Business school teaching case study: Can you put a price on impact?

{"text":[[{"start":8.62,"text":"The concept of the “bioeconomy” — building wealth from a living forest rather than a cleared one — reached a milestone last year with its discussion at the COP30 summit in Brazil. Few businesses have staked more on the idea than Natura, the Brazilian cosmetics group."}],[{"start":24.26,"text":"The company has spent 26 years sourcing ingredients from Amazon communities and, for a decade, trying to show in hard numbers that a standing tree is worth more than a felled one."}],[{"start":34.42,"text":"Its instrument is called Integrated Profit & Loss, or IP&L: a methodology that puts a monetary value on the social, human and environmental effects of everything it does — from the incomes of millions of direct-sales consultants, through its factories, to the carbon in its supply chain and the forest its contracts keep protecting."}],[{"start":53.38,"text":"When Natura published its first IP&L in 2021, it reckoned that every Brazilian real (R$) of sales generated about R$1.5 ($0.29) of value for society, and by 2025 the figure had reached R$4 — a target originally set for 2030, met five years early."}],[{"start":71.86,"text":"The IP&L is among the most developed experiments in impact accounting anywhere. It is also a test of a larger claim: that if a business states what it does to the world in the same units as profit, sustainability can finally be part of the decisions that matter — for example, which ingredients to buy and how to pay employees."}],[{"start":null,"text":""}],[{"start":89.3,"text":"Founded in 1969 and selling door-to-door since 1974, Natura built a business on ingredients such as ucuuba, andiroba and açaí, gathered by more than 10,000 families across the Amazon."}],[{"start":101.4,"text":"Its logic prioritises the standing forest: a tree cut for timber earns a farmer a few dollars once, while the same tree harvested for its seeds can pay several times as much, year after year. That model helped make Natura, in 2014, the first publicly traded company to certify as a B Corp, and later the largest; it recertified most recently in 2024."}],[{"start":122.74,"text":"The IP&L grew out of that history. Working with the Capitals Coalition and the specialist firm Valuing Impact, Natura began with an environmental account in the mid-2010s, added social and human dimensions, and built an economic valuation model covering its whole value chain — sourcing, operations, consultants, product use and disposal."}],[{"start":null,"text":""}],[{"start":144.18,"text":"Impacts were translated into financial terms through valuation factors: a social cost of carbon, a per-hectare value for conserved forest, health-adjusted measures of income and wellbeing. In one example, the model estimates that consuming 300,000kg of diesel produces 1.38mn kg of carbon dioxide equivalent; applying a factor of R$2.97 per kilogramme values the climate damage at R$4.1mn."}],[{"start":171.42,"text":"Adding particulate pollution, fossil-resource depletion and 14 other environmental effects brings the estimated loss of societal wellbeing to R$12.46mn. The calculation in effect assigns a societal cost of roughly R$41.5 for every kilogramme of diesel consumed, once climate, pollution, resource depletion and other impacts are included."}],[{"start":193.54,"text":"Natura’s claim is that the IP&L can provide a roadmap to run the business rather than merely reporting on it. Procurement and finance teams use it to weigh options in a common currency."}],[{"start":204.34,"text":"Ana Costa, a sustainability executive at Natura, said the exercise focused the company on the question of “are we creating more value than we extract from the world?” adding that “if you do not measure it, it does not matter”."}],[{"start":216.9,"text":"For example, in 2025, it calculated that its higher-level sales consultants generated an estimated R$42.7bn in positive human capital impact through things such as the value of training and how their living conditions compare with standards benchmarked by region. Conversely, product use and end-of-life disposal depleted natural capital by R$5.1bn due to the water, waste and emissions expended as consumers use and discard its products."}],[{"start":245.06,"text":"The calculation forces the company to ask different questions than it otherwise would: Do higher sales leave its consultants better off? And are the products behind those sales — from the palm oil in them to the packaging thrown away afterwards — doing more damage in water, waste and emissions than the revenue justifies?"}],[{"start":262.42,"text":"Sceptics doubt that summary figures decide anything. The headline result is a net number and Natura’s natural capital is still negative, offset by positives in human and social capital."}],[{"start":274.18,"text":"If the number that gets quoted blends the good with the bad, does the IP&L sharpen the company’s priorities or soften them? Would it reduce scrutiny on the biggest negative impacts — scope-three emissions [those that occur indirectly across a company’s broader value chain] from inputs such as palm oil, or the disposal of products after sale?"}],[{"start":294.1,"text":"A second tension lies in the valuation factors. Someone must decide what a hectare of rainforest, a year of a consultant’s income or a tonne of carbon is worth, and those judgments and the research underlying them are contestable. The results sit apart from audited financial statements and cannot easily be compared with those of the few other companies attempting this method."}],[{"start":315.3,"text":"Valuing impacts is a growing trend. Other companies such as Philips, Novo Nordisk and Kering have published EP&L (environmental profit-and-loss) accounts, which convert carbon emissions, pollution and resource use into monetary terms. AkzoNobel, the Dutch paints and coatings group, is among the closest precedents, working to publish an IP&L covering environmental, social and human impacts."}],[{"start":338.98,"text":"Natura’s approach is to open up the tool to other users. In July 2026 it launched The Future P&L, a free platform that lets any company enter data on its workforce, suppliers, waste and social spending to see the effects expressed in money. Natura says the approach has revealed more than $9bn of accumulated positive impact and hopes wider use will move investors and regulators towards accounting systems that recognise social, human and environmental impacts"}],[{"start":366.94,"text":"While Natura’s impact is real — its Amazon sourcing sustains communities and forest, and its network moves genuine income to millions of women — the open question is narrower and harder. When a company translates that impact into money, does the figure become an instrument that changes what it sources, makes and pays — or a story it tells about itself, that still sits alongside a strategy decided in the older currency of profit?"}],[{"start":null,"text":""}],[{"start":395.82,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1788419191_9770.mp3"}