Sustainable Procurement in British Dairy Supply Chain By: William Rongxuan Zhao A thesis submitted in partial fulfilment of the requirements for the degree of Master of Philosophy 2017 Sustainable Procurement in British Dairy Supply Chain By: William Rongxuan Zhao A thesis submitted in partial fulfilment of the requirements for the degree of Master of Philosophy The University of Sheffield Faculty of Social Science Management School April 2017 Abstract Purpose – Dairy industry has several negative environmental impacts while continuous decline of number of British farmers in the supply chain questions the overall sustainability of the UK dairy supply chain. The research aims to explore the promotion of sustainable development in the British dairy sector and its supply chain through specific objectives, which are: to identify the current penetration level of different sustainability practices on dairy farming and milk purchasing; to investigate drivers, barriers and benefits of implementing sustainability practices in dairy sector; to identify different supply chain types existing in dairy sector and their implications to sustainability performance. Design / methodology / approach – questionnaire survey was used to collect data from dairy producers and dairy processors. 43 and 53 valid questionnaires returned from dairy producers and dairy processors, respectively, were used in the analysis. Findings – Social sustainability requirements received highest penetration level in sustainable procurement practices, while GHG emission requirements received lowest level of penetration. The most important driver for processor implementing sustainable procurement practices is company’s reputation and brand image, barrier is economic reasons, benefit is the creation of competitive advantage. The research also identified two major types of SC structure operating in the British dairy sector, Type A (farmer – processor - customer) and Type D (farmer and processor –- customer). Type D SC is advantageous to implement sustainability practices and achieved high sustainability performance. Practical implications –Improving sustainability performance throughout dairy supply chain needs continuous financial inputs. It would be very helpful to establish dairy sustainability accreditation and labelling scheme. Originality / value – This work is the first research so far which examined the penetration level of 15 environmental and social sustainability practices in dairy farming and milk sourcing, also identified drivers, barriers and benefits of implementing these practices. Financial incentive, information transparency and lead firm pressure can affect the coupling / decoupling of primary and secondary agency role in dairy supply chain. Key words - Sustainable procurement, Supply chain management, British dairy sector, Environmental sustainability, Social sustainability, double agency theory Table of Contents List of Figures ............................................................................................................................ 5 List of Tables .............................................................................................................................. 7 List of Abbreviation .................................................................................................................... 8 Acknowledgement ..................................................................................................................... 9 1. Introduction ....................................................................................................................... 10 1.1. The Emergence of Sustainability as a Business Issue ....................................... 10 1.2. Sustainability Issues in the Agri-food Supply Chain............................................ 11 1.2.1. The Introduction to British Dairy Industry ..................................................... 12 1.2.2. Sustainability Issues in Dairy Supply Chains ............................................... 15 1.2.3. Research Aims ................................................................................................. 17 2. Literature Review ................................................................................................................ 19 2.1. Introduction ................................................................................................................... 19 2.2. Sustainable Farming ............................................................................................... 19 2.2.1. GHG Emission Reduction ............................................................................... 20 2.2.2. Farmland Conservation ................................................................................... 21 2.2.3. Resource Utilisation......................................................................................... 21 2.2.4. Waste Disposal ................................................................................................ 22 2.2.5. Social Sustainability......................................................................................... 22 2.2.6. A summary of sustainable farming approaches .......................................... 23 2.3. Sustainable Procurement ....................................................................................... 24 2.3.1. History of Sustainable Procurement .............................................................. 24 2.3.1.1. Procurement Management ..................................................................... 24 2.3.1.2. Sustainable Procurement Management ............................................... 25 2.3.2. Drivers of Sustainable Procurement ............................................................. 27 2.3.2.1. Organisation ............................................................................................. 28 2.3.2.2. Regulatory ................................................................................................. 29 2.3.2.3. Customers ................................................................................................. 30 2.3.2.4. Competition ............................................................................................... 30 2.3.2.5. Society ....................................................................................................... 30 2.3.2.6. A summary of drivers of sustainable procurement .............................. 31 2.3.3. Barriers of Sustainable Procurement ............................................................ 34 2.3.3.1. Costs.......................................................................................................... 34 1 2.3.3.2. Lack of Legitimacy .................................................................................. 34 2.3.3.3. Regulation ................................................................................................ 35 2.3.3.4. Poor Supplier Commitment .................................................................... 35 2.3.3.5. Lack of Resource .................................................................................... 36 2.3.3.6. A summary of barriers to sustainable procurement ............................ 36 2.3.4. Benefits of Sustainable Procurement ........................................................... 38 2.3.4.1. Environmental Benefits .......................................................................... 38 2.3.4.2. Financial Benefits .................................................................................... 38 2.3.4.3. Operational Benefits ............................................................................... 39 2.3.4.4. Social Benefits ......................................................................................... 39 2.3.4.5. A summary of benefits of sustainable procurement ........................... 40 2.4. Theories of Sustainable Supply Chain Management (SSCM) .............................. 41 2.4.1. Agency Theory ..................................................................................................... 42 2.4.2. Connectedness to Nature Theory ...................................................................... 44 2.4.2.1. Environmental Ethics ................................................................................... 45 2.4.2.1.1. Distinctions between different environmental value orientations .... 45 2.4.2.1.2. Evaluation of ecocentric and anthropocentric values and attitudes 47 2.5. Research gaps and research questions .................................................................. 48 3. Research Methodology...................................................................................................... 51 3.1. Introduction .................................................................................................................. 51 3.2. Research philosophy and approach ......................................................................... 52 3.3. Research Method ........................................................................................................ 54 3.3.1. Sample selection .................................................................................................. 54 3.3.1.1. Dairy producer ............................................................................................... 54 3.3.1.2. Dairy processor ........................................................................................... 55 3.3.2. Questionnaire Design ....................................................................................