Natura has taken a progressive approach to measuring the environmental and social impacts of their major suppliers. In 2010, they began with a program called Strategic Sourcing which identified and prioritized externalities, which led Natura to select their eight main social and environmental externalities: CO2 emissions, water consumption, waste generation, formal education programs, staff training, rate of work-related accidents, social inclusion/hiring employees with disabilities and private social investment.
Between 2011 and 2013, Natura focused on palm oil (a key component of their products) and conversion of land for its production, which are a growing concern in the Brazilian Amazon. The cosmetics company applied The Economics of Ecosystems and Biodiversity (TEEB) monetization approach to compare a standard (monoculture) model for palm oil production with a more sustainable agroforestry system they had developed. The results showed that the total environmental value provided by the agroforestry system is three times greater than that provided by the palm oil monoculture (R$411 (US$167) per hectare, compared to R$122 (US$50) per hectare during the lifecycle of 25 years of planting).
As a next step, in 2014 Natura began development of their first Environmental Profit and Loss (E P&L) in order to monetize the company’s environmental impacts across their entire value chain (from extraction of raw material to the use and disposal of products). By accounting for the company’s GHG emissions, air pollution, land use and biodiversity impacts, consumption and pollution of water and waste production, the company hopes to better inform their internal decision-making process—from strategic planning to the design of products and services.
Building on their E P&L, in 2015 they will begin development of a Social Profit & Loss (S P&L), involving the assessment of social impacts on stakeholders in their value chain: the communities with whom they co-develop raw materials in Latin America, particularly in the Amazon, members of their marketing network, suppliers, communities surrounding operations, employees and ultimately, their consumers.
To learn more about measurement of natural capital in Brazil click here.