A sustainability performance assessment framework for palm oil mills

Abstract

The palm oil industry has had to undergo rapid development in order to cope with the increasing demand from consumers year by year. The palm oil industry is receiving criticism from various parties on the issue of sustainability. This paper presents the development of a Palm Oil Mill Sustainability Index that enables millers to assess the sustainability performance of palm oil mills against benchmarks, and to differentiate between the performance of each mill. The assessment was performed via the adoption of a Proximity-to-Target approach that measures the current sustainability performance of the industry relative to policy targets. The industry's comparable performance was observed in terms of sustainability and indicators through a graphical method. The resulting Palm Oil Mill Sustainability Index scores were translated into a five-point rating system to describe the sustainability performance levels for different mills i.e. excellent, good, fair, poor, and very poor. Based on the Palm Oil Mill Sustainability Index scores and rating system, weak performance indicators were identified, for example, excessive use of water consumption due to inappropriate operation of hydrocyclones. By identifying the weak performance indicators, practical recommendations and measures for improvement can be proposed and the Palm Oil Mill Sustainability Index scores recalculated to evaluate the effectiveness of the proposed sustainability performance strategy. Selected palm oil mills in Malaysia were used as a case study to demonstrate the applicability of the framework. The results provide empirical evidence to support a decision-support-system for enhancing palm oil mill sustainability performance, so as to achieve a balance between environmental, economic, and social aspects in the palm oil mill sector.