The company announced that this week it would raise the banned Papuan flag in its store windows, hand out flyers to customers and sell a limited edition perfume, with funds going towards the movement.
An official from the Indonesian embassy in Canberra says he is surprised by Lush's campaign and questions what the company knows about the situation on the ground in Papua.
The British company Lush's Campaigns Manager, Megan Taylor, told Radio Australia's Asia Pacific the cause fits in with the company's ethical philosophy, having previously campaigned in support of animal rights and gay marriage.
"Of all the campaigns we've done it's probably the one we've had to really explain because not many people know what the issue is," Ms Taylor said.
Regional expert and Victoria University senior lecturer, Richard Chauvel, says the Lush campaign is the first commercial campaign in Australia in support of Papuan independence.
"I think from the point of view of the activists in Papua and their supporters outside, I think it has the potential to reach a somewhat different audience."
In 1969, a selected group of Papuans voted for Indonesian control in a UN-sponsored referendum, but the so-called 'Act of Free Choice' was widely criticised as being rigged.
Papua was granted special autonomy status in 2001.
Australia and Indonesia have a history of disagreement on Papua's status, with Jakarta recalling its ambassador from Australia in 2006 when Australia granted visas to 42 Papuans who arrived there by boat.