on a Consolidated basis, respectively, as of December 31, 2012).
The stock options outstanding at the end of the year have the following vesting dates and exercise prices:
As of December 31, 2013
Remaining
Exercise Existing contractual Vested
Grand date
price - R$
options life
(years)
options
___________________
_____________________
_____________________
April 22, 2008
26.42
277,856
0.31
277,856
April 22, 2009
28.82 1,355,815
3.36
1,355,815
March 19, 2010
42.49 1,480,171
4.28
740,086
March 23, 2011
49.35 1,251,405
5.28
March
18,2013
53.93 _________
2,095,861
7.32 _________
6,461,108
2,373,757
_________
_________ _________
_________
As of December 31, 2012
Remaining
Exercise Existing contractual Vested
Grand date
price - R$
options life
(years)
options
___________________
_____________________
_____________________
April 25, 2007
31.90
163,099
0.32 163,099
April 22, 2008
24.77
454,686
1.33 454,686
April 22, 2009
27.02 2,104,834
4.37 1,052,417
March 19, 2010
39.65 1,766,059
5.29 March
23, 2011
46.27 _________
1,496,752
6.29 _________
5,985,430
1,670,202
_________
_________ _________
_________
As of December 31, 2013, market price per share was R$41.37 (R$58.62 as of December 31, 2012).
The options were measured at their fair values on grant date, pursuant to IFRS 2 - Shared Based Payments.
The weighted average fair value of the options as of December 31, 2013 was R$11.52.
Significant data included in the fair value pricing model of the options granted in 2013:
• Volatility of 30% (36% as of March 23, 2011).
Consolidated
__________________
2013 ________
2012
________
Gains on monetary and exchange variations:
Exchange rate changes on imports
Exchange variation of receivables export
Monetary
variations of financing
12,566
1,655
5,554
3,665
13741
________
________
(a)
Losses on monetary and exchange variations:
Exchange differences on loans Exchange rate changes in
accounts payable in foreign subsidiaries
18,2575,361
________
________ ________
________
(201,451)
(50,134)
(9,881)(2,530)
________
________
(211,332)(52,664)
________
________ ________
________
(b)
Gains and forward swap transactions:
Exchange differences on instrument swap
Recipe of the swap exchange coupons
Revenue from pre swap rate
201,477
49,959
40,036
22,265
12,838________
________
(c)
Losses swap and forward:
Financial costs swap instruments
Exchange variation forward
254,35172,224
________
________ ________
________
(143,002)(56,759)
(8,379)________
________
(151,381)(56,759)
________
________ ________
________
(d)
26. OTHER OPERATING INCOME (EXPENSES), NET
Gain (loss) on sale of property, plant and equipment
PIS and COFINS credits (*)
Untimely used PIS and COFINS credits
Other
operating income (expenses)
Other
operating income (expenses), net
CompanyConsolidated
_______________________________________
2013
201220132012
_________
_________
_________ _________
1.064
1,460
13,397 894
-
715
-
1,665
1.731
7,311
7,299
11,617
(19.963) _________
5,986 _________
(11,845) _________
(25,819)
_________
(17.168) _________
15,472 _________
8,851 _________
(11,643)
_________
_________
_________ _________
_________
(*) The stated amount includes the recognized PIS and COFINS tax credits arising from a favorable outcome in a lawsuit
claiming the unconstitutionality and illegality of the PIS and COFINS taxable basis broadening established by Law 9718/98.
27. EARNINGS PER SHARE
• Dividend yield of 4% (5.3% as of March 23, 2011).
27.1. Basic
• Expected option life of three and four years.
Basic earnings per share are calculated by dividing the net income attributable to the owners of the Company by the weighted average of common shares issued during the year, less common shares bought back
by the Company and held as treasury shares.
• Risk-free annual interest rate of 8.7% (10.9% as of March 23, 2011).
24.3. Pension plan
The Company and its subsidiaries sponsor two employees’ benefit plans: a pension plan, through a private
pension fund managed by Brasilprev Seguros e Previdência S.A., and an extension of healthcare plans to
retired employees.
The defined contribution pension plan was created on August 1, 2004 and all employees hired from that
date are eligible to it. Under this plan, the cost is shared between the employer and the employees so that
the Company’s share is equivalent to 60% of the employee’s contribution according to a contribution scale
based on salary ranges from 1% to 5% of the employee’s monthly compensation.
As of December 31, 2013, the Group did not have actuarial liabilities arising from the former employees’
pension plan.
The contributions made by the Company and its subsidiaries totaled R$3,338 (Company) and R$5,012
(Consolidated) in the period ended December 31, 2013 (R$2,489, Company and R$3,447, Consolidated
in the in the period ended December 31, 2012) and were recorded as expenses in the period.
25. FINANCIAL INCOME (EXPENSES)
Financial income:
Interest on short-term investments
Inflation adjustment and foreign exchange gains (a)
Gains on swap and forward transactions (b) Other financial income
Financial expenses:
Interest on financing
Inflation adjustment and foreign exchange losses (a)
Losses on swap and forward transactions (b)
Gains (losses) on the mark-to-market
of swap and forward derivatives
Other financial expenses
Financial expenses, net
The objective of the breakdowns below is to explain more clearly the foreign exchange hedging transactions contracted by the Company and the related balancing items in the income statement shown
in the previous table:
CompanyConsolidated
_______________________________________
2013
201220132012
_________
_________
_________ _________
52,521
41,895
71,002
60,461
459
-
18,257
5,361
240,647
71,961
254,351
72,224
15,64715,97520,61223,762
_________
_________ _________ _________
309,274129,831364,222161,808
_________
_________ _________ _________
(67,423)
(200,022)
(138,536)
(85,307)
(51,150)
(56,458)
(99,158)
(211,332)
(151,381)
(100,963)
(52,664)
(56,759)
(8,399)
12,706
(18,379)
12,854
(20,814)(17,572)(42,222)(36,625)
_________
_________ _________ _________
(435,194) _________
(197,781) _________
(522,472) _________
(234,157)
_________
(125,920)(67,950)(158,250)(72,349)
_________
_________ _________
_________ _________
_________
_________
_________
2013 __________
2012
__________
Net income attributable to owners of the Company
842,608
874,376
Weighted
average of common shares issued - thousands
431,239,264431,239,264
__________
__________
Weighted
average of treasury shares(1,731,895)(2,362,295)
__________
__________ __________
__________
Weighted
average of outstanding common shares
Basic
earnings
per share - R$
429,507,369428,876,969
__________
__________
__________
__________
1.96182.0388
__________
__________
__________
__________
27.2. Diluted
Diluted earnings per share is calculated by adjusting the weighted average outstanding common shares supposing
that all potential common shares that would cause dilution are converted.The Company has only one category
of common shares that would potentially cause dilution: the stock options.
2013 __________
2012
__________
Net income attributable to owners of the Company
842,608
874,376
Weighted
average of outstanding common shares
429,507,369428,876,969
__________
__________
__________
__________
Adjustment for stock options712,3022,159,288
__________ __________
__________
__________
Weighted average number of common shares
for diluted earnings per share calculation purposes430,219,671431,036,257
__________ __________
Diluted
earnings per share - R$1.95862.0285
__________ __________
__________
__________
28. RELATED-PARTY TRANSACTIONS
On June 5, 2012, an agreement was signed between Indústria e Comércio de Cosméticos Natura Ltda.
and Bres Itupeva Empreendimentos Imobiliários Ltda., (“Bres Itupeva”), for the construction and lease of
a distribution center (HUB), in the city of Itupeva/SP. Messrs. Antonio Luiz da Cunha Seabra, Guilherme
Peirão Leal and Pedro Luiz Barreiros Passos, members of the group of controlling shareholders of Natura
Cosméticos S.A., indirectly hold controlling interest in Bres Itupeva.
28.1. Intergroup balances and transactions
Receivables from and payables to related parties are as follows:
Company
__________________
2013 ________
2012
________
Current assets:
Natura Inovação e Tecnologia de Produtos Ltda. (a)
2,072
10,419
Natura Logística e Serviços Ltda. (b)
1,927
8,597
Indústria e Comércio de Cosméticos Natura Ltda. (c)
5,3706,892
________
________
9,36925,908
________
________
________ ________
Current liabilities:
Trade payables:
Indústria e Comércio de Cosméticos Natura Ltda. (c)
249,843
159,460
Natura Logística e Serviços Ltda. (d)
12,886
38,024
Natura
Inovação
e
Tecnologia
de
Produtos
Ltda.
(e)
13,78957,051
________ ________
276,518254,535
________
________
________ ________
Dividends
and interest on capital payable
452515
________
________
________
________
Related-party transactions are as follows:
Company
________________________________________
Product Sales
Product purchases
_______________________________________
2013
201220132012
_________
_________
_________ _________
3,096,630 3,042,587
-
Natura Cosméticos S.A. - Brasil
-
- 2,835,721 2,815,267
Natura Cosméticos S.A. - Peru
-
-
41,424
37,841
Natura Cosméticos S.A. - Argentina
-
-
79,748
73,032
Natura Cosméticos S.A. - Chile
-
-
50,667
50,211
Natura Cosméticos S.A. - Mexico
-
-
57,956
41,440
Natura Cosméticos Ltda. - Colombia
-
-
26,051
20,100
Natura Europa SAS - France
-
-
3,651
3,463
-
-
1,114 1,217
Natura Logística e Serviços Ltda.
-
-
- 16
Natura
Biosphera Comércio
- _________
- _________
298 _________
_________
3,096,630
3,042,5873,096,6303,042,587
_________
_________
_________ _________
_________
_________
_________
_________
Service provided
Services
received
____________________
___________________
2013
201220132012
_________
_________
_________ _________
Administrative structure: (f)
233,375
267,095
-
Natura Cosméticos S.A. - Brazil
-
-
183,511
209,876
-
-
32,247
36,804
- _________
- _________
17,617 _________
20,415
_________
233,375
267,095233,375267,095
_________
_________
_________ _________
_________
_________
_________
_________
Products and technology research and development: (g)
Natura Cosméticos S.A. – Brazil
210,178
256,910
-
- _________
- _________
210,178 _________
256,910
_________
210,178
256,910210,178256,910
_________
_________
_________ _________
_________
_________
_________
_________
Research and testing “in vitro”: (h)
Natura Innovation et Technologie de Produits SAS - France
1,591
2,923
- _________
-
_________
1,591 _________
2,923
_________
_________
_________
Lease of properties and shared charges: (i)
8,171
7,618
-
-
-
-
Natura Cosméticos S.A. - Brazil
-
-
_________ _________
8,171 _________
7,618
_________
_________
_________
Total
of sales and purchases and services
-
1,591 _________
2,923
_________
1,591 _________
2,923
_________
_________
_________
-
4,734
4,414
1,903
1,774
1,534 _________
1,430
_________
8,171 _________
7,618
_________
_________
_________
3,549,945 _________
3,577,133 _________
3,549,945 _________
3,577,133
_________
(a) Advances granted for provision of product and technology development and market research services.
(b) Advances granted for provision of logistics and general administrative services.
(c) Payables for the purchase of products.
(d) Payables for services described in item (f).
(e) Payables for services described in item (g).
(f) Logistics and general administrative services.
(g) Product and technology development and market research services.
(h) Provision of in vitro research and testing services.
(i) Lease of part of the industrial complex located in Cajamar, SP and buildings located in the municipality of Itapecerica da Serra, SP.
The main intercompany balances as of December 31, 2013 and December 31, 2012, as well as the intercompany transactions that affected the years then ended, refer to transactions between the Company and
its subsidiaries.
Because of the Company’s and subsidiaries’ operational model, as well as the channel chosen to distribute
products, direct sales via Natura Beauty Consultants, a substantial portion of sales is made by the subsidiary
Indústria e Comércio de Cosméticos Natura Ltda. to the parent company Natura Cosméticos S.A. in Brazil
and to its foreign subsidiaries.
Sales to unrelated parties amounted to R$9,100 for the period ended December 31, 2013 (R$7,851 for the
period ended December 31, 2012).
There is no allowance for doubtful accounts recognized for intercompany receivables on December 31,
2013 and December 31, 2012 since there are no past-due receivables with risk of default.
According to note 14, the Group companies usually grant each other pledges and collaterals to guarantee
bank loans and financing.
In May 2013, the company Eva Movies Audiovisual Ltda. ME, one of whose members is the son of Mr.
Alessandro Carlucci, Natura Cosmetics SA president, started providing original video production for the
Company, especially for the “Natura Meeting” and event services for the channel “Love Makeup “the estimated contract term is 24 months and the estimated value is R$797.
28.2. Key management personnel compensation
The total compensation of the Company’s and its subsidiaries’ Management is as follows:
2013
2012
_______________________
_______________________
Compensation
Compensation
_______________________
_______________________
VariableVariable
Fixed _______
(*)
Total
(*)Total
______
______ Fixed
______ _______
______
Board of Directors
6,541
1,357
7,898
5,654
2,344
7,998
Officers (statutory)
7,664 _______
2,992 ______
10,656 ______
6,931 _______
5,810 ______
12,741
______
Total
14,205 _______
4,349 18,554 ______
12,585
8,154 20,739
______
______
_______ ______
______ ______ _______
_______ ______
______
Executives (not statutory)
35,701 _______
9.853 ______
45,554 ______
28,964 _______
20,345 ______
49,309
______
______ _______ ______ ______ _______ ______
(*) Refers to profit sharing recorded in the year.The amounts include any additions and/or reversals to the provision recorded
in the previous year in view of the final assessment of the targets established for directors, officers and executives.
28.3. Share-based payments
Breakdown of Company officers and executives’ compensation:
Officers
Executives
2013
2012
_________________________________
_________________________________
Stock option grant
Stock option grant
_________________________________
_________________________________
Stock option
Average
Stock option
Average
balance
exercise price balance exercise price
(number) (a) _________________
R$ (b)
(number) (a)
R$ (b)
________________
________________
_________________
1,697,035
43.97
1,564,890
35.52
________________
________________ _________________
_________________ ________________
________________ _________________
_________________
2,458,019
43.972,666,136
35.52
________________
_________________
________________
_________________
________________ _________________ ________________ _________________
(a) Refers to the balance of unexercised vested and unvested options at the end of the reporting period.
(b) Refers to the weighted-average exercise price of the option at the time of the stock option plans, adjusted for inflation
based on the Extended Consumer Price Index (IPCA) through the end of the reporting period.
29. BUSSINESS COMBINATION
a) Emeis Holdings Pty Ltd
On February 28, 2013, the Company, through the holding company Natura Australia Pty Ltd (“Natura
Australia”), completed the acquisition of 65% of the voting capital of Emeis Holdings Pty Ltd (“Emeis”),
the final amount of AU $ 71,104.
The Emeis is primarily engaged in the development and marketing of cosmetics and premium beauty and
operates under the brand name “Aesop” in Australia, Asia, Europe and North America. The Company
acquired Emeis to start operations in the retail market and expand its presence in the international market.
Following the fair values of identifiable assets and liabilities at the date of acquisition Emeis translated at the
exchange rate prevailing on February 28, 2013 are presented:
Assets
availability customers stocks other assets Income Taxes and Contrib. social Deferred immobilized intangible Intangible assets identified: brands Relationships with retail customers
Fair value at the
recognition
(R$)
______________
10,896
5,304
12,024
5,021
3,054
15,607
3,931
79,691
______________
1,286
______________
______________
136,814
continue>>
continuation>>
Liabilities
Providers Tax Liabilities Salaries and social security obligations other Provisions Income Taxes and Contrib. social Deferred Other
Payables Fair value at the
recognition
(R$)
______________
(4,414)
(275)
(1,163)
(1,389)
(24,457)
(5,727)
______________
(37,425)
______________
Total
net identifiable assets 99,389
______________
______________
Non-controlling interest measured at fair value (34,786)
Restricted deposits 23,775
Contingent consideration (16,178)
Goodwill
on acquisition 71,708
______________
30.2. Operating lease transactions
The Company and its subsidiaries have commitments arising from operating leases of properties
where some of its foreign subsidiaries, the head office in Brazil and “Casas Natura” in Brazil and
abroad are located.
Contracts have lease terms of one to ten years and no purchase option clause when terminated;
however, renewal is permitted under the market conditions where they are entered into, for an
average of two years.
As of December 31, 2013, the commitment made for future payments of these operating leases had
the following maturities:
Total
consideration143,908
______________
______________
Less than a year
More than one year and less than five years
More than five years
The measurement of intangible assets was completed in December 2013 and resulted in the award of
just the brand (“ Aesop “) and relationships with retail customers value and indicated that the fair value
at the acquisition date, converted by the exchange rate prevailing at 31 December 2013, was R$83,856,
which was reduced by goodwill.
31. INSURANCE
Intangible assets acquired in a business combination have the following estimated useful lives:
Years
______________
Brands25
Relationships with retail customers 9
Goodwill on acquisition date converted by the exchange rate in effect on December 31, 2013 is R$74,132
and understands the value of deriving synergies from the acquisition of future economic benefits.
The allocation of values to intangible assets identified on acquisition date promoted the realization of a
liability for deferred taxes on the acquisition date and translated at the exchange rate prevailing on December 31, 2013, in the amount of R$16,353, to be recognized during the period of amortization of the
intangible assets. The amount of goodwill allocated that will be deductible for tax purposes.
Was recognized at the acquisition date relating to contingent consideration related to additional payment
value based on certain performance indices of R$16,753, the original value in local currency was converted by the exchange rate in effect on December 31, 2013.
The gross nominal value of receivables acquired on the acquisition date and converted into Reais, considered the fair value is $ 5,304 of short-term, and has no expectation of loss.
Costs related to the acquisition of R$4,200 were recognized in the income statement as administrative
expenses.
The fair value of the consideration was R$143,908, paid fully in cash on hand.
Since February 28, the date of its acquisition, Emeis contributed to the Company’s net revenue of
R$137,866 and net income of R$14.846, include minority interests.
If the acquisition had occurred at the beginning of the current Emeis have contributed to the Company’s
net revenue of R$155,156 and net income of R$3,055 (unaudited) reporting.
30. COMMITMENTS
30.1. Inputs supply contracts
The subsidiary Indústria e Comércio de Cosméticos Natura Ltda. entered into a contract for the supply
of electric power to its manufacturing activities, in effect through 2015, which provides for the purchase
of a minimum monthly volume of 3.6 Megawatts, equivalent to R$373. As of December 31, 2013, the
subsidiary was compliant to the contract’s commitment.
The amounts are carried based on electric power consumption estimates in accordance with the contract
period, whose prices are based on volumes, also estimated, resulting from the subsidiary’s continuous
operations.
Total minimum supply payments, measured at nominal value, according to the contract, are:
Less than a year
More
than one year and less than five years
2013 __________
2012
__________
3,583
3,983
3,205 __________
6,929
__________
6,78810,912
__________
__________
__________ __________
CompanyConsolidated
____________
___________
9,900
29,656
13,480
25,549
- ___________
1,226
____________
23,380
56,431
____________
____________ ___________
___________
The Group has an insurance policy that considers principally risk concentration and materiality, and insurance is obtained at amounts considered by management to be sufficient, taking into consideration
the nature of its activities and the opinion of its insurance advisors. As of December 31, 2013, insurance
coverage is as follows:
Item
Type of coverage
________________________________________________________________________
Industrial complex/ Any damages to buildings, facilities, and
inventories machinery and equipment
Vehicles Fire, theft and collision for 1,395 vehicles
Loss of profits
Loss of profits due to material damages to facilities, buildings and
production machinery and equipment
Insured
amount
___________
1,147,604
68,391
1,841,722
32. APPROVAL OF FINANCIAL STATEMENTS
The individual and Consolidated financial statements were approved by the Board of Directors and
authorized for issue at the meeting held on February 12, 2014.
Members of the Board
of Directors
Independent auditor’s report
on financial statements
plínio villares musetti
Chairman of the Board of Directors
GUILHERME PEIRÃO LEAL
The Board of Directors and Shareholders
Natura Cosméticos S.A.
São Paulo - SP
Introduction
Julio Moura Neto
We have audited the accompanying individual and consolidated balance sheet of Natura Cosméticos S. A. (Company) as of
December 31, 2013, and the related consolidated statements of income, of comprehensive income, shareholders’ equity, and cash
flows for the year then ended, including the summary of main accounting practices and explanatory notes.
Luiz Ernesto Gemignani
MARCOS DE BARROS LISBOA
Raul gabriel beer roth
roberto oliveira de lima
Members
EXECUTIVE COMMITTEE (COMEX)
CEO
Agenor Leão de almeida junior
Vice President, Digital Technology
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of the individual financial statements in accordance with
accounting practices adopted in Brazil, and of the consolidated financial statements in accordance with the International Financial
Reporting Standards (IFRS), as issued by the “International Accounting Standards Board – IASB”, and in accordance with accounting
practices adopted in Brazil, and for such internal control as management determines is necessary to enable the preparation of these
financial statements that are free from material misstatement, whether due to fraud or error.
Independent Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit, which was conducted in
accordance with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement in the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal controls relevant to the preparation and fair presentation of the Company’s financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal controls. An audit also includes evaluating the appropriateness of accounting practices
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
Erasmo Toledo
Vice President, International Businesses
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Gerson VALENÇA PINTO
Vice President, Innovation
In our opinion, the individual financial statements referred to above present fairly, in all material respects, the financial position of
Natura Cosméticos S.A. as of December 31, 2013, and the performance of its operations and its cash flows for the year then ended,
in accordance with the accounting practices adopted in Brazil.
João Paulo Ferreira
Vice President, Commercial
Opinion on the consolidated financial statements
Vice President, Brands and Businesses
Josie Peressinoto Romero
Vice President, Operations and Logistics
Lilian Guimarães
Vice President, People and Culture
Robert Claus Chatwin
Vice President, New Businesses
Roberto Pedote
Vice President, Finance, Legal Affairs and Institutional Relations
board of directors
Executive President
Opinion on the individual financial statements
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Natura Cosméticos S.A. as of December 31, 2013, and the consolidated performance of its operations and its
consolidated cash flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS) as issued
by the “International Accounting Standards Board – IASB” and the accounting practices adopted in Brazil.
Emphasis of matter
Measurement of investments in subsidiaries, associates and joint ventures by the equity method
As described in Note 2.1., the individual financial statements were prepared in accordance with accounting practices adopted in
Brazil. In the case of Natura Cosméticos S.A., these accounting practices differ from the IFRS, applicable to the separate financial
statements, only with respect to the measurement of investments in subsidiaries, associates and joint ventures by the equity method
of accounting, which, for purposes of IFRS, would be measured at cost or fair value. Our opinion is not qualified in respect of this
matter.
Restatement of corresponding amounts for the year ended December 31, 2012
As mentioned in Note 2.29, as a result of the change in accounting policy adopted by the Company in 2013, the corresponding
amounts for the year ended December 31, 2012, presented for comparison purposes, were adjusted and are being restated as
provided for in NBC TG23, or in the Technical Pronouncements CPC 23 – Accounting Practices, Changes in Accounting Estimates
and Errors. Our opinion is not qualified in respect of this matter.
Other matters
Statements of value added
We have also audited the individual and consolidated statement of value added (SVA) for the year ended December 31, 2013,
prepared under the responsibility of the Company’s management, the presentation of which is required by the Brazilian Corporation
Law for publicly-held companies, and as supplementary information under IFRS, whereby no statement of value added presentation
is required. These statements have been subject to the same auditing procedures previously described and, in our opinion, are
presented fairly, in all material respects, in relation to the overall financial statements.
Business Director
Lucilene Silva Prado
São Paulo, February 12 2014.
Legal Affairs Director
Roberto Pedote
Finance and Institutional Relations Director
TECHNICAL REPRESENTATIVE
Mauro Pimenta de Moraes
Accounting Manager
CRC 1SP266360/O-3
Auditores Independentes S.S.
CRC-2SP015199/O-6
Drayton Teixeira de Melo
Accountant CRC-1SP236947/O-3
Alessandra Aur Raso
Accountant CRC-1SP248878/O-7
assurance statement
Independent Auditors’ Limited
Assurance Report on the
Natura Cosméticos S/A’s Annual
Sustainability Report
To
The Board of Directors, Shareholders
Natura Cosméticos S/A
GRI G4-33
Introduction
We were engaged by Natura Cosméticos S/A to present our
limited assurance report on the information contained in the
Annual Sustainability Report in accordance with the GRI G-4
guidelines (reporting option “Comprehensive”) for the twelvemonth period ended December 31, 2013.
Company management’s responsibilities
Natura Cosméticos S/A management is responsible for
preparing and presenting appropriately the information
contained in the Annual Sustainability Report for the year
ended December 31, 2013, in accordance with criteria,
assumptions and methodologies GRI - G4 (reporting
option “Comprehensive”) and for the internal controls
as management determines is necessary to enable the
preparation of information free from material misstatement,
whether due to fraud or error.
Independent auditors’ responsibility
Our responsibility is to express a conclusion on the Natura
Cosméticos S/A’s Annual Sustainability Report information for
the twelve-month period ended December 31, 2013, based
on the limited assurance work conducted in accordance
with Technical Release No 07/2012, approved by the Brazil’s
National Association of State Boards of Accountancy (CFC) in
light of NBC TO 3000 (Assurance Work Other Than Audit or
Review), issued by the CFC, which is equivalent to international
standard ISAE 3000, issued by the International Federation of
Accountants, applicable to non-historical information. These
standards call for compliance with ethic requirements, including
independence and work carried out to obtain limited assurance
that the Natura Cosméticos S/A’s Annual Sustainability Report
for the twelve-month period ended December 31, 2013 is free
of material misstatement.
A limited assurance work conducted in accordance with
NBC TO 3000 (ISAE 3000) consists mainly of inquires of
management and other Company professionals involved in the
preparation of the Annual Sustainability Report, as well as of
the application of additional procedures deemed necessary to
obtain evidence which enables us to conclude on the limited
assurance on the Annual Sustainability Report. A limited
assurance work also requires additional procedures, as the
independent auditor becomes aware of matters which lead him
172
assurance statement
to believe that the Annual Sustainability Report information
may contain material misstatement.
The selected procedures relied on our understanding of the
aspects concerning the compilation and presentation of the
Annual Sustainability Report information in accordance with
criteria, assumptions and own methodologies from Natura
Cosméticos S/A. The procedures comprised:
(a) the planning of the work, considering the materiality, the
volume of quantitative and qualitative information and the
operating and internal control systems which supported the
preparation of Natura Cosméticos S/A’s Annual Sustainability
Report information for the twelve-month period ended
December 31, 2013.
(b) the understanding of the calculation methodology and the
procedures for preparation and compilation of Annual
Sustainability Report through interviews with management in
charge of preparing the information;
Conclusion
Based on the procedures performed and herein described,
nothing came to our attention that makes us believe that
Natura Cosméticos S/A’s Annual Sustainability Report
information, for the twelve-month period ended December 31,
2013, was not compiled, in all material respects, in accordance
with the GRI - G4 (reporting option “Comprehensive”)
guidelines and with Natura Cosméticos S/A’s own criteria,
assumptions and methodologies.
São Paulo, april 10, 2014.
ERNST & YOUNG
Auditores Independentes S.S
CRC-2SP015199/O-6
(c) the application of analytical procedures on quantitative
information and sample verification of certain evidence
supporting the data used for the preparation of the Annual
Sustainability Report;
(d) comparison of the financial indicators with the financial
statements and/or accounting records.
Luiz C. Passetti
Accountant CRC 1SP144343/O-3
We believe that the evidence obtained in our work was
sufficient and appropriate to provide a basis for our
limited conclusion.
Scope and limitations
The procedures applied in a limited assurance work are
substantially less in scope than those applied in an assurance
work aimed at issuing an opinion on the Annual Sustainability
Report information. As a consequence, we are not in a position
to obtain assurance that we are aware of all matters which
would be identified in an assurance work aimed at issuing an
opinion. Had we carried out a work to issue an opinion, we
could have identified other matters or misstatements in the
Annual Sustainability Report information. Accordingly, we did not
express an opinion on this information.
The non-financial data is subject to further inherent limitations
than financial data, given the nature and diversity of methods
used to determine, calculate or estimate such data. Qualitative
interpretations of materiality, significance and accuracy of data
are subject to individual assumptions and judgments. Also, we did
not carry out any work on data reported for prior periods nor
in relation to future projections and goals.
173
editorial team
Vice President of Finance, Legal Affairs
and Institutional Relations
Roberto Pedote
Corporate Affairs
and Government Relations
Publisher
Marcelo Bicalho Behar
Overall Coordination
Cristina Amadio Molini and Jaqueline Nichi
Support
Mônica Frohlich
Corporate Finance
Financial information
Alexandre Nakamaru, José Wanderley and Mauro Moraes
Support
Lígia Silveira
Market relations
Fabio Cefaly and Tatiana Bravin
Sustainability
Socio-environmental information
Denise Alves, Luciana Villa Nova, Juliana Pasqualini and Thaís Ferraz
Editorial coordination and design
Report Sustentabilidade
Team: Ana Souza (project and relationship management),
Álvaro Almeida, Talita Fusco and Michele Silva (editing), Gabriela
Scheinberg (reporting), Flávia Ocaranza (graphic design and
layout),Thaís Colpaert, Karina Simão, Fabíola Nascimento and
Giuliana Bellegarde (sustainability consulting)
Infographics (pages 6 and 10)
Modernsign Design e Inovação
Revision
Cesar Ribeiro
Translation
Raymond Maddock
174

natura annual report 2013

Transcription

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