May 27, 2024

5:50

7 min read (Updated: May 27, 2024 11:41)

This Monday, the Brazil Climate Summit Europe, a spin-off of the conference held in New York since 2022, takes place in Paris. The event focuses on telling the stories of different industries and companies that have built sustainable and thriving businesses in Brazil while following the best ESG practices available.

Natura&Co, the beauty and cosmetics group that recently committed to a much more proactive approach to its ESG journey, will be an important part of the conversation. In an interview with The Brazilian Report, a media partner of Brazil Climate Summit Europe (BCS Europe), Angela Pinhati, the sustainability director for Natura&Co Latin America, gave us a sneak preview of some of the insights she will share with the audience.

The timing could not be better, as the group has begun transitioning from sustainability to regeneration as the soul of its business — or, as the World Economic Forum put it, “from reactive resilience to more proactive regeneration.” The official communication came out in December during COP28 in Dubai, but the transformation had been in the making for some time. Months before the announcement, the group updated its sustainability plan, raising the bar of its decarbonization, deforestation, and diversity targets.

“We are currently in transition. Sustaining the world the way it is is not enough. But more important than having this sense of non-conformity, of helping people in times of crisis, as is happening now in Rio Grande do Sul or the drought that hit the Amazon region last year, companies must embrace their decarbonization goals,” says Ms. Pinhati, adding that both public and private organizations need to move towards regeneration. “The urgency to act has never been so present,” she says, referring to the increasing frequency of extreme climate events.

Following the restructuring strategy initiated in 2022, the company is also shifting its focus from global to Latin America. Natura&Co has been divesting from previous acquisitions, as is the case of Aesop, the Australian brand sold to L’Oréal for USD 2.53 billion, and The Body Shop, the British chain bought by private equity group Aurelius. It has also been studying the best way to separate Avon’s operations in Latin America from Natura and other international operations, aiming to simplify its business.

The new decarbonization plan approved by the Science Based Targets initiative (SBTi) now aims at zeroing Scope 1 and 2 emissions (coming from the energy used in production and all direct impacts) by 2030 and reducing Scope 3 emissions (those from supply and logistic chains) by 42 percent. For all the carbon credits needed to neutralize its emissions, Natura&Co pledged to purchase at least half from forest preservation and regeneration projects in the Amazon rainforest, preferably from the communities where it operates. The group wants to expand its current 2 million hectares of standing forest to 3 million hectares at the end of the decade.

“A practical example [of how the group is moving from sustainability to regeneration] is the way we are completely changing how we produce dendê oil [palm oil] in the state of Pará. We are moving away from monoculture to agroforestry systems, using 18 native species to regenerate pastures and other degraded areas,” explains Ms. Pinhati.

The project follows the standards of the Roundtable on Sustainable Palm Oil (RSPO) and the Union for Ethical BioTrade (UEBT). It started 15 years ago with 18 hectares and has grown to 182 hectares. The group aims to expand dendê production to 40,000 hectares by 2035 through direct leasing of properties, partnerships with family farmers, or financing for those producers who already know agroforestry techniques and need financial support. The partner bridging the gap between Natura and producers is the startup Belterra Agroflorestas.

According to studies carried out with the Brazilian Agricultural Research Corporation (Embrapa) and the Tomé-Açu Mixed Agricultural Cooperative (Camta), planting oil palms in agroforestry systems is not only a way of restoring degraded lands but it is up to 50 percent more productive than doing so through monoculture. By 2030, the group hopes to have 100 percent of two of the main commodities in its business — palm oil and alcohol — produced through regenerative practices.

Another example of the group’s new regenerative approach was the inauguration in February of an essential oils processing plant in Santo Antonio de Tauá, also in Pará, in partnership with the local cooperative Aprocamp. Since 2003, the cooperative has been supplying plants such as pataqueira, storax, priprioca, and capitiu, among others, to Natura, accounting for around 70 percent of the brand’s perfumery raw materials originating in the Amazon rainforest. “With this, they will be able to earn around 60 percent more than just selling the seeds,” says Ms. Pinhati.

Natura’s essential oils processing plant in Santo Antonio de Tauá. Photo: Natura

Natura uses 44 bioactive compounds from the Amazon region in its formulations and wants to expand that to 55 by 2030, which also means increasing the number of families involved in agroextractive communities, currently over 10,000. In 2023 alone, the group directly invested nearly BRL 43 million (USD 8.35 million) in its projects in the rainforest region.

The group has also committed to leveraging the living conditions of its more than 4 million consultants selling Natura and Avon products. “Ten years ago, we created a human development index (HDI) with a methodology inspired by that of the UN to monitor the development level of our Natura consultants in terms of education, health, income, and other aspects, and these metrics have only grown,” says Ms. Pinhati. In 2023, the HDI among Natura consultants reached 0.632 percent, a 3.6 percent increase compared to the previous reading in 2020. By 2030, the group wants to increase that by 10 percent, including also the more than 2 million Avon sellers in Latin America.

Amid all its goals, Natura&Co has also found a way of measuring impact from a business perspective. The Integrated Profit and Loss (IP&L) measurement, implemented in 2022, allows the group to link its financial results to its environmental, social, and human impacts. In 2023, for every BRL 1 of revenue, the group says it generated a net return of BRL 2.70 in benefits for society — last year, the group posted BRL 26.7 billion in net income, up 3.5 percent from 2022 in constant currency.

“This helps give the company clarity on where it needs to attack its problems. And it fits perfectly into the conversation of BCS Europe, as we will talk to investors, who should be aware of this [metrics when making decisions],” points out Ms. Pinhati. By the decade’s end, Natura&Co expects the IP&L ratio to reach BRL 1 to BRL 4.

More about the Brazil Climate Summit Europe

Much smaller than the event in the U.S., hosted by Columbia University for more than 500 people last year, the European conference will take place at the Maison de l’Amérique Latine for just over 100 guests — the organization has carefully selected the participants of this first invite-only edition of the event.

Many hands are involved in organizing BCS Europe. Its organizers comprise alumni and current students of Insead and HEC Paris, two of Europe’s most prominent business schools.

The conference is also backed by the Brazilian Embassy in France, the French Brazil Chamber of Commerce (CCIFB), the Brazilian Chamber of Commerce in France (CCBF), Brazil’s export promotion agency ApexBrasil, and the Boston Consulting Group (BCG), among other strategic partners. The Brazilian Report is the initiative’s media partner. For more information on the event schedule, visit the BCS Europe website.