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Deciphering Corporate Governance and Environmental Commitments among Southeast Asian Transnationals: Uptake of Sustainability Certification

Jean-Marc Roda (), Kamaruddin Norfaryanti and Palhiarim Tobias Rafael

No 40412, Working Papers from CIRAD, Forest department, UPR40

Abstract: Promoting tropical forest sustainability among corporate players is a major challenge. Many tools have been developed, but without much success. Southeast Asia has become a laboratory of globalization processes, where the development and success of agribusiness transnationals raises questions about their commitment to environmental concerns. An abundance of literature discusses what determines the behavior of Asian corporations, with a particular emphasis on cultural factors. Our hypothesis is that financial factors, such as ownership structure, may also have a fundamental role. We analyzed the audited accounts of four major Asian agribusiness transnationals. Using network analysis, we deciphered how the 931 companies relate to each other and determine the behavior of the transnationals to which they belong. We compared various metrics with the environmental commitment of these transnationals. We found that ownership structures reflect differences in flexibility, control and transaction costs, but not in ethnicities. Capital and its control, ownership structure, and flexibility explain 97% of the environmental behavior. It means that existing market-based tools to promote environmental sustainability do not engage transnationals at the scale where most of their behavior is determined. For the first time, the inner mechanisms of corporate governance are unraveled in agricultural and forest sustainability. New implications such as the convergence of environmental sustainability with family business sustainability emerged.

Keywords: Southeast Asia; oil palm; forest; transnationals; investment strategy; emerging markets; competitiveness; network analysis; network metrics; ethnic business; ownership structure; family business. agribusiness (search for similar items in EconPapers)
JEL-codes: D85 F02 F23 G32 L14 L73 Q01 Q13 Q23 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2014, Revised 2015-05
New Economics Papers: this item is included in nep-acc, nep-cfn, nep-env and nep-sea
Note: Accepted: 9 April 2015 / Published: 29 April 2015 in Forests 2015, 6(5), 1454-1475; doi:10.3390/f6051454 at http://www.mdpi.com/1999-4907/6/5/1454 (This article belongs to the Special Issue Governing Forest Landscapes: Challenges and Ways Forward)
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