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Natura, naturally
May, 10,2013
WOBI Multimedia Production Team
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This Brazilian beauty products company is one of the most highly respected firms in the world, thanks to its general focus on sustainability, based on preservation of the biodiversity of the amazon rainforest.

From Sao Paulo, Brazil, where Natura Cosméticos has its headquarters, you must take a plane to Amapá State in the far northern region of the country on its Atlantic coast, continuing for two and a half hours by car, and another two hours by boat on the Iratapurú River, into the interior of the Amazon Rainforest, in order to reach the small village of São Francisco.

It is an indigenous community made up of 32 families, whose members take part in gathering the annual harvest of Brazil nuts from one of the largest Brazil nut forests in eastern Amazonia: some 800,000 hectares (1.97 million acres) of this crop, from which the essential ingredient is extracted for a cosmetics line sold under the Ekos brand of the country’s beauty and personal hygiene giant. Ekos markets perfumes, oils, soaps, creams and fragrances, among other things, made with raw materials originating from Brazil’s biodiversity (fruits, grains, seeds and roots of the Amazonian flora).

Once a year, entire families from the São Francisco community travel upriver three days, and for 60 more hand pick Brazil nuts. This is the main economic activity of the village’s population, members of which have been working for Natura for the past 10 years, having collected 11,500 kg of nuts in that time.

Currently, the 14 assets that Natura extracts from the Amazonian ecosystem generate more than US$ 10 million in sales for the firm. By the end of 2012, its goal was to produce a business turnover of US$ 65.8 million culled from the sustainable exploitation of the Amazonian region, and to distribute US$ 5.8 million among supplier communities.

In 2011, Natura made the biggest investment in its history—US$ 170 million—to expand its production, improve its logistics and retool its processes, placing the focus on reducing the environmental impact of its products and on educating the consumer. “When consumers acquire a Brazil nut-based product,” says Natura Vice President in Charge of Organizational Development and Sustainability Marcelo Cardoso, they take with them our story, our Brazilian tradition. It’s part of the experience.”   

 

Few companies in the world can match Natura in terms of the business philosophy that it posits or its sustainable development practices, not even in a scenario populated by global giants from the highly developed world—like the US firm Colgate-Palmolive, which billed over US$ 16.73 billion in 2011, or France’s L’Oréal, which scored revenues of US$ 25.8 billion for the same period. Natura’s 2011 billings, meanwhile, totaled US$ 2.71 billion, so you might conclude that it is at a disadvantage because of operating in the developing world, but that’s not the case. Learning how to face all types of challenges—scarce resources, a shortage of qualified talent, lack of financing, poverty, insufficient infrastructure, low supplier quality standards, poor consumer education, etc.—actually places the company in a better position than that of its competitors in the industry. These factors sharpen its creativity and capacity for innovation at the service of competing in the global arena. With a GDP of nearly US$ 2.48 trillion in 2011, a population (according to UN data) of 196.7 million—almost 9% of whom live in extreme poverty—and with 30 percent of its workers still operating outside of the formal labor system—Brazil has become an extreme testing ground for the company’s innovations.

Natura’s value proposal is unique—sustainability as the central focus of the business and life cycle analysis for all of its products—and is what has launched it to the top of the global sustainability rankings. In 2011, for instance, the Brazilian firm was ranked the second most sustainable company on earth, by Canada’s Corporate Knights Research Institute. And Forbes magazine ranked it the eighth most innovative company in the world. Today, Natura is one of the most profitable organizations in the world cosmetics industry and is growing at a rate of 20 percent a year. In 2011, it invested US$ 709 million in R&D, achieving an innovation ratio of 64.8 percent (a percentage derived from an equation that includes results obtained from sale of products launched over the past two years). And while, for now, it is only operating on emerging markets (Latin America) and in France, it has plans—not yet revealed to the public—to expand its operations in Europe. Natura’s Director of Operations Sergio Kuroda says that the work the company does with the Iratapurú community is only a small piece of a very large puzzle. For its Ekos product line, the firm is working in cooperation with no fewer than 23 rural communities, comprising 2,731 native Brazilian families—its only suppliers—spread all over the country. In addition, Natura has also started working with a handful of other communities beyond Brazil’s borders. One of these is located in the town of Malvas, on the beaches of northwestern Ecuador’s El Oro Province. That community processes the fragrant palo santo leaves used in making essential oils for the firm’s Natura Amor América product line, a brand created on the basis of oils from plants found throughout Latin America.

The relationship between Natura and its suppliers is fairly unique. In 2000, the firm pioneered in the establishment of vegetal input supply chains to which it applied the principles of the Convention on Biological Diversity, instituted by the United Nations in the 1990s. This document set down the legal framework for preventing and approaching the root causes of waning biodiversity. In order to bring its operations into line with this commitment, the firm has formed a team of anthropologists, social scientists, psychologists, economists, biologists and administrators in charge of caring for and managing company relations with small rural groups that harvest the basic natural assets used in the brand’s products.

Antônio Luiz Seabra founded Natura in 1969, with one guiding idea in mind: well-being—”Bem Estar Bem”—which later was to become the company’s business philosophy: helping the consumer and the entire value chain achieve a state of harmony with nature. From the outset, Seabra and his firm demonstrated concern for the environment and in the exploitation of the natural ingredients they used, ensuring that they did so without spoiling the areas where they operated. Throughout the company’s history, no crisis or circumstantial problem has been able to sway it from its veritable obsession. Indeed, in 1998, certain major brands like  L’Oréal and Palmolive tried to acquire the trademark. But Seabra responded by doubling his bets and seeking greater differentiation, creating a business model based exclusively on sustainable development, and thus creating a definitive competitive edge for his firm. Ekos was born of the brand’s  aim of rediscovering Brazil, in a celebration of the tropical country’s exuberance and exalting not only its vegetal wealth but also the natural inhabitants of its land.

Says Cardoso: “for Natura, in terms of its potential value and potential for innovation, the Amazonian region could end up becoming the Silicon Valley of South America.”

But Cardoso doesn’t see the road ahead as an easy one. The company’s credit access, which starts on emerging markets, can be a true nightmare. In its early years, for instance, Natura went through such a bad financial crisis that Seabra was on the verge of giving up, until someone convinced him that his company was destined to trigger major world changes. Clinging doggedly to that dream, he bet his life on his enterprise. “The way we operate is very attractive,” says Cardoso, “but we still can’t claim to be absolutely sustainable.”

Natura has set some high goals for itself, and Cardoso admits that some of them are not yet being met. “Materially we’ve done a great deal,” he says, “but we’re barely getting started on our major goal: that of becoming agents of social change.”

This is to be the next step for Natura: opening its doors to the world, crossing borders, sharing methodologies with its peers and with firms in other industries with the aim of improving and standardizing them, so as to generate genuinely disruptive values. “We have a very important role ahead of us: changing the system, influencing public policy, and inviting different interest groups to take part in this transformation, in every country where we operate.”

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