Goal-Based Private Sustainability Governance and Its Paradoxes in the Indonesian Palm Oil Sector

Abstract

In response to stakeholder pressure, companies increasingly make ambitious forward-looking sustainability commitments. They then draw on corporate policies with varying degrees of alignment to disseminate and enforce corresponding behavioral rules among their suppliers and business partners. This goal-based turn in private sustainability governance has important implications for its likely environmental and social outcomes. Drawing on paradox theory, this article uses a case study of zero-deforestation commitments in the Indonesian palm oil sector to argue that goal-based private sustainability governance's characteristics set the stage for two types of paradoxes to emerge: performing paradoxes between environmental, social, and economic sustainability goals, and organizing paradoxes between cooperation and competition approaches. Companies' responses to these paradoxes, in turn, can explain the lack of full goal attainment and differential rates of progress between actors. These results draw our attention to the complexities hidden behind governance through goal setting in the corporate space, and raise important questions about the viability of similar strategies such as science-based targets and net-zero goals.

Keywords: Governance through goals; Paradoxical tensions; Private sustainability governance.

Fig. 1

Drivers of deforestation in Indonesia, 2001–2016. Large-scale oil palm plantations drove 23% of deforestation during this time period, with peaks in 2008–2009, when they accounted for around 40% of national deforestation. Data from Austin et al. (2019), own illustration

Fig. 2

This schematized palm oil supply chain from the view of a large integrated supply chain company’s refinery illustrates the high complexity and multiple levels of actors in the sector, who need to work collaboratively to disseminate and enforce corporate supplier policies. Own illustration, adapted from Lyons-White and Knight (2018)

Fig. 3

Timeline of development of ZDC implementation concepts, collective action arenas, and tools in the palm oil sector. Own illustration

Fig. 4

Companies face interrelated and conflicting demands coming from all sustainability dimensions and need to balance between two modes of operating while embedded in a challenging legal compliance context

Fig. 5

Key stakeholders in the zero-deforestation palm oil governance space, by membership of various multi-stakeholder groups. Own illustration