CA climate laws a case study for procurement professionals

Dive Brief:

The latest carbon reduction laws for CA impose the most aggressive legislation to date, placing strict limits on factories, vehicles and power plants, Environmental Leader reports.
CA Governor Jerry Brown last week signed two bills, which require the state to reduce carbon emissions to 40% of their 1990 levels by 2030.
Representatives of the California Trucking Association, the California Chamber of Commerce and the California Manufacturers and Technology Association all opposed the bills claiming it would decrease investment in CA and increase operating costs.

Dive Insight:

As more and more businesses move to supply-chain wide sustainability policies, CA provides a useful and large example for the benefits of clear and mandatory environmental standards.

The West Coast state continues to be a precedent setting leader in clean energy and environmental legislation, and while hundreds of businesses have come out in support of the legislation many fear such aggressive measures may lead to business flight from the state.

However, legislators argue that many businesses in CA are anchored within the state and, since all state businesses are required to comply, do not face significant competitive advantages. In addition, rather than business flight, Environmental Leader reports a previous similar legislation (AB32) led to a sizable growth of the state's clean energy economic sector and brought more jobs.

While CA itself is not a business, the state's experience with setting sustainability standards can provide a useful example for businesses attempting to, or weary of doing the same.

State legislation is similar to procurement standards in that it requires all competitors to abide by the same rule. As Supply Chain Dive previously reported, setting clear standards upfront can go a long way in pushing suppliers to enact sustainability measures.

Furthermore, just as it is often cheaper to adopt sustainability standards than relocate from CA; in many cases, if the business relationship is well established it is often cheaper to enact carbon-reduction policies than to find new purchasers for product.

As more and more businesses move to supply-chain wide sustainability policies, CA provides a useful and large example for the cost-benefits of mandatory standards.