Palm oil mill has been regarded as a profit making industry for the past decades. Besides revenue from the palm oil production itself, the abundance of biomass could generate high economic return to the palm oils mill by converting it to value added products. However, the palm oil industry currently suffered various criticisms and negative reports from the international non-government organizations on the environmental issue. This paper presents the development and the applicability of environmental index (EI) for palm oil mill in order to enhance the competitiveness of the industry. The methodology will include the index development and identify area of weaknesses (hotspot). The index will be able to identify performance of the mills in Environmental aspect against benchmarks and differentiate every mills performance. By this, the mills can easily identify its hotspot and take necessary steps to improve. The system will also benefit the marketing team to market its products (CPO, PKO etc.) to niche markets that seek uptake from mills with lowest footprints (Carbon, water, energy etc.). The results can be used not only to evaluate the performance of an operating process against standard benchmarking but also to establish the best environmental practices among palm oil industry. It is anticipated that the development of environmental index will be an important instrument for supporting sustainable operation for palm oil mill.
