Sustainability Certification and Environmental Dislcosure in Malaysian Palm Oil Industry: The IMpact on Firm Performance

Noorhayati, Mansor and Alif Falni, Hassan Shukri (2016) Sustainability Certification and Environmental Dislcosure in Malaysian Palm Oil Industry: The IMpact on Firm Performance. In: International Social Sciences and Tourism Research, 20-22 April 2016, UNISZA.

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Abstract

Sustainability certification in the Malaysian Palm Oil Industry (MPOI) is still a debatable issue. Even though the certification is widely accepted as a cost of doing business particularly for export purposes, the fundamental principle is that Malaysia has all along been very proactive and responsible in palm oil production .This study discusses the results of a finding conducted to examine the issue of sustainability certification on MPOI firm performance. In addition, accounting and environmental factors were also incllllded in the study. Following the stakeholder theory, the relationships between finn performance and four independent variables which are (i) RSPO Certification; (ii) MSPO Certification; (iii) Environmental Disclosure; and (iv) Export Earnings were examined. A structured questionnaire, with a ten­ point Likert scale, was used. A convenience sampling was used to select the MPOI companies from the Directory of Oil Palm Estates in Malaysia. A total of 260 sets of questionnaires were sent to MPOl companies in Malaysia either via e-mail or fax. A total of 106 was returned but 3 of them was incomplete and thus, not included in the final analyses. The data was analysed using the Stmctural Equation Modeling (SEM) and the Statistical Package for the Social Sciences (SPSS). The study reveals that only technology has a significant positive impact on firm performance (p-value <0.001). Contrary to expectations, the findings show insignificant relationship between the RSPO certification, MSPO certification, environmental disclosure and export earnings respectively (p-value >0.001). Accordingly, the study suggests: that Malaysian government especially Malaysian Palm Oil Board (MPOB) should move toward with a latest technology. Thus, MPOB should transfer the technology to the MPOI companies in ways of adding value, increasing productivity and driving cost reductions across the production of palm oil.

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