Natura &Co is one of the largest personal care and cosmetics companies in the world. Headquartered in São Paulo, Brazil, the company’s footprint spans 73 countries and includes Natura, Aesop, The Body Shop, and Avon brands. Guilherme Leal, the co-founder and co-chairman of its board of directors, is not a carefree businessman. He is clearly concerned about the future of his country.
Last month, Leal publicly criticized Brazil president Jair Bolsonaro’s administration for the country’s rapidly deteriorating environmental and economic reputation — especially as it pertains to the illegal deforestation of the Amazon — calling it a threat to international investment in Brazil. Leal is not the only critic, as investors pressure Bolsonaro to act.
Natura’s stance carries significant weight. The company has been recognized 10 times as one of the world’s most ethical companies. Out of 132 businesses, it’s the only Brazilian company to make the list.
The latest action demonstrating the company’s commitment to sustainability in practice, not just in theory, took place this week. Natura &Co concluded an international fundraising of US$1 billion in bonds linked to sustainability goals (“ESG Bonds”) – the single largest sustainability linked bond issuance to date in Latin America. The market seems to have literally bought the idea: the demand for the papers exceeded the supply four times.
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The issue was carried out by its subsidiary, Natura, with Natura &Co acting as the guarantor. The funds will be used to refinance existing debt, in line with the group’s liability management plan to improve its capital structure. The seven-year notes mature on May 3, 2028 and carry an interest coupon of 4.125% per year, to be paid on a half-yearly basis.
Taking 2019 as the baseline, the transaction commits Natura to meet two environmental indicators by 2026 year-end: reducing greenhouse gas emissions intensity by 13%, and reaching 25% of post-consumer recycled plastic in plastic product packaging. These goals align with the group’s Sustainability Vision 2030 Commitment to Life. If Natura doesn’t reach these goals, the penalty is an increase of 65 basis points in the interest rate as of November 2027.
Sustainability, ethical behavior, and social responsibility form the pillars of Natura’s business model. We recently checked in with Andrea Alvares, chief brand, innovation, international, and sustainability officer of Natura, Natura &Co’s subsidiary, to learn how the company puts those pillars into practice.
LS: What’s the driving rationale behind building a business with ethical conduct as its core principle?
Alvares: Natura’s commitment to the environment, to its consultant network’s social well-being, and to sustainable business practices began at its founding in 1969 and permeates its entire history.
In the 1970s, we invested in research to expand our use of natural ingredients. During the 1980s, we pioneered product refills to reduce packaging ahead of the sustainability debate that, decades later, is more urgent than ever.
The Ekos line, created in 2000, reflects our core commitment to reducing deforestation by developing regenerative business models based on our relationship with communities in the Amazon. We have been a Carbon Neutral company since 2007.
This ethos took shape over time, and it continues to guide our business strategy. Natura launched the Sustainability Vision 2050 in 2014, issuing a challenge to generate positive economic, social, cultural, and environmental impact by 2050.
The document set very ambitious goals, one of which included filling 50% of company leadership positions with women by 2020. We surpassed that goal with 51% women in the three highest organizational levels at Natura &Co.
Meeting that sustainability challenge requires strategic planning and action to reduce our impact on the environment, which is why — again, in 2014 — we adopted environmental profit and loss (EP&L). It allows us to measure the impact of our business on the environment, so that we know the costs and can decide where and how to better invest our resources.
Natura released its Sustainability Vision 2030 Commitment to Life in 2020. This is our public commitment to reach specific, established goals addressing some of the world’s biggest social and environmental challenges, including human-rights violations.
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LS: How has the company’s sustainability commitment translated to other social issues such as cultural, ethnic, social, and racial diversity?
Alvares: Natura adopted a direct sales business model in 1974. This shared-value design not only created a source of income for many women, who at that time did not participate in the labor market the way they do today; it fostered other aspects of well-being such as health, education, and independence.
Our commitment to education, for example, has continued to evolve since 1995. We created the Natura Institute to help transform Brazilian education and guarantee quality learning for all children. Also, Natura and its consultants contribute a portion of their profit from the Crer Para Ver product line to public education improvement programs.
One of our company’s founding beliefs is that a diversity of the parts increases the value of the whole, and we are committed to affirmative action. Through our program called Each Person Matters, Natura invests in initiatives that support diversity and promote education and income generation. This includes issues surrounding gender equity, ethnic and racial inclusion, people with disabilities, and the LGBTQIA+ community.
Natura promotes awareness actions for employees through its LGBTQIA+ affinity group, offers health benefits to LGBTQIA+ couples and adopts the chosen names of transgender employees.
Last year, we joined Avon in a global campaign called #IsoladasSimSozinhasNão — which translates in English to “Isolated, Yes; Alone, No” — to assist women living in violent situations during the pandemic. The campaign used social media to create awareness and provided guidance on how to seek help, in addition to education programs to help people recognize domestic violence.
Natura donated essential products to shelters, intensified our support and guidance tools for employees and consultants, and we created multidisciplinary teams to receive and assist employees who might be experiencing domestic violence.
Our marketing campaigns reflect the company’s core beliefs, and the narratives in our communication projects promote awareness and diversity. We believe this is essential to building a more inclusive and fair society.
One project in particular caused an internet uproar. Last Father’s Day, we launched a campaign called #MeuPaiPresente (“A Present Father”). It featured the daily routine of real parents and children — including Thammy Miranda, an influencer, politician, and transgender man. The campaign invited consumers to see fatherhood as free of stereotypes and to celebrate all ways of being a man.
LS: How are Natura’s customer-facing actions reflected internally with respect to diversity practices in hiring, training, and advancement?
Alvares: In our Commitment to Life, we pledged that at least 30% of all senior positions will be filled by underrepresented groups within the company by 2030. That includes ethnic, racial, and sexual diversity, people with disabilities, and socially and economically vulnerable people.
We actively support gender parity and equal pay, and Natura is committed to ensuring that 50% of the finalists in all hiring processes are women. As I mentioned earlier, 51% of the company’s top leadership positions are occupied by women.
Natura plans to increase Black representation in its workforce by using more inclusive (non-biased) selection processes. We have implemented development actions to help Black employees occupy positions at all levels of the company, and we promote racism awareness among all employees.
Looking to ensure a diverse future, Natura set a goal for Black students to represent 50% of all participants in its 2021 internship program. The selection process did not restrict age, demand technical requirements or require any specific courses, languages or universities. Today, 51% of the company’s interns are Black.
The company invests in accessibility and inclusion for people with both physical and intellectual disabilities. For example, we offer a program to teach Brazilian sign language (known as Libras) to employees, and we have an online platform where Libras interpreters translate employee/management feedback processes, as well as medical services offered at Natura.
Specialized professionals periodically monitor our employees with intellectual disabilities and their managers, and we create ways for them to develop within the company. Currently, 7.2% of our employees have such a disability, and we’ve set a goal to increase that number to 8%.
Helping our employees manage career and family is another company priority. Our support initiatives include a six-month maternity leave, a 40-day paternity leave, and we have provided baby nurseries in the company since 1991.
As a result of the pandemic and the increased number of employees working from home, we have focused on improving work/life balance. We do not schedule meetings before 9:00 am or after 6:00 pm, and we established a two-hour lunch time so employees can prepare meals, take care of their children or other personal activities. We provide paid leave to take care of health- and family-related situations.
LS: How does Natura keep current with what its customers want?
Alvares: The desire to make Natura a company that generates value for society drives our business decisions, how we relate to our audiences, the way we make and sell products, and how we connect with consultants and consumers.
Natura consultants are in constant contact with customers, which makes them essential to understanding our consumers. In 2019, we added tools to the consulting application that gives these professionals information about customers’ buying habits. This lets them activate new clients and create personalized promotions.
We learned through our consultant network that a digital migration was a growing movement even before the pandemic began. By the end of 2020, 80% of our consultants (more than one million) had an online store, which we call a Digital Space.
Social distancing, due to the pandemic, has people interacting more with Natura’s online sales channels, which include Digital Spaces and our e-commerce site. Social selling — combining the direct sales model with online channels and connecting customers via social media — gives us more insight into our customers’ needs and interests.
LS: As a publicly traded company, Natura must answer to shareholders. How does the company balance that line? What does Natura, and business in general, gain by prioritizing environmental and social responsibility?
Alvares: Sustainable performance has always been part of our core business model, and Natura transforms socio-environmental challenges into business opportunities. Investing in sustainable business practices is a competitive differentiator that helped make Natura one of the major players in the international beauty market.
It is essential that our entire network — including employees and partners — incorporate Environmental, Social and Governance (ESG) fundamentals into their mindset and practices. Natura bases its ESG indicators on the goals it established in its Sustainability Vision 2030 Commitment to Life, and these goals have been part of its executive evaluation and compensation process since 2009.
All companies that adopt ESG practices — not just Natura — will have more business and investment opportunities. This model provides clarity, security, and a strategic view of the risks and benefits in social and environmental issues, potential legislative changes, and image risks.
As people become increasingly aware of their consumption habits and the impact of human actions on the planet, ESG helps companies respond to the biggest consumer concerns.
Innovation is an essential and constant part of our business. Last year, Natura launched its new Innovation Center, a technological enterprise designed to expand the company’s scientific capacity and to create sustainable cosmetics with natural ingredients from Brazilian biodiversity, especially the Amazon region.
The Center consolidates the company’s position as an innovator in natural-ingredient cosmetics, and its structural capabilities reduce prototyping time, improve knowledge management, and optimize workflows. We can develop new, more effective formulas, products, packaging, and technologies in less time.
Our innovation index — which refers to the percentage of sales in the last 12 months generated by products launched in the previous 24 months — increased from 58.4% in 2019 to 67.1% in 2020.
We believe that innovation is not just about creating news technologies. It’s also about breaking paradigms and proposing creative solutions that generate returns for the company and for society.
