Development of a Green Palm Oil Agroindustry Model Based on Resource Efficiency and Circular Economy in Medan, Indonesia

Abstract

Palm oil processing created substantial economic value while intensifying demands for materials, energy, water, and responsible residual management. This study developed and empirically tested a company-level green palm oil agroindustry model that integrated resource efficiency and circular economy practices at PT Musim Mas in Medan City. Explanatory quantitative research was conducted with 50 internal respondents representing management, production and operations, engineering and maintenance, environment and sustainability, quality control, and workers. Data were collected through a five-point Likert-scale questionnaire, observations, interviews, and documentation and were analyzed using descriptive statistics and structural equation modeling–partial least squares (SEM-PLS). The questionnaire results represented internal perceptions of practice implementation and did not constitute direct audited measurements of water consumption, energy use, waste generation, or emissions. The mean scores for resource efficiency, circular economy, and green agroindustry were 3.98 (good), 4.14 (good), and 4.03 (good), respectively. Resource efficiency was positively associated with green agroindustry (β = 0.382; t = 4.216; p < 0.001), circular economy was positively associated with green agroindustry (β = 0.447; t = 5.031; p < 0.001), and resource efficiency was positively associated with circular economy (β = 0.516; t = 6.284; p < 0.001). Together, resource efficiency and circular economy explained 71.4% of the variance in green agroindustry (R² = 0.714). Within the investigated model and sample, circular economy exhibited a stronger standardized direct association with green agroindustry than resource efficiency. The findings were also consistent with a pathway in which efficient resource use facilitated higher-value resource recovery and waste-to-value practices. Water efficiency, emission control, renewable energy utilization, and green technology innovation were identified as priority areas for further improvement. Overall, the findings provided company-level, cross-sectional evidence supporting the integration of resource efficiency and circular economy practices into green palm oil agroindustry development; however, broader replication and longitudinal assessment were required to establish their generalizability and long-term effects.