Measuring stock market connectedness among palm oil buyers: Do sustainability standards matter?

Abstract In this paper, we analyze the relationships between palm oil buyers and consider their sustainability scores. We present a model that describes connections and constructs networks, and this model examines the roles of important actors in these networks. We examine the closing price data of 55 palm oil stocks pertaining to buyer companies from November 11, 2010 to December 11, 2017 by applying the minimum spanning trees (MST) approach and by considering the sustainability scores of these companies. Based on the MST results, General Mills, Unilever, and Kellogg's stood out as the dominant stock companies in the network that comply with the sustainability positions of the companies included in this research. In particular, the growing pressure to consider palm oil sustainability in global operations opens up opportunities for new modes of operation for the existing palm oil networks.