Production cost approach and material flow cost accounting as a step towards increasing responsibility, efficiency, and sustainability (RES): the case of palm oil mill in Banten Indonesia

Abstract

Based on Indonesia Program for Pollution Control, Evaluation and Rating (PROPER), palm oil industries are more likely to care about hazardous waste management rather than resource efficiency. It is very important to balance and achieve economic and ecological targets by identifying material and energy inefficiencies with significant economic impact. The application of standard and sustainable production also plays important role for oil palm companies which so far have more than 70% of biomass energy materials such as shells, powders, fibres, and dried empty bunches. This study used the production cost approach and material flow cost accounting to reduce material consumption and waste minimization. Identifying resource efficiencies were used to determine area for improvement. The results show that palm oil company more likely to manage total waste, hazardous waste, and raw materials consumed than material efficiencies. In terms of financial factors, cost ratio and profitability are likely to affect firm decisions regarding to manage the material flow for reducing hazardous waste ratio. This could support long-term business relationships which can be established and negotiated between the palm oil industry as organic waste supplier and the bioenergy producer, revealing economic and environmental benefits for both actors while contributing to the development of responsibility, effectiveness and sustainable (RES).