The Determinant of Sustainable Certification Adoption in Indonesia Palm Oil Industry Arif Imam Suroso 1* , Hansen Tandra 2 , Indra Wahyudi 1 1 School of Business, IPB University, Bogor 16151, Indonesia 2 Department of Resource and Environmental Economics, IPB University, Bogor 16680, Indonesia Corresponding Author Email: arifimamsuroso@apps.ipb.ac.id https://doi.org/10.18280/ijsdp.170331 ABSTRACT Received: 11 January 2022 Accepted: 1 April 2022 The palm oil industry operational causes several debate, especially in environmental and social problems. Roundtable on Sustainable Palm Oil (RSPO) is presented as the institution that oversees sustainable development through the sustainable certification issued. The motivation of the adoption recently from the public pressure for palm oil companies to adopted this certification. However, this pressure is only the external factor to driven the sustainable development in palm oil companies. The internal factor from palm oil industry have not observed as the adoption of sustainable certification. Therefore, the purpose of this study is to examine the factors that affected the adoption of sustainable certification in oil palm companies by using binary logistic regression. We examined 14 financial reports of the Indonesia palm oil companies that go-public from 2014 until 2019. The results show that Return on Assets (ROA), Current Ratio, Firm Size, and Oil Extraction Rate (OER) not affect the adoption of RSPO. However, the Return on Equity (ROE), Debt to Equity Ratio (DER), and Export significantly influence the RSPO adoption by Indonesian palm oil companies. The internal factor, specifically in financial aspects be the main driver for adopting the sustainable certification. Therefore, the promotion of sustainable certification must lead on the growth of finance performance to maintain this adoption. The limitation of this research is only focused to listed palm oil companies in Indonesia Keywords: palm oil, sustainable certification, finance ratio, business analytic 1. INTRODUCTION Indonesia is the largest palm oil producer in the world since 2004. Thus, the industry is very competitive in the global market [1]. The total export of Indonesian palm oil in 2018 is 30,3 million tons [2]. The palm oil industry also contributes significantly to social aspects through alleviating poverty and developing welfare for the wider community [3, 4]. Besides, the palm oil industry has the potential to provide large profits and create other derivative industry [5, 6]. Although the industry has a positive contribution, the palm oil operational activity is accused of the deforestation, water, land-use change, and social issues that could occur in the surrounding community [7, 8]. In addressing these issues, several regulations related to sustainability standards have been developed. The European Union only approves palm oil products that are suitable for sustainable development [9]. This regulation could create global pressure for the palm oil industry to support sustainable development [10]. The palm oil business is vulnerable to global vegetable oil trade competition and is under a considerable measure of worldwide pressure due to bad media attention and intensive mediatization. Therefore, academics, corporate organizations, communities, and government (the triple helix) are face a challenge for palm oil industry improvement that may affect their desire and capacity to compete in achieving shared value to fulfilment [11]. The oil palm companies implement sustainable development in their operational activities and growing environmental and social issues. Therefore, Roundtable on Sustainable Palm Oil (RSPO) is present as one of the global organizations that ensure sustainable development in the palm oil industry. The adoption of sustainable development based on global standards could play a fundamental role in contributing to organizational output legitimacy to produce sustainable results and impacts [12]. However, there was a decline in the performance of oil palm plantation companies. The implementation of sustainable development affected the loss of financial performance and is considered part of the corporate responsibility towards the environment [13]. Economic losses are expected from certification and membership costs, including consumers who could not pay an extra price for sustainable palm oil products. Therefore, it does not affect firm performance [14]. The problems lead to how the internal conditions could underlie oil palm plantation companies' decision to adopt sustainable certification. The sustainable certification is the important criteria for attract an investor to palm oil stocks [15]. Firm has a several benefits, such as projected more outstanding sales, improved operations, improved morale for employees, and greater access to markets [16]. Thus, it can increase the performance of oil palm plantation companies. Therefore, compliance with global standards is an opportunity to develop the company's competitive advantage. The adoption of sustainable certification could increase new market share in particular countries [17]. Based on the research gap, it was found that there are different impacts of RSPO adoption. Decision-making related to the adoption of International Journal of Sustainable Development and Planning Vol. 17, No. 3, June, 2022, pp. 1001-1006 Journal homepage: http://iieta.org/journals/ijsdp 1001