EP239. How one Indonesian island community is conserving wildlife through coconut oil

A friend of mine was on holiday recently in Southeast Asia and she sent me a text and in that text she said, I've just spent hours on a bus and all I've seen is palm plantations. So palm oil is big business. In Indonesia alone, oil palm plantations stretch for about 15 million hectares. That's really big. And my guest today felt exactly the same way when she was living in Indonesia and she realized that she could make a difference. So she started a business, a conservation foundation and an eco resort on the island of Simalu where her team has partnered with over 500 farmers with small holdings who now produce coconut oil that supplies companies such as Lush. This could be a model that other suppliers could use too, where business is there to make money and do good at the same time. Now, a lot of companies in the cosmetic sector talk about the ways that they embrace sustainability, but a very large part of the time that means they simply make charitable donations or they try to minimize their operational footprint. This concept of embedding, biodiversity conservation and social enterprise at the very heart of a business is a model that I suspect will need to become the norm in the future. So settle in to be inspired by the company founded by Jane Dunlop and her husband on the island of Simulu in Indonesia. Welcome to Green Beauty Conversations in which I challenge the beauty industry to become more sustainable, champion, independent and green beauty. And encourage to join me in changing the beauty industry for the better. I'm your host, Lorraine Dallmeier. I'm a chartered environmentalist, biologist and the CEO of award winning online organic cosmetic formulation school Formula Botanica. We have tens of thousands of students in over 190 countries around the world who study with us to become organic beauty formulators and entrepreneurs. Visit our website atformulabotanica.com to try our free online formulation course. And if you want to be the first person to know what's happening in green beauty, make sure you subscribe to this podcast in your favorite podcast app. So in today's episode I'm joined by Jane Dunlop, the co founder and CEO of Allouan, a business that conserves ecosystems and biodiversity. Jane's journey began in the 2000s when she relocated to the island of Sumatra with her husband Luke. They were called to protect this biodiverse paradise, but witnessed firsthand the threats of poaching, deforestation and unsustainable palm oil practices. So in response, Jane and her husband co founded Alouan. The organization creates high quality coconut based products at scale. They replant smallholder crops to improve productivity on farms and they undertake active conservation of forest and marine species and ecosystems under threat. Now, all of this happens in one place so that they can integrate social, environmental and economic needs and opportunities. Hi, Jane. How are you doing today, Lorraine?

I'm great, thank you. So nice to be here.

It is so lovely to have you with me. Your story is so inspiring. I know our listeners are going to be absolutely fascinated by what you do. So let's start with that. What do you do? Could you please introduce yourself and your business to us?

Yeah. So my name is Jane and I'm the founder and CEO of a company called Alawan. And we are set up to protect forest and marine ecosystems that are threatened and endangered species. And we do that all in one location. So rather than working in diverse locations, we work really deep and specific landscapes, one landscape in particular.

Well, let's learn more about that. First of all, what does allawan mean?

Ah, that's a beautiful question. So Allawan is from the Dubaian language, which is a language that's dying out on the island of Similu where we do our work. I actually sat down for half a day with this beautiful man, Pakheru is his name, and scowled through all of these dictionaries that were translated divine language to Indonesian. So the word, it means your trajectory or your path. And it's also the bow of a ship. So that relates to sort of our journey in the world, maybe our personal journey and our own paths. And we also produce a very high quality coconut oil. That's our main product through our business. So we like the idea of sort of a body of water traveling or, you know, the oil making its path. So, yeah, it's very meaningful.

Yeah, it sounds absolutely beautiful and I think that sets the scene for what we're going to talk about. So you've already alluded slightly to where your business is located. First of all, tell us a bit about where it's actually located.

So we're located on an island called Simalu off the coast of Sumatra in Indonesia. The island is 100,000 hectares and that's about two and a half times the size of Singapore for anyone that's visited Singapore before. So it's not a tiny island, it's a reasonable size and 70, 85% of the island is still covered in primary rainforest.

Amazing. And so you've obviously established the business there and you already alluded to the fact that you produce coconut oil. You also produce other coconut based products as well, don't you?

Yeah, so coconut oil is our primary product at the moment. The Idea is that we'll be focusing on all aspects of the coconut and then over time other products that come from the area and then it can support farmer livelihoods, for example. So yes, coconut oil, coconut flour or an exfoliant which is a byproduct from the coconut oil process. And then, you know, the coconut is such an amazing plant. You can get the timber, you can get shells, you know, shell, coconut shell as a byproduct as well. Fibre, which at the moment we're leaving in the field. But we're working with partners to look at doing fiber pads that you might be able to use for example to sit coconut soap or any soaps, shampoo, conditioner bars. On top of so, so many opportunities, you know, we've felt like we're in startup phase for a long time. So many different challenges and so coconut oil has really been our lead product and then we'll be adding, adding more as we go forward.

Beautiful. And I mean coconut has always been a personal favorite of mine. My children can attest to the fact that anytime there's any coconut on any menu anywhere, I'm there straight away. So I love this. Tell me more about the island of Similu. Why there?

Yeah, so Similu is a really important place to protect. Obviously I've mentioned the forest area. We focus on protecting the places on our planet that are still worth protecting and where there's still these incredible natural resources. So the story of Sumatra over the last 30 years is that you've had unprecedented deforestation. Indonesia's had the world's highest deforestation rate. So that's sort of the why of where we work, where we, where we do. And the mission really is to stop the island being converted to a land use that would result in the forest disappearing. Everything that we're doing is working in the coconut sector and protecting the species by investing in sort of regenerative approaches to investing in farms, added value at origin and then to market. Yeah. So it's dealing with the agriculture, land use pressure, land use change from primarily palm oil on Sumatra. At the moment there's small scale palm oil on Sumalu, but it's actually really starting to increase rapidly. So it's a real focus at the moment.

I can imagine, I can imagine that's probably a bit like trying to hold back the tide there a little bit. I mean, a friend of mine was recently on holiday in that area of the world even and said she took quite a sizable bus journey and saw just non stop palm oil plantations. So I can imagine that must Be quite a difficult thing to get involved with. What's your story? How did you end up here? How did you end up working on the island of Similu? Why this particular venture?

My husband Luke and I actually ended up in Aceh in 2006. So Aceh had the 2004 Indian Ocean tsunami, lost 500,000 lives and has had quite an intense history really. They've had a 30 year conflict with the national government. They wanted to separate from the rest of Indonesia in some ways that kept its forest intact because you couldn't exercise mining and logging concessions. So it has this incredible natural resource. The forest on the mainland still has tigers, orangutans, elephants. And so this incredible place on the planet, just as important as the Amazon, but a place that we don't hear about. So straight out of the university, Luke and I ended up in this place, had had $7 billion of aid finance, all of these organizations and we really had a chance to understand how development works, how conservation works from a very broad perspective. And I think from that we took away that aid finance, donor financed can do a lot, but at the end of our work there wasn't a lot of focus on financial sustainability. And so we, we really took a turn at that point. All of the work that was being done by conservation organ, incredible, really important, very impactful. But how are we going to sustain that over the medium to long term? And that's when we started looking at investment opportunities. From there. I worked internationally with a wonderful organization, Fauna and Flora International, which I think Lorraine, you said you were familiar with, based in the UK and that felt like home, really. FFI has quite an innovative entrepreneurial approach to doing things. And at that time forest carbon markets globally were increasing and that really brought money into conservation that we hadn't seen before and it brought in a different expertise and way of doing things. So our experience with donor funding cycles is that they were quite rigid, they had a definite time period and if you said you were going to do a in January 2004 then you had to do exactly that. And there wasn't a lot of space to sort of transition or move budgets around. But for the first time we were working with Macquarie Capital, we had investment bankers in our team and it was a lot more flexible. We were able to respond to the needs on the ground. If you didn't need to spend money, you weren't going to be sort of chastised for doing that and you could be really impactful. And there were also a lot more funds available than we'd had in the past. So I think the flexibility of funding, being able to respond to the needs on the ground, as well as just the different expertise and scale of finance, that really had an impact. But what happened at the end of that phase of our work is that we had the global financial crisis and that work was discontinued. The big unfccc, the big climate conference in Copenhagen. Things stopped at a global level and that work globally just didn't continue. The other take home from that was there was this massive gap between what the expectations were and how quickly we could achieve things and the realities on the ground. So we decided that we would work in one landscape and we would. This is my husband Luke and I. We would sort of take everything that we'd learned from that and build something from the bottom up that was an eco resort, a conservation foundation, and Allawan business. And the idea was that if we build a team and have very strong roots on the ground in a place, then eventually we could see where the world was heading. The climate, environmental trajectory and the pressures on the planet were very clear. I think in our minds, we thought that funding for this sort of work at scale would come on board a lot sooner than it did. Probably taken 10 years longer than we thought it would, but it really is starting to happen now. And we have these organizations in place.

Amazing. So you obviously realized you wanted to do good. You ended up on the island of Similu. You set up the eco resort, the foundation, Alouan. How did you get the community involved in at that point? What happened then as you arrived on Simalu?

Yeah, so we'd already been in n for 10 years at that point, and we had connections and relationships. So it wasn't like we were not there one day and then there the next, and we had to build people together. I think we already had a core team and partners that wanted to do this with us. So I would say it was almost similar to anybody that was living in a place and was bringing people together to start any sort of enterprise. We lived there and it was home for us.

No, I get it. Okay, so you're working with the community there. What you've set up with Alouan is very special because you have, I believe, about 500 smallholders and farmers on board. How did that work? Because, I mean, I manage a team of 35 people. I struggle enough with that. How did you bring 500 people together and get everyone pointing in the same direction?

Yeah, so we work with 500 smallholder farmers in the company and on the same island. We also Have a processing facility and we have about 70 staff in the processing facility. And then we have a mid level management team that pulls everything together. So I would say the best thing that we have done is build an incredible mid level management team. And that really, that took some time, but it's not me that's doing that work on a daily basis. I'm working with that mid level team. And I would say the biggest thing that we've done also is have women leading that mid level management team. So as you can imagine, we've made lots of mistakes and we've had lots of iterations, but it's incredible in the particular place where we work. Aceh is actually the only province in Indonesia that has Sharia law. And that can come with lots of cultural norms where women find it challenging to have leadership roles. And it is just unbelievable having women in leadership. And so we have a female general manager, we have a female that runs our production facility. We have a female head of our field team and really love being the people that together. When Luke and I have pulled this together, so 500 farmers that through our organic certification team, I sometimes can't really understand it myself, but it is really about team building.

It's an incredible scale that you've got set up there. So you're working with about 500 farmers then across the island. How does it work in terms of harvesting the coconuts from them? Because you've got all these different smallholders, but you've brought it together in one organization. How does that work from a practical perspective?

Yeah. So the coconuts are existing on the island. They were planted in the 60s and 70s, so we're not starting a new enterprise. And that was really important for us. We came into a landscape, we looked at what was already there and we looked at how can we add value to what is existing and where are the challenges that farmers face. What are they? Farmers are already selling to either the mainland for copra, which is a very common market for coconut. And that is where coconuts are dried before they're processed. And that's a lot of the coconut oil that you'll find globally. It has quite a complicated supply chain and lots of people along the supply chain. What they can also do is stock and hold that copra so they'll buy from the farmers at a lower price, hold it in very, very large storage facilities. It often goes quite mouldy. But the processing technique so they can put it to a really high temperature, very high heat point before they process it. That is the existing market for smallholder coconut farmers in similar. We set up farmer groups, there's about 40 farmers per group and various training programs were run supporting farmers to manage their fields better. And then we're sourcing coconuts from them at a higher price than the market.

Wow, okay. Well that certainly also helps then, because that means that people are more incentivized to also stay in that industry. I would imagine there is immense pressure on many of the farmers and smallholders in those areas to succumb to selling their land to palm oil plantations. Is that something that you've seen firsthand as well?

Yeah, that is something that's happened a lot on mainland Sumatra and it wasn't happening where we are, but in the last 12 months we're starting to hear signs of that happening in the community. The stories that our team are coming back with are that the palm oil companies have supported smallholders to plant palm on their farm, but that there's been no inputs provided and that that's being used as a way to be able to purchase land from farmers sort of through predatory means. Which is really sad to hear, but it is the reason that we were set up and it's why we exist. So got work to do.

Yeah, I mean, it's a fantastic mission you've got there and I love how you've brought this together on this, this one island as well. Just give us a feel for the scale of what you're dealing with. I mean, how many tons of coconuts are you harvesting? How much are you producing each year?

You're going to have to make me think of numbers, but they don't stand my head. Up until the end of last year we were producing around about 40 metric tonnes a year. That's big if you're looking at a small business or from a community perspective. But for us that was very much not a break even place. We're set up to scale so that we really can have that landscape impact and not only work with 500 smallholder farmers, but in our area, work with 7,000 hectares, which would be around about three and a half thousand smallholder farmers. Because unless we can do that at scale, we're just not going to have a chance of, like you said, sort of turning the tide of this pressure. And the pressure is very real. So that's on our mind on a daily basis. But so we, until the end of last year were producing 40 metric tons a year and we jumped up to 120 metric tons a year, which is fantastic. We've had incredible investors that have supported Us along the way through very challenging times and been very patient, but that puts us in a really strong position. So the work now is to work on, really sales from that 40 to 120 metric tonnes.

Gosh, that's amazing. You've tripled. That's a huge, huge undertaking to scale like that. Congratulations. Where does most of your coconut oil go?

We have been very lucky so that initial sort of 30 to 40 metric tonnes a year. We've had an incredible partnership with Lush Cosmetics. So it goes from Medan in no Sumatra and is shipped into pool.

Wow. Yeah, that's so funny. I mean, it's just down the road from me. I have bought many Lush products over the years and I'm sure our listeners have too. So we know where the coconut oil is coming from now. We can trace it back exactly to source. And on that note, you have complete traceability in your supply chain as well. How did you build that into it? Because that's fascinating.

Yeah, we did. We have full traceability and that's really important. I think one of our unique selling points. But it was really easy to set up traceability. We're on the island, we meet with the farmers regularly, so we now have a QR code and every container, every customer receives a QR code for every batch. And from that you can scan it and trace right back to the GPS farm location and you get the farmer's name, where the coconut comes from.

Wow, that is incredible. I mean, I've been talking a lot about traceability on the podcast recently, so it is wonderful to meet someone who's running such an incredible undertaking where you can trace things right back to source like that. And I'm sure that is very appealing to many companies, including, I'm sure, Lush. How does it work to get, or how hard was it, I should ask to get organic certification when you're working with that many smallholders? Because that must have been an undertaking as well.

Yeah, we did that in our first year. It was really important for us to be organic and the organic standards actually have embedded traceability because you need to have GPS locations within that anyway. So there are a number of reasons that organic was important for us. Also very thorough in terms of documentation and a very, very rigorous certification process. They are in the field with us for 10 days from sometimes, you know, 7:00am till 6:00pm, and we have, in the past, I think, seven years since we've had the certification, they have come all the way to our island and done a spot check and we just got a phone call one day that they'd arrived on the island and that they wanted to visit several farms. So very thorough, the farmers. We just have to visit every farm. There's quite a detailed process. We probably have to spend half a day with every farmer to set everything up initially. And in terms of organic certification, we also add our own layers on top of that. Biodiversity conservation is really important for us. So we spend time talking with the farmers about the species that they're seeing, how their relationship is with them. For example, a monkey might visit the farm, and that might be considered a threat to the farmer. So how do they deal with that? And it's pretty informal. And we're also using that as an informal more opportunity to educate farmers about the threatened species. So on our island, there's a species of monkey and two songbirds that are very highly threatened, as well as some sea turtle species. So we chat about that as well. But that's about having staff in the field that can do that work and that spend time with farmers.

Incredible. Well, it's an incredible undertaking, I'm sure, to get that level of certification. I can also imagine there are quite a few people putting their hand up and volunteering to come and do the audit because it sounds like an idyllic place to visit. Now, you obviously employ your team on the island. You said you have the processing facility, you have the management team there, but you also employ rangers, don't you? How does that work?

We do. So we have the company Allawan, and then we also have a foundation that runs more like a traditional conservation organization and that we receive donor finance. The idea is that over time, as Alawan gets to scale, we'll be able to finance the foundation, and that's the financial sustainability element. In the early days, I think we thought that might take sort of 18 months to a couple of years, but the reality is it's taking a lot longer. But they do complement each other really well. So we actually started Alawan in response to a need for funding on an island called Mangkaru. Mangkaru is an uninhabited island. It is absolutely incredible. It is a place where turtles nest every single night of the year. In the years prior to us being involved, there was very inconsistent funding. So sometimes there'd be rangers on the island, and sometimes there weren't. And we got very clear data that when the rangers weren't on the island, every single turtle egg was poached. So, you know, sea turtles are amazing. They've got data on how they come back to nest in the same place that they were born and very special species on our planet. So the first program that we started funding was the Bunkaru Sea Turtle Ranger program. We have four to six rangers that are permanently present on the island 365 days a year, and they're doing patrols morning and night and collecting data. Since then, we've expanded to three other very critical nesting sites for sea turtles. There's this incredible leatherback species that's huge. It's like sometimes it can be 3 or 4 meters in diameter. So there's a very important nesting site called Salalt island where they are nesting. It's also a really important coconut harvesting site as well. So there's a lot of. A lot of overlap.

Wow. Well, I mean, congratulations that you've managed to put this in place as well. I'm sure that has made a real profound difference there too. It's wonderful how you've woven everything together with the foundation, alouan, the coconut producer. And there's an eco resort as well.

Right.

How does that work?

Yeah, so that was one of the initiatives that we set up and that's been a really nice base. There's a really nice surf break in front of the island. My husband's a surfer. I try to avoid it as much as possible. That's not true. But, yeah, Mahi Mahi is the resort. It's an incredible place. And, yeah, quite a different place to come and have a holiday. Either if you're a surfer or you're interested in nature, it's a wonderful place to visit over time. I think there's a bit of a dream to be able to host people on the island and. And share the journey that we've been on and offer really diverse experiences to people. At the moment, there just isn't the bandwidth. But, yeah, I do have a bit of a dream for that one day.

Oh, I love that. I love the way that you're creating this whole ecosystem effectively to look after the ecosystem, I suppose. Do you think this could be a model for other cosmetic ingredient suppliers, where businesses are effectively set up to conserve biodiversity at the same time?

Definitely could, yeah. I think we're setting up to prove that that's possible. So it's definitely a model that that's replicable not only in terms of scaling up for coconut, but a whole range of ingredient that you might use in the cosmetics, personal care, and, you know, indeed for any. Any raw material or ingredient that we're sourcing globally.

Are you starting to see interest from. From other suppliers as well? Sort of coming to you to learn from your model. Yeah.

So I was at in Cosmetics in Paris in April, which is one of the biggest trade fairs for personal care globally. I was a bit wary about going and being under the bright lights for a few days. I'm much more comfortable on the island. But I really, really enjoyed it and certainly our traceability stood out and there was significant interest in that. So the evolutions with the regulatory framework in Europe, the CSRD and there's a deforestation free regulation, the eudr, that is having a massive, massive impact. I couldn't believe it. I was shocked. I think it's from the perspective of selling into that market. It is the biggest shift that I've seen almost in my entire career. And so companies like Evonik, the world's largest purchaser of hardened coconut oil, were really, really interested in what we're doing and we're starting to have conversations with them. So that's the really, the really big guys that have been in this for a long time looking at how they can retrofit what they're doing to ensure that there's traceability throughout their supply chain. And then of course some of these beautiful emerging business models that we see, some of the smaller personal care cosmetics producers, they're wonderful because they don't need to retrofit. And I think there's so much creativity and beauty in those businesses that are emerging. So yeah, there is lots of interest and I think think it's a really nice time to be in the industry.

Amazing. Well, I'm sure lots of people will be watching closely to see what you do at Aloan. So one final question. What are your future plans? It sounds like you're scaling up massively. You've already tripled in production. What else is on the horizon for Aloan?

So the most important thing that Alloan can do right now is replant coconut trees for smallholder farmers. A lot of our effort is focused on that right now. So unless we can replant trees for smallholder farmers, they can't pay to do it themselves, they don't have savings, fencing's required, organic fertiliser and then to purchase the seedlings. Unless we can do that, another land use is going to come in. That's going to be palm oil and that's going to come with all of the additional externalities that come when palm oil takes over a landscape. So yeah, we've been busy working on financial models. We have some R and D funding with Lush and other partners. So we've been busy Working with farmers on what will work and figuring out how we can get a living wage to farming families as soon as possible because unless we do that, it's not going to work. So yeah, funding fundraising proposals and really talking to people to see what we can do.

Wow. Exciting plans on the horizon. It all sounds incredible. Thank you so much Jane for joining me on the podcast today and telling your story. I love what you're doing with Aloha. I wish you all the best of luck. I will certainly be following your story with great interest. If other people want to connect with you, where can they do that?

Yeah, so we have all the traditional websites, www.alawan.coco4coconut.com we have Instagram, Alawan Coconut, LinkedIn and you're also welcome to follow me. I would say that yeah, our calm side of things is not as strong as it could be. We've got work to do on that. We're pretty focused on what we're doing on the island. So yeah, encourage me to. Encourage me to talk more and share more. I need it.

Amazing. Well, we'll include all those links in the show notes. Lovely to chat to you today. Thank you so much for joining me on the podcast.

Thank you so much, Lorraine. It's a pleasure.

I would love to hear your thoughts on this episode. Do you also see this as a model for other businesses where companies weave biodiversity conservation and social enterprise into the very heart of their activities? And would you just like me love to visit the island of Sumul and try Alouan's incredible sounding coconut oil? I bet you would leave us a comment on our social channels as both the Formula Botanica team and I love hearing from you. And if you want to hear more about some of the topics we talked about today, please do delve back into the podcast archives. So some great Examples include episode 216 in which I discuss a new industry wide initiative on traceability and ask some probing questions about whether the mainstream industry is really all that interested in opening the doors to transparency and traceability, which is of course a core value in alloan. Or episode 213 in which I interviewed Ruth Andrade, the Earth Care Strategy lead at Lush, about the way that they approach their formulations and their ingredient sourcing, as of course they source their coconut oil from Alouan. This is a lovely way of following that story further down the supply chain, Jane. Or episode 231 in which I interviewed Dr. Sally Goldstone about the ways that the beauty industry needs to do better in conserving biodiversity, and I'm sure you'll recognize a lot of what Sally said in that episode in the work that Jane and her team are doing. There's a wealth of information in our old episodes, and I do encourage you to go back and listen to them. Thank you for joining Jane and I for this latest episode of Green Beauty Conversations. I really hope you enjoyed it.

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