Natura Cosméticos, S.A. and the future of Integrated Reporting

Executive Summary

• This Case discusses the Integrated Reporting process at Natura Cosmetics; a Brazilian company and a leader in the cosmetics, fragrance & toiletries market.

• Natura utilizes an integrated management model that focuses on the economic, social and environmental throughout the process of the Company.

bien estar bien

• Brazilian manufacturer and marketer of products in the CF&T* category

• Enjoys majority market share over companies like HUL, Revlon Inc. and Estee Lauder Companies Inc.

• An eco-friendly, sustainable company

• A master of lean innovation

• 7000 happy employees and 1.2 million direct sales consultants

• Often referred in popular culture as the ‘Google of Brazil’.

Core Strategy

• A new strategy focused on corporate social plus environmental responsibility and sustainable development

• Strategic purpose defined in terms of progress on Economic, Social & Environmental performance

• New Strategy requires new integrated reporting process

Measures the financial, social and environmental

performance of the corporation over a period of

time.

Triple Bottom Line

Tata Steel -Jamshedpur

Economic

• Market conditions

• Input costs

• Labour

Social

• Rehabilitation

• Community well-being

• Health and Sanitation

Environmental

• Deforestation

• Use of natural resources

• Pollution of resource bodies in the vicinity

Functions that impact the integrated reporting

process for a major steel plant

The need for Integrated Reporting

• A new standard for corporate communication, and helps to complete financial and sustainability reports.

• Creates provision for concise representation of how an organization demonstrates stewardship and how it creates and sustains value.

Integrated Reporting Process at Natura hasevolved and adapted to time

Stakeholder Dialogue

Communication Plan

KPIs including GRI

Integrated Management

Culture

Integrated Management

Culture

Stakeholder Dialogue

Engagement & Relationship

Development

The Power of Digital

Reporting and Communications

Features of Integrated Reports at Natura

• New Strategy required a new integrated reporting process

• The integrated reporting process appends to the organization’s value chain and defines priorities and commitments

• Supports dialogue and mutual collaboration between stakeholders like consultants, employees, management, vendors and suppliers

Salient Indicators* of Integrated Performance

Economic Social Environmental

• Net revenues totalled R$5.1 Billion with a growth of 21.1%

• Net income of R$744.1 Million achieved.

• Geographical expansion with international operations commencing in Argentina

• 1.2 Million happy consultants – a growth of 17% over previous year

• Development programs of the company receive R$10 million in funding.

• 73% employees give overall favourable response on working conditions

• Reduced water consumption by 10% using efficient methods

• Introduction of organic and bio-degradable packaging material

• 33% reduction in GHGs ( Green House Gases) emissions.

*2010 data points

Key Learnings from Natura – 3 Bullet Points

• Despite having sustainable methods inbuilt to most processes which has a cost function to it, Natura has managed to be one of the most profitable companies in Brazil

• Has been accepted widely across customer segments due to brand affinity, clean reputation and despite the premium pricing

• From an organizational point of view, a sustainable strategy from day zero has defined the organizational structure

Points of Contradiction

• Reporting process too focused on stakeholders

• Does not take into cognizance competitor actions in terms of social responsibility

• The KPIs are limited to a specific geography and may not apply in other markets

The reporting process in the future intends to go from informative to transformative.

The organization’s integrated reporting must tell an inspiring story of sustaining

profitability.

Future Forward

déjà vuAbhishek | Arisha | Ananya | Avijit | Chirag | Nandini | Rahul | Sampad