Strategising in the Sustainable Palm Oil Segment by Leveraging Social Skill: The Case of DAABON Group & RSPO NEXT

Abstract

This paper examines the role of sustainability certifications in the palm oil industry for companies to differentiate and strengthen their industry position. The case of Colombian palm oil company DAABON Group is studied in terms of; i) how the company applied social skill and strategy to identify the sustainability certification RSPO NEXT as an opportunity; ii) the strategic implications of DAABON’s adoption of RSPO NEXT. In recent years, the palm oil industry has been growing rapidly but it has also become associated with environmental and social malpractice. As the most efficient vegetable oil crop, promoting sustainable production of palm oil is critical to secure food supply and protect the climate considering the global population growth. Multi-stakeholder initiatives led by the RSPO and related sustainability certifications have been established to counter the negative reputation and increase sustainability standards. This paper addresses the lack of literature regarding recent sustainability standards, specifically the RSPO NEXT and the 2018 RSPO P&C. The purpose of the thesis is to understand palm oil companies’ ability to identify sustainable strategic opportunities and gain insights into the importance of differentiating through sustainability in a competitive segment. Through the Strategic Action Fields theory, we construe DAABON surrounding universe. In the fields, we assess the concept of social skill related to business strategy and evaluate the adoption of RSPO NEXT as a strategic move. We conducted 17 interviews with DAABON Group representatives and industry stakeholders to investigate their perception and experience of RSPO NEXT and its impact. For this explorative research, we investigated three themes: Purpose and Pursuit of RSPO NEXT, Implications of RSPO NEXT, and the Sustainable Palm Oil Segment. Our findings highlight the usefulness for companies of combining social skill with business strategy to successfully identify opportunities and navigate in their segment. RSPO NEXT’s strategic implications for DAABON include improved reputation, a stronger supply chain, risk mitigation, but also limited commercial impact. Overall, DAABON managed to improve their competitive advantage and thereby, the company’s position in the segment through RSPO NEXT. Keywords: RSPO NEXT, RSPO, strategic action fields, social skill, sustainability certifications, sustainability strategy, palm oil, business strategy, competitive advantage, positioning, differentiation, institutional theory