The Business Case for Sustainability in the Palm Oil Industry. Do More Sustainable Palm Oil Companies Consistently Outperform their less Sustainable Competitors?

Konstantin A. J. Thiel

Student thesis: Master thesis


The business case for sustainability promotes a positive relationship between its three pillars, sustainability performance, competitiveness and economic performance. I apply the business case for sustainability to 50 South-East-Asian palm oil companies in order to investigate whether those companies with higher levels of sustainability performance gain a consistent competitive advantage and achieve better financial and operational results than those companies with lower levels of sustainability performance. I use two separate proxy variables to assess the level of sustainability of the sampled companies, and subsequently divide them into a Minority and a Majority sustainable group, depending on their proxy score. Thereafter I defined a set of financial and operational performance indicators relevant for the palm oil industry and tested whether the Majority group does consistently outperform the Minority group over the time period from 2015 to 2017. Finally, I include a set of other explanatory factors to assess if the relationship between the level of sustainability and financial and operational performance is unique. From the results, I find that the Majority group does not consistently, i.e. not over the full time period from 2015 to 2017, outperform the Minority group with regards to all the included financial and operational performance measures. Nonetheless, the evidence suggests that there are indeed several robust relationships between the level of sustainability, the market competitiveness and economic performance for the sampled palm oil growers. Furthermore, I find that, despite of some explicable exceptions, none of the explanatory factors does have a significant impact on the obtained results and therefore conclude, that the level of sustainability performance is the stand-alone differentiating factor between the different financial and operational performances.

EducationsMSc in Accounting, Strategy and Control, (Graduate Programme) Final Thesis
Publication date2019
Number of pages92
SupervisorsKristjan Jespersen