“Natura strives to aggregate value for the Amazon so the forest is worth more standing than it is cut down.”
NATURA AT A GLANCE
Location: São Paulo, Brazil
Structure: Publicly traded
In Short: Brazilian cosmetics and personal hygiene company
In late 2014, Brazilian company Natura became the world’s largest B Corp. The company produces and distributes cosmetics and personal hygiene products throughout Latin America and France, and has redefined the nature of beauty with its tagline “Bem Estar Bem,” or “Well Being Well.” In 2013, Natura was recognized as one of the 10 most innovative companies in the world by Forbes, and 58 percent of Brazilians now use the company’s products. Natura is an example of true sustainability at scale: as the company grows, so does its positive impact.
So how does a cosmetics company drive sustainability on such a large scale, and what can other companies learn about growing a company’s impact? The answer takes a systems-thinking approach. In addition to creating natural products, Natura embeds sustainability into its brand and practices through numerous cutting-edge strategic initiatives.
1 Making the Amazon More Valuable
Natura is working to develop a new economy in the Amazon region that values preservation over destruction. The old economy, based on extraction and rainforest devastation, is a threat to Natura and its business model of making products derived from living, standing forests, or “floresta em pé.” Natura strives to aggregate value for the Amazon so the forest is worth more standing than it is cut down. The only way to add value is to create a demand for the products of the living forest, such as its seeds, fruits, and oils. For example, Natura has discovered a new ingredient, the ucuuba fruit, which comes from the Tocantins and Pará regions of Brazil. When ripe, these fruits release red seeds, which create a sort of floating carpet in the flooded areas where they grow, and which have ideal characteristics for cosmetics: they are hydrating but not heavy. In the past 30 years, the ucuuba tree has become nearly extinct because it has been cut down for its wood. Natura uses the seeds to create a butter that is used in hydrating lotions and soaps and, as a result, has made the ucuuba plant three times more valuable for its seeds than for its wood.
2 Industrial Symbiosis: Natura’s Ecoparque
In March 2014, Natura built its Ecoparque production facility in the Amazonian city of Benevides. The vision for the Ecoparque is for Natura to work alongside several other companies to promote industrial symbiosis, in which waste products from one company are used as raw materials for other products made by other companies. For example, Natura makes soap out of the seeds of the maracuja, or passion fruit. Natura hopes that a juice company or a biomass company might be interested in using the pulp or the fiber of the passion fruit, and will choose to be located in the Ecoparque to be close to the source of these raw materials, which are Natura’s waste products.
3 Social Biodiversity: The Ekos Product Line
In order to help maintain the biodiversity of the Amazon forest, Natura also fosters social biodiversity. This concept allows the region’s communities to benefit financially from being suppliers of Natura’s raw materials. Natura provides incentives for local communities to preserve the forest, and then Natura and the communities share the benefits. These practices are embodied in Natura’s Ekos brand, which the company launched in 2000.
The Ekos line is produced using raw materials from the rainforest, including cacao, guarana, Brazil nuts, and less-known products like andiroba and copuassu. Natura uses rainforest communities’ knowledge of local plants and their various properties to create its products, essentially transforming their traditional knowledge into modern technology. By relying on these communities to source raw materials, Natura is investing in and incentivizing them to protect the forests where they live.
4 Integrated Reporting
To promote greater transparency about its activities and vision, in 2013 Natura launched its first integrated report — a concise communication that clearly articulates the company’s strategy, governance, and overall performance in the short- and long-term. As the first company in Brazil to adopt integrated reporting, Natura has committed itself to “radical transparency.” Most corporate reporting is based on a rear-view-mirror analysis of the company and fails to provide a full picture of how the company creates value. Integrated reporting allows companies to report on how they address the following six forms of capital:
1. Financial capital
2. Manufactured capital
3. Human capital
4. Social capital (relationship capital)
5. Natural capital
6. Intellectual capital
The focus on a broader range of metrics and multiple forms of capital within the integrated reporting process has helped Natura reinforce the company’s overall values of holistic and long-term thinking. In addition to clearly defining the company’s priorities and commitments in a transparent manner, this process creates a supportive and collaborative dialogue and environment for all stakeholders of the company.
The combination of these four practices has made Natura a true leader in the sustainability movement. By working with local communities, making resources more valuable, promoting collaboration and resource-sharing with other companies, and using radical transparency with all stakeholders, Natura integrates sustainability into the core fabric of the company’s corporate identity, creating a model for others to emulate and be inspired by.
5 LARGEST B CORPS IN THE WORLD
Natura is the largest B Corp in the world. The four other largest B Corps are:*
Business Development Bank of Canada
Canadian bank offering financing, subordinate financing, venture capital, and consulting services to small and medium-sized companies across the country.
Vermont-based cooperative of dairy farms producing award-winning dairy products, including cheese, butter, yogurt, cottage cheese, and sour cream.
Green Mountain Power
Electric utility based in Vermont focusing on a transition to clean energy generation and innovative energy storage solutions.
California-based outdoor apparel company creating clothing and gear for the silent sports: climbing, surfing, skiing and snowboarding, fly fishing, and trail running.
OTHER B CORPS ON THE PUBLIC MARKETS
Public Companies that Have Become Certified B Corps
• Natura (BVMF: NATU3)
• Snakk Media Ltd. (NZX: SNK)
• Australian Ethical (SX: AEF)
• New Resource Bank (OTCMKTS: NWBN)
B Corps that Have Completed an IPO
• Etsy (NASDAQ: ETSY)
• Rally Software (subsequently decertified by B Lab following acquisition by CA Technologies)
B Corps Acquired by Public Companies
• Plum Organics by Campbell Soup Company (NYSE: CPB)
• Happy Family by Groupe Danone (OTC: DANOY)
• Five:am by PZ Cussons (LON: PZC)
Public Companies that Have Certified a Subsidiary
• Unilever (Ben & Jerry’s) (NYSE: UN)
• Procter & Gamble (New Chapter) (NYSE: PG)
6 Tenets of Integrated Reporting
According to Paul Druckman, CEO of the International Integrated Reporting Council, there are six basic tenets behind integrated reporting.
1 Communication about value creation: How does the company use the six types of capital to create value?
2 Articulation of strategy: How are risk management and performance indicators derived from strategy?
3 Connectivity of information: How are the different parts of the business connected? How do the various types of capital used by the business interconnect?
4 Future orientation: Rather than focus on historic data alone, the integrated report addresses whether the company is prepared for the challenges and opportunities of the future, beginning with its business model.
5 Understanding the external environment: How does the company impact the external environment and how is it impacted by it?
6 Concise and clear communication: Many company reports are not readable and concise. The goal of integrated reporting is relevance and integrated thinking.
Deborah Leipziger is an author, consultant, and professor in the fields of sustainability and social innovation. She advises companies, governments, and UN agencies on human rights and environmental issues. She has advised leading multinational companies on strategy and supply chain issues. For more information go to: www.deborahleipziger.com