Factors influencing sustainability certification among plantation companies in Malaysia: a panel approach

Abstract Adoption of palm oil sustainability standards remains limited, especially among plantation companies. This is a concern since plantation companies are critical in the palm oil industry, not only for their own production but as an important nucleus to smallholders. Using a panel technique, this study investigates the drivers underlying the certification of Roundtable on Sustainable Palm Oil (RSPO) standard by plantation companies in Malaysia. We examine the period between 2000 and 2016. Panel logistics analysis allows for changes in variables, including company capacity (proportion of planted area), company fundamentals (mill extraction rate and operating profit margin), and the time-dependent price of crude palm oil. Despite the fact that these variables influence adoption, our findings reveal that adoption is found to be inelastic to changes in these variables. Given the currently limited response to adoption, a partially targeted approach encompassing education and technical assistance, financial assistance, and regulation is recommended to create a better enabling environment.