How RSPO Certification Can Improve Palm Oil Companies Profitability

April 13, 2021

It is increasingly clear that RSPO certification is positively correlated with the increase of a palm oil company's profitability. The existing evidence has encouraged many palm oil companies to have RSPO certification by implementing sustainable business processes. 

The following are two explanations of how the RSPO certification can improve Palm Oil Companies profitability:

Selling Crude Palm Oil at A Higher Price

Referring to Dr Steffen Preusser's paper on 34 palm oil companies certified by the Roundtable on Sustainable Palm Oil (RSPO), companies with more than 40% RSPO certified growing area are able to sell crude palm oil at the global market up to $690 per metric ton.

It is 6.84% higher than the normal average price of the crude palm oil. Compared to companies that are only 20% or less certified, their average crude palm oil price is only around  $ 570 per metric ton.

Upgrading Operational Indicators to The Max

In addition to increasing the value of its products, initiating RSPO certification drives palm oil companies to intensify their operations, documentation systems, employment relationships and other internal factors. As a result, it goes to the profitability increase. 

The World Wildlife Fund's 2012 report corroborates the fact that companies with a greater proportion of RSPO-certified planted areas experience higher yields and oil extraction rate. 

Key Takeaway

To sum up, sustainability and profitability are two essential things which in fact can be positively correlated to one another. 

This is also an impetus for palm oil companies to continue applying sustainable systems in operating their business.

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