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Research Report

Risky business: Motivating uptake and implementation of sustainability standards in the Indonesian palm oil sector

Sophia M Gnych
Godwin Limberg
Gary Paoli
Copyright Date: Jan. 1, 2015
Pages: 63
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https://www.jstor.org/stable/resrep02250
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Table of Contents

  1. (pp. 1-9)

    This report is broken down into four main sections: introduction, methods, results and discussion, and conclusions. Readers who already have a strong understanding of the global palm oil supply chain and associated sectors, as well as existing sustainability standards for palm oil, may wish to move straight to the methods, results and conclusions.

    The introduction will provide useful background for those readers with little or no knowledge of palm oil. It sets the scene, providing context for the results and discussion. It is divided into the following:

    Tropical agriculture and climate change: The challenge of reducing agricultural GHG emissions.

    Climate...

  2. (pp. 10-12)

    The findings of this paper are based principally on direct interviews with 15 oil palm growers or companies operating plantations in Indonesia: six large (over 100,000 ha), five medium (10,000–100,000 ha) and four small (under 10,000 ha) (See Table 1). In addition, for purposes of triangulation, we conducted purposive interviews with 17 key informants from financial service providers (3), NGOs (3), consultancies (6), government bodies (1) and industry associations (2) with expertise related to Indonesian oil palm (see Annex 3).

    We focused interview efforts on large companies operating at the national/international level, and within East Kalimantan province, to ensure...

  3. (pp. 13-15)

    The study identified multiple factors that influence the adoption of corporate sustainability commitments (a summary of interview results can be found in Annex 7). The breadth and interrelatedness of these factors highlight the need for a framework or structure that can organize important factors under thematic categories. Here, we use elements of frameworks from existing literature, on both corporate social responsibility (CSR) and CSP, to inform and analyze our findings.

    Corporate social responsibility can be broadly defined as a firm’s “considerations of, and response to, issues beyond the narrow economic, technical and legal requirements of the firm, to accomplish social...

  4. (pp. 16-31)

    In this section, we will explore the motivations behind corporate sustainability commitments, focusing on the dominant motivations, namely instrumental risk and relationships.

    Risk-based motivations are driven by self-interest, but reflect steps taken for self-defense, as opposed to seeking additional benefits. Risk-based motivations, particularly where they have financial implications, were overwhelmingly reported as a driver for corporate sustainability commitments. These risks were experienced in a number of ways and varied depending on a grower’s context and exposure. Critically, interviews consistently described responding to risks that ultimately translated into financial risk. For example, one interviewee said, “For managers, good agricultural practice is...

  5. (pp. 32-36)

    This research paints a picture of an industry adopted by a nation as a source of rural development, income generation and national pride. Rapid growth in demand for palm oil has led to rapid expansion. This expansion has been built, however, on a foundation of weak land rights and spatial planning, weak governance and weak technical capacity.

    In addition, consumer markets have focused on purchasing products for their customers at the lowest cost in order to drive consumption, while making the maximum profit for their shareholders, with little concern for the sustainability of their sourcing. This has done little to...