In Malaysia, the areas converted to palm cultivation over the past two decades came from pre-existing rubber, cocoa and coconut farms, or from logged-over forests of areas zoned for agriculture. Today, 60% of Malaysia remains forested, less than 20% is used for agriculture. Taken together with perennial tree crop areas, such as palm farms, almost 76.3% of Malaysia is covered by forests and trees. The lush habitat of palm farms encourages and sustains biodiversity.

The Malaysian oil palm industry is subject to and strives to comply with a wide array of environmental laws, including the Land Conversion Act of 1960, the Environmental Quality Act of 1974, the Pesticide Act of 1974, the National Park Act of 1984 and the Environmental Quality Act of 1986. For example, the clearing of 500 hectares or more of land requires permission from the Malaysia Department of Environment and an environmental impact assessment study. In large areas of the country, jungle is not allowed to be cleared for palm cultivation. In cases where logged-over forests are converted to palm cultivation, strict regulations prohibit open burning and require careful treatment of logging debris. The industry uses environmentally sound practices in connection with fertilization, pest control, land and crop management, and waste management.

Malaysia is deeply committed to sustainable oil palm cultivation practices, and its leadership in the field is underscored by the establishment of a Palm Oil Wildlife Conservation Fund, an initiative aimed at promoting the formulation of ideas and proposals which can enhance biodiversity linked to palm oil production worldwide.

The Malaysian oil palm industry has always placed strong emphasis on research and development of the various aspects of palm oil cultivation and management, from planting techniques, waste management technologies, by product utilization to palm oil product development. Most of the present agronomic and waste management practices are based on long term trial results, emphasizing on high sustainable productivity and environmental conservation.

Oil palm cultivation and processing, like other agricultural and industrial activities, raises environmental issues. There is growing concern that agriculture, as fundamental as it is to the existence of man, is also responsible for many of the environmental ills facing the world today. Land degradation and loss of fertility caused by soil erosion is a major problem in many parts of the world, and is especially rampant in the tropics. Agrochemicals including chemical fertilizers and synthetic pesticides, which have become an integral and indispensable component of modern agriculture, besides increasing production, are known to cause such negative side effects as eutrophication of fresh and marine waters, excessive nitrate leaching into ground water and the persistence of pesticide residues in food, soil and water. Similarly, processing of agricultural produce also contributes to pollution. Food processing industries generate large quantities of effluent with a high Biochemical Oxygen Demand (BOD) which, when discharged untreated into watercourses, adversely affects aquatic life and domestic water supply.

This section discusses the environmental issues associated with the cultivation and processing of oil palm and measures taken to minimize their impact on the soil, water, atmospheric environment and sustainable practices for oil palm cultivation.