Dive Brief:

• Approximately 170 states agreed to limit the amount of sulfur in shipping lines' fuel at an International Maritime Organization meeting last week, according to various news outlets. 
• The new limits require ships to use only fuel with up to 0.5% m/m sulfur composition by 2020, down from a previous cap of 3.5% m/m. The cap had been agreed upon in 2008, with the condition of meeting again by 2018 to determine whether enough compliant fuel would be available to meet the deadline.
• The shift is expected to cost shipping companies roughly $40 billions dollars, the Wall Street Journal reports, a concerning burden while the industry struggles due to slowed markets. 

Dive Insight:

The Paris agreement to reduce climate change, although perceived as a diplomatic success, was largely criticized for excluding regulations for the aviation and shipping industries, which if unregulated could contribute up to 50% of the world's carbon emissions by 2050.

The shipping industry has largely responded to the criticism with claims that it remains independently committed to combating climate change. The IMO's agreement to reduce sulfur output by 2020, despite the costs and spurning the back-up option of 2025, should bolster then industry's argument.

Various companies have taken the issue into their own hands by adopting sustainability-based procurement standards for shipping lines, in hopes that the companies will reach the targets sooner rather than later. 

The market costs of the regulations cannot be ignored, but the IMO's agreement highlights the importance of reduced carbon emissions to combat climate change, which is already and will continue to disrupt supply chains through weather impacts. Meanwhile, as other examples show, procurement is often in the best place to set sustainability-based supplier standards if the company allows it.