1. Table of ContentsAbstract................................................................................................................31. Introduction..................................................................................................32. Company Background – IJM Plantations..................................................43. The Unethical Environmental Issues..........................................................4

3.1 Loss of Biodiversity..........................................................................................................53.1.1 Flora, Fauna and People............................................................................................5

3.2 Deforestation.....................................................................................................................53.2.1 Local Communities Activities...................................................................................63.2.2 Land-use and Human Rights.....................................................................................6

3.3 Impact to the Firm.............................................................................................................73.3.1 Financial Impact........................................................................................................73.3.2 Reputation Damage...................................................................................................7

4. Root Cause of the Problems.........................................................................84.1 Laws, Policies and Regulation..........................................................................................8

4.1.1 Customary Land Rights Violation.............................................................................84.1.2 Weak National Regulations.......................................................................................9

4.2 Lack of Environmental Impact Assessment (EIA) System..............................................94.3 Unethical Business Conducts - Corruption.....................................................................10

5. Ethical Models............................................................................................115.1 Utilitarianism (Consequentialism)..................................................................................115.2 Deontological..................................................................................................................115.3 Virtue Ethics...................................................................................................................12

6. Recommendation........................................................................................126.1 Protect Indigenous People Land Rights..........................................................................12

6.1.1 Benefits and Consequences.....................................................................................136.2 Sustainable Palm Oil Development Concept..................................................................14

6.2.1 Benefits and Consequences.....................................................................................156.3 Fight against Corruption.................................................................................................15

6.3.1 Benefits and Consequences.....................................................................................167. Conclusion...................................................................................................17References..........................................................................................................18

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Abstract

This report talks about the environmental issues committed by a well-known organization in the

palm oil industry. Subsequently, root causes of the issues are analyzed and based on the common

ethical models – utilitarianism (consequentialist) approach, deontological approach and virtue

ethics approach, recommendation on how the issue could be avoided in the future is presented.

1. Introduction

Environmental issues, damages and concerns are some of many global issues that have been

widely discussed and debated since decades ago. The issues and concerns are usually associated

with air pollution, climate change, river pollution, water quality, land-use change or any harmful

human activity that impacting the variety of life on earth or commonly referred to as

biodiversity. In the early 1970s, global warming was the main subject of discussion among

environmentalist after global temperatures have begun to rise. Prior to that, the temperature has

been relatively constant since 1945 (IPCC, 2016). Later, degradation of natural resources and all

parts of biologically diverse earth became the subject of international debate.

In Asia, particularly Malaysia and Indonesia, palm oil industry is one of the main

contributors of the national economic growth. Together, the two countries were the major

producers in the world contributing million tons of the commodity in yearly basis. Palm oil

plantation is deemed suitable to be planted in the lowland tropical rainforest, particularly peat

swamp area that supports the highest biodiversity of any terrestrial ecosystems and covered

almost all areas in Southeast Asia particularly Malaysia and Indonesia. While the commodity

market is increasingly growing, the industry carries a number of risks. This paper intends to

reflect on these risks by exploring the impacts and root cause of oil palm development activities

in Malaysia and Indonesia by IJM Plantations Berhad, a subsidiary of IJM Corporation Berhad.

The impact of said activities is on the natural resources with rich biodiversity, and at the same

time it tarnishes the image and reputation of the responsible company committing such an

unethical activity.

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2. Company Background – IJM Plantations

IJM Corporation Berhad is one of Malaysia’s largest conglomerates with operations in

construction, property, minerals, infrastructure and plantations. The company is listed on Bursa

Malaysia in Kuala Lumpur. Under plantations business unit, the group is run by IJM Plantations

Berhad or “IJMP”. The parent company has 55.11 per cent shareholding of this group which is

also stock-exchange listed in Bursa Malaysia.

In 1985, the company engaged in cultivation of oil palm, selling crude palm oil, crude

palm kernel oil, palm kernel expeller, stone quarrying, cement production and provides

plantations agro-technical and advisory services. The company headquarters is in Sandakan and

primarily operates in Sabah. As reported in the annual report, the company currently has more

than 11,000 employees. The company has 11 plantations totaling 30,000 ha in which 87% is

appear to be fully developed. The company expanded its operation in Indonesia after the

stagnation of new land expansion in Sabah. The company holds majority stakes in nine

plantations in Indonesia with a total of 50,000 land-bank. The plantations in Indonesia are still

under development as 64% of the trees are immature between 1 to 3 years (IJMP AR, 2015;

AmResearch, 2015).

3. The Unethical Environmental Issues

Many researchers indicate that agricultural expansion activities are causing worldwide tropical

biodiversity loss (Foley et al., 2005; Green et al., 2005). For example, palm oil plantation

development causes major impact to the ecosystem of the forest, causes pollution, it is also

impacting the socio-economy of people living in the development area. In a research conducted

by Norwana et al. (2012) indicates the villagers affected by development are can no longer hunt

or collect wild fruits and they are forced to encroach on surrounding forest reserves for hunting

activities. Typically, any oil palm operators are directly and indirectly responsible for

committing this issue, however the most recent highlights were given to IJMP for the alleged

environmental damages particularly in East Kalimantan, Indonesia (Daily Express, 2015).

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3.1 Loss of Biodiversity

In essence, biodiversity boosts ecosystem productivity. Each living thing on earth has an

important role to play. Nevertheless, human activity in converting forests for oil palm plantations

is causing massive extinctions to this ecosystem (Wilcove & Koh, 2010) and the primary threat

is due to deforestation (Fitzherbert et al. 2008; Koh and Wilcove, 2008). The consequences of

native forest removal always associated with flora, fauna and indigenous people.

3.1.1 Flora, Fauna and People

There are more than 300,000 different animals found throughout of Borneo and Sumatra. One of

the endangered animal species is orangutan. The animal used to be the common icon in these

areas, but due to excessive deforestation for oil palm development, its habitat has been

destroyed. In a related article reported by Dailymail (2011), hundreds of orangutans were killed

for food by villagers in Borneo for survival. In addition, other endangered animals such as

Sumatran Tiger, Sumatran Rhinoceros, Sun Bear and Pygmy Elephant have been reported

declining in numbers as a result of oil palm development (Schoeman, 2015). All animals in the

forests depend on each other to ensure survival, the erosion of animal diversity causes imbalance

ecosystem, and therefore it is important to preserve the diversity in wildlife.

A larger number of plant species means a greater variety of crops which ensures natural

sustainability for all life forms. It provides a food source for the animals to maintain the

ecosystem. In another example, the indigenous communities have adapted their lifestyles to the

forest environment by using hundreds of products from the natural forest such as medicinal

herbs, wild fruits and rattan. Deforest for oil palm development impacted the availability of such

products. As a result, the indigenous people changed their lifestyle by purchasing such products

instead of sourcing it themselves (Norwana et al., 2012).

3.2 Deforestation

Palm oil development has been long associated with deforestation. Deforestation has been

recognized as one of the primary threats to biodiversity in tropical forests around the world.

According to Kricher (1997), deforestation results from activity such as cutting, clearing and

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removal of rainforest or related ecosystems into less bio-diverse ecosystem such as pasture,

cropland, or plantations. Norwana et al. (2012) highlighted the introduction of commercial oil

palm cultivation in Sabah primarily affected in fish stocks, loss of access to forest resources, and

loss of cropland. Every new development of plantation areas continues giving the same negative

impact to the biodiversity.

3.2.1 Local Communities Activities

Fishing – being the main livelihoods activity of the villagers, reduction in fish stocks has led to

substantial economic losses. The use of pesticides and herbicides in the palm oil plantations

polluted the rivers. River pollution affecting fish populations and thus reducing their household

income. As a result, the villagers have to venture further afield to coastal areas to fish (Norwana

et al., 2012).

Limited hunting activities – the loss of forest cover has led to decreasing hunting activities

among villagers. They now have to travel further and deeper into the forest hunting for wild boar

and deer.

Commercial logging – while the organization enjoying the profits of commercial logging, the

logging activity affected the non-timber forest products such as wild fruits, rattan and traditional

herbs. As a result, the villagers have no longer access to natural forest resources to make a living

(Norwana et al., 2012).

3.2.2 Land-use and Human Rights

In a research conducted by Norwana et al. (2012) mentioned the villagers or the indigenous had

occupied the land area long before it was converted to oil palm. They have been practicing the

activities for livelihood as well as performing small-scale cultivation of predominantly rice for

household consumption. The villagers claim that most of the time, they were not informed about

the establishment of the plantation in their area. They were forced to give up their land to the

firm as they had no land titles.

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Without formal land titles, they have no rights to continue living in the area. As a result,

the villagers lost their cropland to the firm. Although the firm’s action is legal, but it has been

deemed unethical doing that to the villagers. The research also indicates resistance of the

villagers to the formal plantation employment as it would reduce their “independence” and time

for their household chores. In sum, the oil palm industry has also abuse the indigenous people

rights in many ways as mentioned.

As reported by (Daily Express, 2015), IJMP’s activity in converting natural forest has

resulted irreversible alteration of ecosystems and vegetation, with major consequence of

biodiversity loss due to deforestation and logging. The environmental degradation and human

rights violations mentioned above reflect how complex the impacts have been from the rapid

development of the palm oil industry in Malaysia and Indonesia. Consequently, the impact is

also felt by the company as they have to pay the price on certain actions imposed by its

shareholders and the stakeholders.

3.3 Impact to the Firm

There are at least two significant impacts from the unethical conducts by IJMP;

3.3.1 Financial Impact

IJMP, Genting Plantations Berhad and nine other companies have made major headlines in

newspapers and investment blogs and articles (Daily Express, 2015; Clean Malaysia, 2015;

Rainforest Foundation Norway; 2016; Salt, 2016) after Norway’s Government Pension Fund

Global (GPFG), the world’s largest sovereign wealth fund excluded the companies from its

investment portfolio. The main reason of the exclusion is mainly due to the risks of “severe

environmental damage” by IJMP and Genting Plantations Berhad at Indonesian palm oil

plantations. The immediate consequence is IJMP is no longer receives financial aids from GPFG.

3.3.2 Reputation Damage

Apart from the financial impact, IJMP’s integrity and ethical conduct have been questioned. In a

report produced by GPFG (2014), IJMP has been found clearing forest in the buffer zone outside

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the concession boundaries. The company also failed to provide any information on the location

of its concession, or on forest condition and biodiversity. IJMP is said failed to outline the steps

taken to reduce the loss of biodiversity and IJMP did not conduct any conservation assessment in

which the important action of reducing biodiversity loss due to deforestation. The company is

also found continuing conversion without implementing measures to preserve the ecosystem.

IJMP also failed to respond when GPFG asked about its operations. Such public revelation has

tarnished the image and reputation of IJMP and it has jeopardized the company future endeavors

in the industry.

4. Root Cause of the Problems

The root cause of the issues can be viewed from different perspectives such as laws, policies and

regulations, lack of an environment impact assessment system, and corruption.

4.1 Laws, Policies and Regulation

There are a few common areas of interests in this manner;

4.1.1 Customary Land Rights Violation

The customary land rights violation has always been the primary discussion in this weak area.

According to Schoeman (2015), there are over two million indigenous people in Malaysia, and

Indonesia has somewhere between sixty to ninety million people, and many of whom live in or

near tropical forests that rely on these forests for livelihoods. Government and Malaysian courts

have different opinion on these people’s land rights which resulting more customary land rights

have been converted to state forests. Once it is within state jurisdiction, the land is converted into

private concessions for development.

The weak recognition of customary land rights allows government agencies to develop

indigenous lands to palm oil plantations. As timber can be sold to subsidize the initial costs of

planting and maintaining palm oil plantations, the firm started with slash-and-burn as the

traditional approach of logging. The remaining land is then cleared by burning, which then

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contribute to greenhouse gas emissions that increase global warming. The deforestation activity

is to make way for palm oil plantations in which a lot of environmental damage is done in

between the process (Norwana, 2012; Schoeman, 2015). The palm oil development can be done

in a controlled environment and environmental damage can be minimized if standard rules and

regulations of new land acquisition and opening new development areas is in place and enforced

by the authorities.

4.1.2 Weak National Regulations

In 2004, a group of stakeholders formed the Roundtable on Sustainable Palm Oil or “RSPO”.

The organization is intended to “develop standards that are meant to make an entire commodity

chain more sustainable (Schouten et. al, 2012), and the RSPO seeks to accomplish this by

advocating a balanced, multi-stakeholder approach, with considerable emphasis on

environmental sustainability. According to RSPO (2015), the vision of the RSPO is to transform

markets to make sustainable palm oil the norm. The organization will certify companies that are

compliant with the requirements and allows them to label their products as containing

sustainable palm oil. Examples of the requirements include conducting environmental impact

assessment, implementing mitigation measures, or having appropriate wastewater management

systems (RSPO, 2015).

Nevertheless, (Schoeman, 2012) highlighted some institutional weaknesses which have

prevented the vision and transformation of the RSPO. The significant weakness is the RSPO is

already dominated by industry members. As such, it is more difficult for environmental groups to

pursue their interests as the industry members are unlikely to support the rigorous standards to

keep their operating costs lower. Another weakness is the RSPO has not actually banned

deforestation, but only urged against such practices (Schoeman, 2012). This is the case for IJMP

where the company is yet to be RSPO certified (GPFG, 2014) but continue business as usual

without risking serious consequences.

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4.2 Lack of Environmental Impact Assessment (EIA) System

In 2009, the Government of Indonesia imposed a new environmental law that puts a greater

restrictions on industry and harsher penalties for noncompliance. All palm oil companies, must

conduct environmental-impact assessment and obtain a permit as a precondition to securing other

business permits. Part of the law entails that companies must set up a fund that may be used for

environmental rehabilitation and recovery (Schoeman, 2012).

The companies that are likely to have significant environmental impacts or are already

suspected of noncompliance must conduct periodic environmental audits. However, according to

the findings of Schoeman (2012), lack of enforcement, such as discrepancies and loopholes in

the system, the companies have seen taken the law for granted. It was highlighted in GPFG

(2014) report that IJMP has nothing in place when asked to produce their impact assessment

procedures. While in another research conducted by Varkkey (2013) found that some Malaysian

palm oil operators are “almost untouchable” due to its close relationship with Malaysian

Government, as a result these companies continue its business despite being noncompliance to

the impact assessment policy.

4.3 Unethical Business Conducts - Corruption

Fitzherbert et. al (2008) argue that ambiguities in the land tenure, corruption, bribes and

combined with increased regional autonomy in Indonesia have made it easier for palm oil

operators to obtain permission to clear millions of hectares of forest under the name of plantation

establishment. Schoeman (2012) mentions that decentralization of authority increases corruption

in giving out logging and palm oil plantation permits or license in Indonesia.

Local officials often do not share information on logging and palm oil permits, resulting

more deforestation which including in the protected areas. Foe, (2005), reported approximately

270,000 hectares in six provinces had been excised from protected forest for palm oil project

without the approval of the ministry. Another factor that leads to corruption is because the

country is trying to reach a palm oil production output of forty million tons per year by 2020.

Although there is no evidence of Malaysian company's involvement in such activities, corruption

is known to be one of the contributory factors to the unethical environmental damage.

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5. Ethical Models

Trevino and Nelson. (2014) the authors of “Managing Business Ethics – Straight Talk about

How to Do It Right”, discuss three major ethics theories - utilitarianism, deontological and virtue

ethics that specify and justify moral rules, principles and integrity. In short, utilitarianism is the

principle of the best ethical decision to be taken that has the best benefits of a greater number of

people, while deontology focus on duties, obligations and principles rather than the outcome.

Virtue ethics approach focuses on the integrity of the moral actor than the act which is the

decision or behavior. Nevertheless, ethical decision making in business is not always straight

forward as there is dilemma or ethical dilemmas in between the process in which two or more

“right” values are in conflict. The approaches discussed and used in the given theories will assist

in making the appropriate decision through this tough ethical dilemmas.

5.1 Utilitarianism (Consequentialism)

Utilitarianism is also called consequentialist theory focuses attention on the results or

consequences of the decision or action. The theory is based on the principle of utility where an

ethical decision would maximize benefits to society and minimize harm. The ultimate goal is the

good consequences over bad for society overall.

A utilitarian would approach an ethical dilemma by systematically identifying a

particular situation of stakeholders as well as the alternative actions and their consequences for

each. Consequentialist approach usually conducts consequentialist analysis in a table format to

weigh each stakeholders’ impact or consequences (harm of benefits). This approach can be

practical and helpful in thinking through an ethical dilemma, however, this approach often

difficult to obtain information required to evaluate the consequences for all stakeholders who

may have impacted by an action or decision.

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5.2 Deontological

The word “deontological” comes from the Greek “Deon”, meaning “duty”. Deontological

approach, focus on the duties, obligations or process rather than the consequences. According to

Trevino and Nelson. (2014), the moral principles are predetermined regardless of the impact,

which means deontologist focuses on doing what is “right” based on moral principles or values.

On the other hand, consequentialist focuses on doing and providing the best for others in the

society. In a real life example where a deontologist auditor would insists, telling the truth about

the company’s current financial difficulties in which will cause the company to be out of the

business and employees out of a job. In contrast, consequentialist would be more willing to

compromise the truth and defer the announcement so that the company could take corrective

action to be back on course.

The challenge in the deontological approach is how to determine what rule, principle or

right to follow. Deontologist would rely on three ethical rules in making a business decision, the

ethical rules include 1) Kant’s categorical imperative, 2) Rawl’s veil of ignorance – for deciding

what’s fair and, 3) Golden Rule – treat others as you would have them treat you.

5.3 Virtue Ethics

Lastly, the virtue ethic approach focuses more on the integrity of the moral actor which is the

person than on the moral act itself which is the decision or behavior. The goal is to be a good

person as that is what everybody wishes for. A virtue ethics perspective considers the actor’s

character, motivations and the approach is particularly useful for individuals, who work within a

professional community that has developed high standards of ethical conduct for community

members for example, lawyers, accountants, physicians, and psychologists.

6. Recommendation

Based on the above discussion about the unethical environmental damage, possible root causes

of the issues, the impact of the firm, and brief discussion of the three main ethical theories, the

recommended solutions for the problems are;

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6.1 Protect Indigenous People Land Rights

As highlighted earlier, customary land rights violation of the indigenous people has been the

main discussion among environmentalist and other interested party in palm oil development. The

land of the indigenous people has been acquired easily and converted to palm oil plantation

areas. The land of the peoples must be protected and preserved. Any development in this area

must be restricted. The unethical environmental damage begins soon after land acquisition. It

starts with land clearing, logging and pollution. The damage is uncontrollable due to the size of

the development area. Therefore, through national law or human rights law, the customary land

rights for these people must be protected and preserved for many reasons.

The suitable ethical model for this suggestion is utilitarianism. There are many

stakeholders are involved in the process such as 1) the indigenous people, 2) the palm oil

operators, 3) the government 4) the importers, and 5) the workers of the palm oil operators.

6.1.1 Benefits and Consequences

The benefits and consequences of this suggestion for the stakeholders are;

The indigenous people - this group of people will enjoy the benefits most, as their land will be

protected. As mentioned, deforestation has degraded their quality of life as they are not able to

continue their normal chores like before. Activities like fishing, hunting will continue as usual

and access to natural resource will be secured. As mentioned by Schoeman (2012), the

indigenous had to change their lifestyle by purchasing items like fish and wild fruits instead of

sourcing it out themselves.

With land use regulations become stricter, the negative consequences are likely to;

The palm oil operators – the operators are not able to expand their business to new plantation

areas. The operators will suffer financial loss and may have to cease operations or venture new

businesses.

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The government – Similar to the palm oil operators, the government will not able generate

income for the country and will not able to achieve the vision of achieving palm oil yielding rate

of six tons per hectares by 2020 (Alang Mahat, 2012).

The palm oil importers – China and India are the major importers of Malaysian palm oil (Alang

Mahat 2012; Schoeman, 2012), lack of palm oil production from Malaysia will divert these

importers to other neighboring country like Indonesia.

The workers – Due to cheap labor and other reasons, the operators invested in foreign workers,

mostly Indonesian to work on their palm oil plantations. These workers will be out of a job and

the skills they have learned while working in Malaysia will be brought back to their home

country. Malaysia is on the losing side while Indonesia re-hire them to work for their local

operators (Alang Mahat, 2012; Schoeman, 2012).

Although the decision will have greater impact to many stakeholders, the ultimate reason

implementing or strengthening the rule is to protect the indigenous people and its land. It will

improve the socio-economy of these people as well as to protect the environment and natural

forest from improper deforestation planning. The consequences can be further refined and

reduced by implementing the second recommendation, as below;

6.2 Sustainable Palm Oil Development Concept

Sustainable development can be defined and interpreted in many ways, but its main objective is

to balance between the needs and awareness of the environment, social and economic limitations

of the nation (Alang Mahat, 2012). In other words, it is an approach to oil palm development that

aims to produce palm oil without causing deforestation and biodiversity loss. Part of the

sustainable palm oil development concept is the introduction of Roundtable on Sustainable Palm

Oil (RSPO) in 2004. One of the initiatives of this organization is the introduction of RSPO

certification for all industry players (Schouten et. al, 2012; RSPO, 2015). As discussed, this

concept is not fully embraced by many industry players yet, in fact, many loopholes were found

and industry players have taken advantage of the weaknesses to continue business as usual

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without worrying to be penalized. As such, it is imperative for the organization to improve the

current initiative for a better industry standards and the environment is well protected.

Deontological is the most appropriate ethical model for this suggestion. Environmentalist,

public and other stakeholders found there is a sense of urgency to improve the industry

standards. Using the RSPO certification as an example, all operators must obtain the certification

prior continuing its palm oil development activity.

6.2.1 Benefits and Consequences

RSPO standards are not to ban deforestation or refraining palm oil operators from opening new

plantation area, but urging the RSPO members (industry players) to be compliance with the

guidelines. For instance, operators must conduct impact assessments before de-forest and have a

proper planning of restoration (Norwana; 2012, Schoeman; 2012). There are a lot benefits of

being compliance with the industry standards. The natural resources of the forest, flora and

fauna, indigenous people and the public will enjoy the most of the benefits. For example, the

industry standards do not condone open-burning activity after land-clearing. Open-burning

increases greenhouse gas emissions that lead to global warming. The entire world will enjoy a

healthier environment if the operators follow the industry standards.

However, being compliance comes with a price. For example, RSPO certification is very

costly (Schoeman, 2012), consequently, not many operators are able to invest in obtaining the

certification. IJMP for example, has yet to obtain RSPO certification (GPFG, 2014), although the

company has been operating its palm oil business in Indonesia for many years. Although there is

no indication that cost is the reason for IJMP not being certified, small-scale operators may use

cost as a reason for non-compliance. On the other hand, findings from many research (Colbran,

2011; Schoeman, 2012; Alang Mahat, highlight corruption as one of the consequences of a

tighter policy. The operators chose the unethical manner by committing bribery to keep on its

operations.

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6.3 Fight against Corruption

Rapid expansion of palm oil industry is caused by the high demand of vegetable oil in the global

markets. Palm oil has become the most important source of vegetable oils due to its advantages

over other oilseed crops such as trans-fat-free edible oil that protect a person from some chronic

diseases as well as delay the ageing process (Alang Mahat, 2012). Due to its popularity and

demand, operators are competing with other operators for expansion of their plantation areas. As

highlighted by Schoeman, (2012), due to lack of control and transparency in the decentralization

process of giving out plantations permits, it introduced another ethical issue – corruption. Foe,

(2005) suggested bribery is a common activity in Indonesia for illegal expansion of oil palm

plantation and excess of the legally permitted plantation areas. When they are detected, the

authorities are not taking any action as the authorities have been “bought”. As a result, forests are

lost and operators are free to indulge more illegal activities such as open-burning or simply left

the plantation areas undeveloped after illegal land-clearing or illegal logging. This unethical

activity causes many issues and the government or the ministry must revisit the current practices

to curb corruption.

As corruption and bribery are deemed to be a serious offend and unethical, virtue ethics is

the appropriate model to be used. In this particular issue, the authorities, government or the

minister himself must possess a high level of integrity in curbing the issue.

6.3.1 Benefits and Consequences

There are many benefits from fighting the corruption issue. The indigenous people will be

benefited more as their land is protected from illegal expansion of oil palm plantation. A

transparent process in giving out permits and license will impose fair competition among

operators acquiring for an expansion of new palm oil plantation areas. The authorities or

government will also generate stable income from licensing fees as well as tax structure (Foe,

2005) as tax is calculated based on the plantations land size. Another benefit is by having a clean

and transparent process will facilitate the success of the second recommendation on sustainable

palm oil development concept. It is nearly impossible to have a congruent sustainable palm oil

development without having a clean administration process in place.

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While the consequences for having a clean process may sound too flashy as the impact

for an organization with “close” relationship with the government (Varkkey, 2013) may no

longer enjoy the special privilege after fair competition is in place. Regardless of its reputation,

the operators must follow the intended process like any other operators. The other possible

impact for operators being caught committing unethical conduct may face stern action from the

authorities such as operating license is revoked as well as receive negative perception from the

shareholders about the organization. The closest example is when GPFG (2014) dropped its

investment link with IJMP.

7. Conclusion

In essence, environmental conservation is paramount activity to preserve the natural resources of

the forests. It has been highly debated that organizations from agriculture sector have been the

major contributors to environmental damages. According to ethical theory of utilitarianism, if the

end results justify the activities implied in the ethical decision making process, and therefore the

determination is considered accepted by all stakeholders. Consequentialist will analyze all

possible consequences to justify the final ethical business decision. Being utilitarian or

consequentialist decision maker enables them to provide detailed explanation of why such

decision is made. While the deontologist decision maker is based on predetermined moral

principles. The example given on building sustainable palm oil development illustrates how

deontologist works – process orientation. Virtue ethics decision maker on the other hand, focuses

on integrity. In the presented example, bribery is deemed to be unethical and the decision is to

completely put out the unethical conduct. In sum, when confronted with ethical dilemmas, the

three common ethics models provide a list of choices before a final decision is made.

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Colbran, N. (2011). Indigenous Peoples in Indonesia: At Risk of Disappearing as Distinct Peoples in the Rush for Biofuel? International Journal on Minority and Group Rights, 18(1), 63-92. doi:10.1163/157181111x550987

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