Sustainability risk management, its determinants and outcome in palm oil mills in Malaysia

Palm oil industry in Malaysia is under greater attention due to the claim of sustainability issues arising from palm oil productions. Sustainability issues, such as gas emissions, solid waste, labour issues, etc., indirectly expose Malaysian palm oil to sustainability risks, such as boycott, reputational, and regulation risks. There is now heighten pressure on the industry to adopt a more sustainable stance towards reducing sustainability issues. Prior studies claimed that sustainability risk management is regarded as an important tool to address sustainability risks arising from sustainability issues. Therefore, this study examines the management of sustainability risks by implementing SRM. This study also investigates the influence of internal and external determinants on SRM implementation and its impact on sustainability performance. In total, 407 questionnaires were distributed between July and December 2020, with a response rate of 28.9%. Data was analysed using Failure Mode Effect Analysis and Structural Equation Modelling. Findings indicate that sustainability risk is identified as having a major impact on the palm oil mill operations, occurs infrequently, and is moderately easy to detect and recognise. Risk control and risk avoidance are the most risk response strategies employed to address the sustainability risk. Overall, palm oil mills have placed an adequate system to monitor the emergence of sustainability risks. The findings unveil that sustainability strategy, business size, top management support, regulatory pressure, and competitive pressure have positive and significant relationship on the SRM implementation. In return, the implementation of SRM has a positive and significant impact on sustainability performance. The findings indicate that the relationship between sustainability strategy, business size, top management support, regulatory pressure and competitive pressure and sustainability performance is indirectly through SRM implementation. The findings contribute to current knowledge and provide useful insight to policymakers on SRM implementation, its determinants, and sustainability performance.

Text 114024 (IR).pdf Download (1MB) Official URL or Download Paper: http://ethesis.upm.edu.my/id/eprint/18073

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