Form SD AVON PRODUCTS INC

As filed with the Securities and Exchange Commission on May 25, 2022

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM SD

SPECIALIZED DISCLOSURE REPORT

 

 

AVON PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

 

New York	1-4881	13-0544597
(State or Other Jurisdiction of Incorporation or Organization)	(Commission file number)	(I.R.S. Employer Identification Number)
Nunn Mills Road, Northampton NN1 5PA United Kingdom
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

	João José Gallego Moura +55 (11) 4389-7881
(Name and telephone number, including area code, of the person to contact in connection with this report)

 

Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:

 

☒ Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2021.

 

 

 

INFORMATION TO BE INCLUDED IN THE REPORT

 

This report for the year ended December 31, 2021 is presented to comply with Rule 13p-1 under the Securities Exchange Act of 1934 (the “Rule”). The Rule was adopted by the Securities and Exchange Commission to implement reporting and disclosure requirements related to “conflict minerals” pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

 

When used in this report, the terms “Natura &Co,” the “Company,” “we,” “our,” or “us” mean, unless the context otherwise indicates, Natura &Co Holding S.A. “Avon” means, unless the context otherwise indicates, Avon Products, Inc. and its consolidated subsidiaries. “Natura Cosméticos” means, unless the context otherwise indicates, Natura Cosméticos S.A. and its subsidiaries.

 

Section 1 - Conflict Minerals Disclosure

 

Item 1.01 Conflict Minerals Disclosure and Report

 

On January 3, 2020, Natura Cosméticos and Avon became wholly-owned subsidiaries of Natura &Co.

 

2021 Overview

 

Natura &Co supports ending violence in the Democratic Republic of Congo and adjoining countries (each a “covered country” and collectively, the “covered countries”) and is taking steps to strengthen its supply chain due diligence capability and traceability with respect to certain “conflict minerals,” which include cassiterite, columbite-tantalite (coltan), gold, and wolframite and their derivatives, tin, tantalum, and tungsten. Natura &Co’s conflict minerals position statement is available at https://www.naturaeco.com/pt-br/conflict-minerals/.

 

We are a global manufacturer and marketer of beauty products, cosmetics, fragrances and toiletries, as well as certain other products, including fashion and home products. Our products include: skincare (which includes personal care), fragrance and color (cosmetics), fashion jewelry, watches, apparel, footwear, accessories, gift and decorative products, housewares, entertainment and leisure products, and nutritional products. Certain of our product categories contain products that include conflict minerals in their creation. For example, some of our raw ingredients used in the manufacture of certain color and skincare products contained tin or gold. Other minerals may be used indirectly as a catalyst in the production of our beauty products. In addition, certain jewelry, accessories and other products within the fashion category also contain these minerals.

 

In accordance with the Rule, we have determined that conflict minerals are necessary to the functionality or production of certain products manufactured and/or contracted to be manufactured for us during the 2021 compliance period. We, therefore, conducted a Reasonable Country of Origin Inquiry (“RCOI”) that was reasonably designed to determine whether any conflict minerals originated in a covered country or are from recycled or scrap sources (as defined by paragraph (d)(6) of Item 1.01 of Form SD).

 

Description of RCOI

 

To the best of our knowledge, Natura &Co did not source any minerals, including conflict minerals, directly from mines, smelters or refiners. Natura &Co conducted supply chain diligence for the 2021 compliance period in order to engage with suppliers and acquire information regarding the potential use and source of conflict minerals in products that they provide to Natura &Co.

 

Targeted Suppliers

 

We surveyed a broad base of tier-one direct suppliers in our Beauty and Fashion & Home products as part of our review of our supply chain. We also surveyed contract manufacturers of Beauty products who manufacture products for Natura &Co.

 

In line with our objective of enhancing supply chain traceability and transparency, and engaging suppliers, we determined that it would be appropriate to include in the RCOI direct suppliers of raw ingredients and fashion products, as well as contract manufacturers, who sold products to us during the 2021 compliance period, even if in certain instances it was unlikely that such suppliers provided us with products containing conflict minerals. We undertook a risk-based approach to identify active suppliers in 2021 that may provide products that contain conflict minerals as part of their production by considering a number of factors based on available sourcing and ingredient information maintained by the Company.

 

 

In total, Natura &Co targeted 176 suppliers to participate in the RCOI.

 

Supplier Engagement

 

We asked suppliers to complete a conflict minerals survey using the Conflict Mineral Reporting Template developed by the Responsible Minerals Initiative (the “Survey”). The Survey includes questions regarding the use and origin of conflict minerals, along with seeking information with respect to a supplier’s policies, processes, and due diligence efforts regarding conflict minerals, including engagement with its own direct suppliers.

 

To encourage awareness and to inform suppliers who may be unfamiliar with conflict minerals and the Rule, Natura &Co provided background information on the Rule. In addition, we provided step-by-step instructions for responding to the Survey. Natura &Co continued to manage a dedicated mailbox for supplier questions about the conflict minerals or for assistance in completing the Survey.

 

Non-responsive suppliers received up to six email reminders to complete the Survey. An escalation letter was sent to suppliers that were still not responsive after the final survey submission deadline.

 

RCOI Results

 

Of the 176 suppliers targeted, 139 provided timely responses, which represents a 79% response rate.

 

In our survey results, eight suppliers indicated that their products contain conflict minerals that originated in one of the covered countries, and four specified smelters that were noted to be conformant to the Responsible Minerals Initiative’s Responsible Minerals Assurance Program (“RMAP”) during the reporting period.

 

We are currently unable to determine specifics on the mine location and country of origin for the conflict minerals used in our products. As a result, we are unable to conclude with certainty that none of the conflict minerals in our products originated in a covered country.

 

We have, therefore, exercised due diligence on the source and chain of custody of these Conflict Minerals as described in Exhibit 1.01 (the “Conflict Minerals Report”).

 

This Form SD and the Conflict Minerals Report are available at the following website: https://www.naturaeco.com/pt-br/conflict-minerals/.

 

Item 1.02 Exhibit

 

The Conflict Minerals Report required by Item 1.01 is filed as Exhibit 1.01 to this Form SD.

 

Section 2 - Exhibits

 

Item 2.01 Exhibits

 

Exhibit 1.01 - Conflict Minerals Report

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.

 

	AVON PRODUCTS, INC. May 25, 2022
	By:	/s/ Ginny Edwards
		Name: Ginny Edwards
		Title: VP, General Counsel and Corporate Secretary

 

Exhibit 1.01

 

Exhibit 1.01 – Conflict Minerals Report

 

When used in this report, the terms “Natura &Co,” the “Company,” “we,” “our,” or “us” mean, unless the context otherwise indicates, Natura &Co Holding S.A. “Avon” means, unless the context otherwise indicates, Avon Products, Inc. and its consolidated subsidiaries. “Natura Cosméticos” means, unless the context otherwise indicates, Natura Cosméticos S.A. and its subsidiaries. On January 3, 2020, Natura Cosméticos and Avon became wholly-owned subsidiaries of Natura &Co.

 

This Conflict Minerals Report is an exhibit to Avon’s Form SD filed with the Securities and Exchange Commission on May 25, 2022 and should be read in conjunction with the Form SD. Capitalized terms used herein and not defined have the meanings set forth in the Form SD.

 

Summary

 

To the best of our knowledge, Natura &Co did not source any minerals, including conflict minerals, directly from mines, smelters or refiners. Natura &Co conducted supply chain diligence for the 2021 compliance period in order to engage with suppliers and acquire information regarding the potential use and source of conflict minerals in products that they provide to Natura &Co.

 

After exercising due diligence as described below, we are currently unable to determine specifics on the mine location and country of origin for the conflict minerals used in our products. As a result, we are unable to conclude with certainty that none of the conflict minerals in our products originated in a covered country.

 

We are a global manufacturer and marketer of beauty products, cosmetics, fragrances and toiletries, as well as certain other products, including fashion and home products. Our products include: skincare (which includes personal care), fragrance and color (cosmetics), fashion jewelry, watches, apparel, footwear, accessories, gift and decorative products, housewares, entertainment and leisure products, and nutritional products. Certain of our product categories contain products that include conflict minerals in their creation. For example, some of our raw ingredients used in the manufacture of certain color and skincare products contained tin or gold. Other minerals may be used indirectly as a catalyst in the production of our beauty products. In addition, certain jewelry, accessories and other products within the fashion category also contain these minerals.

 

In light of our conclusion and in line with the Rule, an independent private sector audit of this Conflict Mineral Report is not required.

 

Due Diligence Framework & Design

 

Natura &Co designed its due diligence process based upon the internationally recognized due diligence framework set forth in the Organization for Economic Cooperation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (“OECD Framework”)(OECD 2016).

 

Due Diligence Steps Taken

 

In accordance with the OECD framework, Natura &Co’s due diligence measures included the following steps:

 

1) Establish strong company management systems

 

·

Maintained a cross-functional team comprised of employees in key business functions (Sourcing, Research & Development, Finance and Legal) to design and implement our conflict minerals compliance efforts with executive-level support and oversight from the Chief Procurement Officers.

 

·

Continued providing background information on the Rule to employees involved in our conflict minerals compliance efforts.

 

·

Provided guidance and support to suppliers involved in our conflict minerals compliance efforts.

 

·

Continued to maintain the conflict minerals position statement, which includes information on how to contact Natura &Co for further information and/or report concerns. The Natura &Co Conflict Minerals Position Statement is available on our website at https://www.naturaeco.com/pt-br/conflict-minerals/.

 

·

Maintained the Natura &Co Ethics Line (avon.navexone.com) that is available 24 hours a day, seven days a week and also provides a way to ask questions or report any issues.

 

·

Enhanced supply chain transparency and strengthened engagement with suppliers by asking targeted suppliers to complete the Conflict Mineral Reporting Template developed by the Responsible Minerals Initiative and providing suppliers with background information on the Rule.

 

·

Required that relevant conflict minerals documentation be retained for at least five years pursuant to our document retention policy.

 

2) Identify and assess risks in the supply chain

 

Our supplier Surveys provided an opportunity for us to engage with targeted suppliers and acquire information regarding the potential use and source of conflict minerals in products that they provide to any brand in the Natura &Co group – Natura, Avon, The Body Shop, and Aesop. It also helped us to assess relevant supply chain information in our information systems. In particular, we:

 

·

Developed a better understanding of our suppliers’ processes and where there were potential gaps in information or understanding.

 

·

Reviewed Survey responses for “red flags,” i.e., inconsistent and/or incomplete responses that indicated a potential risk.

 

·

Compared smelters and refiners identified by participating suppliers to the list of smelters that have been validated as conformant to the Responsible Minerals Initiative’s (“RMI”) Responsible Minerals Assurance Process (“RMAP”).

 

·

Identified areas of improvement for our information technology that could enhance, on an ongoing basis, the quality of direct supplier information to better assess the potential use of conflict minerals.

 

3) Design and implement a strategy to respond to identified risks

 

Natura &Co implemented a risk management plan designed to identify, monitor and mitigate identified risks. Key elements of the plan included:

 

·

Providing updates to senior management in Procurement through Steering Committee updates.

 

·

Sending corrective action follow-up notices to suppliers who provided incomplete and/or inconsistent Survey responses. The corrective action notices requested follow-up information from suppliers, as needed, and directed suppliers to our training materials regarding key regulatory requirements and to industry resources that may be useful to the suppliers.

 

·

Sending a corrective action notice to suppliers who did not complete a Survey in a timely manner, requesting that they begin gathering information regarding the potential use of conflict minerals in materials supplied to Natura &Co during 2021 and also informing them that Natura &Co will provide additional training as needed. Natura &Co informed these suppliers that if they did not complete the survey and comply with our 2021 compliance efforts, Natura &Co would evaluate its options, including but not limited to reassessment of the relationship between the supplier and Natura &Co.

 

4) Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain

 

To the best of our knowledge, Natura &Co did not source any minerals, including conflict minerals, directly from mines, smelters or refiners and is several layers removed from these market activities. As a result, Natura &Co does not conduct audits of smelters and refiners. As part of our due diligence process, we rely on cross-industry initiatives such as those led by the Responsible Business Alliance, GeSI and the Responsible Minerals Initiative.

 

 

5) Report on supply chain due diligence

 

This Report and the Form SD are available at https://www.naturaeco.com/pt-br/conflict-minerals/.

 

Outcomes of Reasonable Country of Origin Inquiry (RCOI)/Due Diligence

 

We have not been able to determine whether any of the products manufactured, or contracted to be manufactured, for Natura &Co by our suppliers contain conflict minerals originating from one of the covered countries.

 

We received responses from 139 (79%) of the 176 suppliers initially identified. Of the suppliers that did complete the survey, 101 responded that their products do not contain any conflict minerals. Based on survey responses, we identified 38 suppliers that manufactured, or contracted to manufacture, products that contained conflict minerals.

 

Of these 38 suppliers, 30 responded that the conflict minerals did not originate in a covered country. The remaining eight suppliers indicated that their products contain conflict minerals that originated in one of the covered countries, and four specified smelters that were noted to be conformant to the RMI’s RMAP during the reporting period.

 

The 38 suppliers identified 339 smelters and/or refiners that may have been used to supply the conflict minerals used in their products. 231 smelters and/or refiners were identified as being conformant to the RMI’s RMAP during the reporting period. The suppliers reported the smelter and refiner information predominantly at a company level and not at a product level.

 

After exercising due diligence as described in this report, we are unable to conclude with certainty that none of the conflict minerals in our products originated in a covered country.

 

Independent Audit

 

Pursuant to Rule 13p-1, Natura &Co has determined that for 2021 an independent private sector audit is not required.

 

Ongoing Risk Mitigation Efforts

 

In line with Avon’s Conflict Minerals Position Statement, the Natura &Co Group-level Global Procurement Center of Excellence is implementing an ongoing risk mitigation plan that is intended to strengthen our supply chain due diligence capability and traceability with respect to conflict minerals and reduce the risk that the sourcing of any conflict minerals benefits armed groups in the covered countries.

 

Natura &Co has implemented the following for the 2021 compliance period:

 

·

Where possible, Natura &Co used raw ingredient and product information to pursue a more targeted approach in identifying suppliers that could be providing products containing conflict minerals.

 

·

Natura &Co informed non-responsive suppliers that failure to support the 2021 compliance effort may cause Natura &Co to evaluate its options including, but not limited to, reassessment of the relationship between the supplier and Natura &Co.

 

·

Natura &Co informed suppliers of the RMI smelter list and encouraged the utilization of conformant smelters.

 

·

Harmonized and published a Natura &Co supplier code of conduct applicable for Avon, Natura, The Body Shop, and Aesop; which brings a specific topic on Conflict Minerals.

 

This new Supplier Code of Conduct can be found at https://www.naturaeco.com/code-of-conduct/.

 

Key steps for 2022 will include:

 

·

Continuing engagement with targeted suppliers in 2022, including current suppliers who were non-responsive to the 2021 RCOI or who were responsive, but did not provide sufficient information.

 

·

Continuing direct engagement with Natura &Co associates responsible for the relationships with suppliers who are asked to complete the Survey as a means of increasing the response rates and improving the quality of data collected.

 

·

Continuing to identify and drive improvements to the ingredient and product information that could enhance, on an ongoing basis, the quality of direct supplier information to better assess the potential use of conflict minerals and increase accuracy for targeting existing suppliers in future years.

 

·

Continuing to monitor the U.S. and global conflict minerals regulatory environment to ensure updates to Natura &Co’s compliance program as needed to comply with relevant regulations.

 

Forward-Looking Statements

 

Certain statements herein, including our ongoing risk mitigation efforts, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks, uncertainties and other factors, which may cause the actual results, levels of activity, performance or achievement of Natura &Co to be materially different from any future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, (1) the implementation of satisfactory traceability and other compliance measures by our direct and indirect suppliers on a timely basis or at all, (2) whether smelters and refiners and other market participants responsibly source conflict minerals and (3) political and regulatory developments, whether in the Democratic Republic of the Congo region, the United States or elsewhere. Any forward-looking statements speak only as of the date they are made. The Company does not undertake to update any such forward-looking statements.

 

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