Financial Sustainability of Palm Oil Companies with Regard to Environmental Certification
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Abstract
Due to development of sustainability awareness, companies need to take into consideration on sustainable issues of palm oil industry. Many palm oil companies are under external pressures to improve their environmental performance by having the Certified Sustainable Palm Oil (CSPO). Thus, the continuous issue faced by the Malaysian palm oil companies is how to remain profitable, yet sustainable after taking consideration the requirement of environmental certifications. Hence, this study aims to determine the most applicable CSPO that will ensure financial sustainability. The study also aims to analyze the impact of RSPO and MSPO certifications and other determinants of profitability toward financial sustainability on palm oil companies from 2009 until 2015 listed in Bursa Malaysia. Empirical quantitative method and multiple regression analysis will be conducted to analyze the effect of environmental certification on firm financial sustainability. CSPO is expected greatly benefits companies in term of financial sustainability. Companies with RSPO-certification or MSPO-certification are expected to have higher profit compare to non-members companies. Thus, the findings of this research will encourage the companies to own CSPO certifications to boost their profits and goodwill.
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