In November 2020 Ethical Consumer searched Natura's website for information on how the company managed workers' rights in its supply chain. It's Annual Report 2019 was downloaded. It stated that the company had consolidated supply chain policies for Aesop, Body Shop and Natura but its brand Avon, which it acquired in January 2020, appeared to still have its own policies and was rated separately.
Supply chain policy (poor)
A strong policy would include the following commitments: no use of forced labour, permission of freedom of association, payment of a living wage, the restriction of working hours to 48 hours plus 12 overtime (without exception), no use of a child labour (under 15 or 14 if ILO exempt), no discrimination by race, sex or for any other reason.
Natura&Co's Annual Report and the Body Shop's Modern Slavery Statement 2019 both referred to the company's Global Supplier Code of Conduct. The Body Shop stated that this reflected the Ethical Trade Initiative's (ETI) basecode. The ETI basecode does meet the requirements of Ethical Consumer's rating but as the Global Supplier Code of Conduct could not be found Ethical Consumer was unable to verify how closely it reflected the ETI code, for example whether it specified the age of a child which was required to be rated higher than 'poor' in this section. In the absence of publicly available information, Natura's supply chain policy was rated as poor.
Stakeholder engagement (rudimentary)
Ethical Consumer deemed it necessary for companies to demonstrate stakeholder engagement, such as through membership of the Ethical Trade Initiative, Fair Labour Association or Social Accountability International. Companies were also expected to engage with Trade Unions, NGOs and/or not-for-profit organisations which could systematically verify the company's supply chain audits, and for workers to have access to an anonymous complaints system, free of charge and in their own language.
In relation to its supply of natural ingredients it stated: The system [Social Biodiversity Chain Verification System] implemented in 2016 ensures traceability in the natural ingredient supply chain and is certified by the UEBT (Union for Ethical BioTrade). This was considered positive but did not appear to apply across all elements of the supply chain. The Bodyshop was a memeber of the ETI which was considered positive.
The company mentioned a complaints process: "Suppliers must read this code and consent to it, with written confirmation from a legal representative. Co-workers may communicate any concerns, suggestions, complaints and report breaches of conduct to the Ombudsman channel. These may be communicated by email, intranet, internet, telephone, post office box or personally, with the option to remain anonymous. Telephone contact is available 24 hours a day in Portuguese, English and Spanish." It did not state whether other languages were available or if lines were toll-free.
Overall Natura was considered to have a rudimentary approach to stakeholder engagement.
Auditing and Reporting (poor)
Ethical Consumer deemed it necessary for companies to have an auditing and reporting system. Results of audits should be publicly reported and quantitatively analysed. The company should have a scheduled and transparent audit plan that applies to their whole supply chain, including some second tier suppliers. The company should also have a staged policy for non-compliance. The costs of the audit should be borne by the company.
The Annual Report stated: "Every year, we perform audit processes on critical suppliers and on new ones. New suppliers are selected in accordance with the nature of their activity, as well as the socio-environmental risks that they present. We audited a total of 415 suppliers in 2019, compared with 280 the previous year. It should be noted that due to the updating of the supply chain management platform to SAP Ariba, it was not possible to report the number of new suppliers screened for socioenvironmental criteria." It also stated that it audited and verified supplier communities in the Amazon through its Social Biodiversity Chain Verification System.
However, Natura did provide a clear audit schedule, full and complete disclosure of audit results, state who bore the cost of audits or provide details of a remediation plan in instances of non-compliance. It was considered to have a poor approach to auditing and reporting.
Difficult issues (poor)
Ethical Consumer also deemed it necessary for companies to address other difficult issues in their supply chains. This would include ongoing training for agents, or rewards for suppliers, or preference for long term suppliers. It would also include acknowledgement of audit fraud and unannounced audits, and measures taken to address the issue of living wages, particularly among outworkers, and illegal freedom of association.
The company stated that it favoured long term relationships with its suppliers. No further information could be found. It was considered to have a rudimentary approach to difficult issues.
Overall Natura received Ethical Consumer's worst rating for Supply Chain Management and lost a whole mark in this category.
Annual Report 2019 (2020)