The global initiative for sustainable palm oil has intensified; however, independent smallholders, who represent a substantial portion of the sector, continue to be marginalised due to the complexities and costs associated with sustainability assessments. Current certification metrics fail to adequately consider their operational contexts and constraints, resulting in significant deficiencies in inclusive sustainability governance. This research creates and verifies a detailed, multi-faceted sustainability metric specifically designed for independent smallholder oil palm farming in Malaysia, facilitating tiered performance assessment that extends beyond simple certification models. A cross-sectional survey involving 301 independent smallholders in Johor, Malaysia, was conducted. The metric, organised into environmental, social, and economic dimensions, was subjected to thorough psychometric validation, which included item to-total correlation, Cronbach's alpha reliability testing, and Confirmatory Factor Analysis (CFA) to establish construct validity. Cluster analysis revealed the metric's ability to categorise smallholders based on sustainability performance. The validated metric included 32 indicators across three dimensions, exhibiting high internal consistency (Cronbach's α > .85 for all dimensions) and excellent model fit (CFI = .951, TLI = .943, RMSEA = .042, 90% CI [.037, .047]). Cluster analysis revealed three distinct segments: High Performers (28%, n = 84), Moderate Practitioners (52%, n = 157), and Challenged Beginners (20%, n = 60). Significant differences were observed in farm size, certification status, and annual income (p .001, η² = .34). This validated tool allows policymakers, certification bodies, and extension services to perform detailed sustainability assessments. The findings recommend moving from uniform certification to tiered support systems, which enable targeted interventions for more inclusive and equitable transitions to sustainable palm oil production.