ESG procurement analysis - identification and prioritization of improvement opportunities

Abstract

Title: ESG procurement analysis - identification and prioritization of improvement opportunities
Author: Tabea Sonnleitner
Supervisor: Louise Bildsten, Division of Engineering Logistics, Faculty of Engineering, Lund University.
Purpose: The purpose of the thesis is to investigate the ESG requirements of the case company, Company A, in order to create a prioritized improvement plan for the global procurement function.
Objectives: Three research objectives were formulated to fulfil the purpose. The first one was to “collect internal and external sustainability requirements for Company ́s A procurement department”. The second one was to “measure the current ESG performance of the procurement department” and the last one concentrated on “an improvement plan to fulfil the mentioned requirements”.
Background: Adhering to ESG regulations and support sustainability is becoming increasingly important for companies. However, due to the complexity of different laws and regulations in the ESG area, it is increasingly difficult for companies to keep track of everything. As Company A, tries to foster sustainability, this master ́s thesis is intended to provide an overview of the sustainability requirements of Company A with a focus on the procurement department. At the same time, the current performance is also to be measured, i.e., the extent to which Company A already fulfils the requirements of the various regulations. This is followed by a recommendation so that Company A can prioritize which changes need to be made to processes, policies, measurements or reports to improve compliance and ESG performance.
Method: This research method of this master ́s thesis was a single-case study, with a single unit of analysis, namely the procurement department of Company A. The case study structure allowed a holistic, in-depth analysis of the phenomenon. Furthermore, an abductive research approach was chosen as it offers flexibility in the formation and analysis of theories. The data in this thesis is primarily qualitative from a thorough literature review and the conducted structured interviews.
Findings: This study found that the procurement department of Company A has 95 sustainability requirements which must be considered and fulfilled. The case interview revealed that Company A has currently big unrealized potentials with regards to those ESG requirements, especially in the field of sustainable procurement policies, measurements and reports. However, this result offers great potential for improvement and Company A can benefit from implementing the master ́s thesis recommendation plan in order to be compliant with the regulations, which impact their ESG performance positively. Thus, the purpose of the thesis has been fulfilled.

Popular Abstract

Is your company an ESG leader?
It is becoming increasingly important for companies to address the compliance of ESG (Environmental, Social, Governance) regulations internally and make a decision whether they really want to be a leader in this field. In a world where sustainability is gaining more and more importance, companies can benefit greatly from being ESG compliant and further being predominant in their industry. This ensures that all stakeholder requirements are met, which in turn have a positive impact on the attractiveness of the company and their value creation.
Company A fosters sustainability and wants to become an ESG leader. However, the path of fulfilling all ESG requirements is characterized by a number of obstacles and a challenging journey. With over 2,400 ESG regulations worldwide, the complexity is illustrated in figures clarifying that sustainability reporting is becoming a vital part of a company´s corporate culture. Therefore, a detailed single-case study was conducted to increase Company A's knowledge on which ESG requirements are important and to help them developing a prioritized improvement plan.
The difficulty of the thesis was resembled by the amount of data which was available in relation to ESG regulations and getting an overview of it. In order to overcome this difficulty, a framework was developed using Microsoft Excel which provided assistance in recording the requirements and was later very helpful conducting the performance analysis. When the ESG requirements were included to the Excel assessment, it became clear that on the one hand, there are requirements which act as order qualifiers and which companies must comply with to be competitive at all. On the other hand, there are also requirements which help Company A to set itself apart from competition and can therefore be declared as order winners.
Another interesting point has shown that there is no standardized guideline for ESG so far. Although various governmental bodies have issued different regulations, some of these are not yet coordinated with each other. In the future however, this will be important so that companies have a clear guide as to which regulations are relevant. In this single-case study, 95 ESG procurement requirements were collected and the current ESG performance of Company A was assessed in order to create an analysis on its strengths and weaknesses. This supports Company A on their way to becoming an ESG leader in their industry, equipping them with enough knowledge to determine which next steps should to be taken. The developed framework can also be used by other companies for the same reason. Anyone could measure their current ESG performance and draw knowledge from the conclusion of the study. Sustainability truly is the challenge of our time and generation and it will remain exciting to see how companies deal with ESG requirements in future. The first step on the journey of becoming an ESG leader is to recognize that action must be taken before measures can be introduced. Company A has done this and will therefore also be able to benefit from it in the future making our world a little bit better.

• author: Sonnleitner, Tabea
• supervisor: Louise Bildsten
• organization: Production Management; Engineering Logistics
• course: MTTM02 20241
• year: 2024
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering
• other publication id: 6012
• language: English
• id: 9157279
• date added to LUP: 2024-08-30 17:39:33
• date last changed: 2024-08-30 17:39:33