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A Lesson in Sustainability: Natura's Marcos Vaz
By: Fernanda Bonifacio
Posted: August 31, 2010, from the September 2010 issue of GCI Magazine.
page 2 of 5Natura definitely didn’t choose the easy way. “Instead of buying our raw materials from major suppliers, we decided to purchase them directly from extractive communities throughout Brazil,” Vaz says. Currently, 26 groups and 2,084 families have trade agreements with the company, and most of the oils and essences used in their products are extracted from plants collected by small cooperatives and associations.
When identifying potential partnerships with new suppliers, Natura must have guarantees that the production will be carried out within the environmental capacity. “We’ve discovered substances with potential use in the industry, but decided to abort the project because the operation was not sustainable,” Vaz explains. “We would need a very large amount of plants to obtain the desired quantity of raw material.”
Nevertheless, the communities that succeed Natura’s stringent quality control gain several benefits—beyond simply reaping income from the raw materials. All of Natura’s contracts are based on benefit sharing, taking into account the use of genetic resources, intellectual property rights and traditional knowledge. This means that when Natura makes profit from a product sourced from the Brazilian biodiversity through the use of local knowledge, it must be equally shared.
Last but not least, the company claims to invest in local development—which includes improvements in infrastructure, training, handling and certification of raw materials. According to Vaz, in 2009, the total resources directed to supplier groups grew 30% to $3 million (R$5.5 million). In 2010, Natura intends to increase this value by 44%. Is all the work worth it? Guilherme Leal, former director and shareholder of the Natura since 1979, has always said the company’s projects have nothing do to with welfare policies. As with any business, the ultimate goal is to make profit. “It’s a combination of intelligence and opportunity. Our decisions are based on business strategies, and this adds value to products,” Leal said while he was still part of Natura’s board (a position from which he resigned in June 2010 when he was officially announced as Brazil’s Green Party vice presidential candidate).
The success of the model chosen by Natura is reflected in its figures. The company ended 2009 with net income of $2.72 billion (R$4.9 billion), 18.6% over 2008. In the same period, its market share grew from 21.4% to 22.5%, according to the Brazilian Association of the Cosmetic, Toiletry and Fragrance Industry (ABIHPEC).