What is the role of companies in the era of sustainable development? It easy to understand that companies are contributing to economy and world growth at various levels; from local to global by creating value added of goods and services. In term of oil palm plantation, large scale companies alter land monetary value to some degree higher by producing palm oil from the plantation.
But, the world is changing and more people considering social and environmental value. Companies are now working not only for profitability only and neglecting their environment. How the oil palm companies dealing with this issue?
The Sustainable Value Added (SVA) known as a new approach to measure corporate contributions to sustainability. The SV term can be found in a scientific journal article written by Frank Figgie and Tobias Hahn, published in 2004.
Sustainable Value Added is developed on the basis of opportunity cost, a return of an alternative use of the resources invested in a company. Opportunity cost shows the return that would have been achieved by an alternative use of capital.
According to Frank Figgie and Tobias Hahn (2004) Sustainable Value Added shows how much value is created because a company is more efficient than a benchmark and because the resources are allocated to the company and not to the benchmark companies. Sustainable Value Added considers simultaneously economic, environmental and social aspect.
I noted the approach is eligible, suitable and very useful if applied in the palm oil industry. It covers from the development of plantation to the production of palm oil. With this method, SVA will track the history of land use type before change to plantation; and examine how the plantation used various inputs as well as the tranportation of the ouput to the processing unit. So complicated? Let see..