Creating sustainable supply chain for palm oil

Abstract

Palm oil is a key commodity in the oil and fat sector and sustainability of the supply chain can only be achieved with buyers and sellers engaging in appropriate practices. Sustainability centric sellers allocate resources and change processes for sustainable productions whilst buyers arrest opportunistic behaviours and look beyond profit. Private and public bodies render governance of the chain by developing generally accepted sustainable standards, encourage compliance reporting and provide alternative dispute resolution platform. Hence, the conceptual model for creation of sustainable supply chain for palm oil is made of sellers, buyers and governance anchored by the underpinning mitigation of risk theory. As the downstream palm oil supply chain is extensive, used for food and non-food, the sustainable practices need to be focused at the plantations and procurement of crude oil. The findings reveal that sustainable supply chain can only be achieved with the integrated effort of sellers, buyers and the private-public governance as dictated by market dynamism.