SUSTAINABILITY INITIATIVES AND PERSISTENT CHALLENGES IN MALAYSIA’S PALM OIL INDUSTRY: EVIDENCE OF A CREDIBILITY GAP
DOI:
https://doi.org/10.35631/AIJBES.829035Keywords:
Sustainability, Palm Oil, Malaysia, Credibility Gap, Stakeholder TheoryAbstract
The palm oil industry plays an important role in Malaysia’s agricultural sector and the global vegetable oil supply chain. However, it continues to face increasing scrutiny over its environmental and social impacts. In response, the industry has introduced a range of sustainability initiatives designed to address its environmental, social, and governance (ESG) challenges. Existing research has largely focused on the adoption of sustainability practices, sustainability disclosure, and certification schemes. However, much less attention has been given to whether stakeholders consider these sustainability claims to be credible or whether they reflect actual organisational practices. This paper addresses that gap by examining the alignment between corporate sustainability claims and organisational practices, while also exploring how stakeholders perceive the credibility of those claims. Guided by Stakeholder Theory, the paper critically reviews the industry's sustainability mechanisms and discusses their limitations in addressing persistent ESG issues. The analysis is based on a critical narrative review that synthesises evidence from academic literature, NGO reports, and industry case studies. The findings highlight that, although sustainability certification and reporting standard improved corporate reporting, documented cases and empirical evidence continue to highlight environmental and social violations, selective disclosure, and concerns over greenwashing. This raises questions about the credibility of sustainability claims and suggests a gap between reported sustainability commitment and firms’ practices. As a result, stakeholders increasingly assess firms’ sustainability claims based on measurable outcomes rather than disclosure alone. The review further suggests that sustainability mechanisms may strengthen disclosure practices without actual changes in operations. Building long-term stakeholder trust therefore requires not only sustainability reporting but also consistent implementation, operational changes and transparency.
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