Sustainability governance framework for Malaysia-China palm oil supply chain under the Green Belt and Road Initiative

Abstract

Palm oil, extensively used across industries, is central to global agricultural trade, yet it faces growing sustainability concerns and scrutiny over its environmental and social impacts. As a major importer, China plays a crucial role in shaping the sustainability agenda for palm oil. This study explores the role of the palm oil supply chain within the green supply chain system of the Belt and Road Initiative, aiming to enhance the flow of sustainable palm oil into China by examining the performance of rules, roles and organisations in this agenda. The research objectives, aligned with the aforementioned purposes, are as follows: (i) to identify the issues and challenges in implementing sustainable palm oil within the Malaysia-China supply chain; (ii) to analyse the rules, roles and organisations involved in palm oil sustainability governance within the Malaysia-China supply chain and (iii) to formulate a sustainability governance framework for the Malaysia-China palm oil supply chain under the Green Belt and Road Initiative. This study adopted a qualitative research approach to investigate challenges related to sustainable palm oil in China, including weak enforcement of standards, fragmented institutions and limited stakeholder collaboration. These findings were obtained based on: firstly, these issues were identified through document content analysis of government policies, institutional frameworks, third-party studies, NGO surveys, ESG reports, palm oil sustainability certification standards and China’s Green Supply Chain Certification Guidelines. Secondly, interviews were conducted to analyse the positioning of rules, roles and organisations in palm oil sustainability governance, with participants both inside and outside the supply chain serving as informants, thereby enhancing the credibility of the findings. Thirdly, a focus group discussion was conducted to gather insights towards the formulation of the sustainability governance framework, with recommendations from discussants guiding the exploration of this study. Participants in interviews and focus group discussions were primarily based in China, with staff members from certain foreign organisations operating within China also being invited. These comprised industry stakeholders, government bodies, think tanks, international institutions and non-governmental organisations. The data acquired was subjected to thematic analysis using Atlas.ti. Applying Institutional Theory, specifically coercive, mimetic and normative isomorphism, this study examines the root causes of these challenges and proposes strategies to address them. Meanwhile, the perspectives of path dependence, interdependence and resilience from Evolutionary Governance Theory complement the institutional analysis and contribute to the overall governance agenda. Hence, this study proposes a governance framework aligned with the Green Belt and Road Initiative, integrating national, regional and international institutions as layered and interconnected governance systems rather than as isolated regulatory bodies. This offers a novel governance pathway for palm oil sustainability, providing insights into the adaptive regulatory and institutional mechanisms required to align sustainability objectives with global trade practices.