The Golden State’s Lead in Sustainable Development Goals
This piece was originally written as a contribution for the Thomson Reuters Institute. You can read the original post here.
The State of California remains resilient in its efforts to implement the United Nations’ Sustainable Development Goals (SDGs) while nations including the United States and United Kingdom face delays and challenges.
The United Nations SDGs call for multilateral action to address social, economic, and environmental sustainability. Political shifts and the economic impacts of the COVID-19 pandemic have delayed broad realization of these goals across the US. In this vacuum, California has moved itself to the forefront, and is now joined by several other states, counties, and municipal governments that are forging their own paths toward implementation.
California’s embrace of SDGs
Progress toward implementation of the 17 SDGs adopted by the UN in 2015 has stalled dramatically. As of 2023, the United Nations reported that progress had “stalled or reversed” for 30% of its SDG goals, with the pandemic, escalating climate crisis, and war in Ukraine noted as the primary reasons. Implementation toward some goals, such as working toward zero hunger, appear to be counterproductive, as efforts to meet growing food demand hinder the goal of reduced greenhouse gas emissions.
In the UK, Prime Minister Rishi Sunak faced criticism for pushing back deadlines for climate-related goals. Delays in phasing out the sale of new combustion engine vehicles and gas boilers, coupled with a failure to meet emissions targets have attracted negative business attention. Resistance to green policies is not exclusive to the UK, however, as political and labor movements in Italy, Poland, Germany, and the Netherlands have applied political pressure to slow or reverse requirements on building energy-efficient, combustion engine cars; nitrogen pollution on farms; reliance on fossil fuels; and oil and gas heating.
By contrast, the State of California — the world’s fifth-largest economy — has taken a progressive approach toward SDG implementation. The California Air Resources Board has established far-reaching goals of dramatically reducing greenhouse gas emissions, substantially reducing in fossil fuel demands, and making significant gains in reducing smog-forming pollution, with an overall aim of reaching carbon neutrality by 2045. More recently, Gov. Gavin Newsom dedicated $180 billion in multisource funding toward electrical grid capacity that will help provide clean energy, safe drinking water, and modernized transportation infrastructure.
Reporting requirements for businesses
In 2023, the State of California passed State Senate Bills 253 and 261 requiring mandatory emissions reporting from more than 15,000 business entities. The reporting requirements compel businesses with certain revenue minimums to report on their direct greenhouse gas emissions, (known as Scope 1); emissions from their purchased energy (Scope 2), and additional climate-related financial risks beginning in 2026. The most controversial reporting requirement, that of emissions from downstream vendors and suppliers (Scope 3) will not be needed until 2027.
Legal challenges have arisen in federal court with a lawsuit from the U.S. Chamber of Commerce, arguing that Senate Bills 253 and 261 violate the First Amendment of the Constitution by “compelling speech” from business entities. Additionally, Scope 3 reporting itself has been targeted as it would require supplier companies outside of California, and perhaps outside the US, to provide reporting to impacted California businesses.
Just this month, the Securities and Exchange Commission adopted their own business reporting guidelines, closely resembling California’s, for most publicly traded companies. The SEC’s reporting guidelines require affected companies to disclose climate related risks, costs of severe weather events and natural conditions, climate-related targets or goals material to their business, processes adopted by the company to identify climate-related risks, and Board of Director oversights on these risks. The final proposal dropped the controversial Scope 3, which has been adopted but delayed in the State of California.
The SEC has noted that nearly 40% of affected companies already report on these measures, just not in any standardized fashion. Their argument is that such reporting does not have a value judgment, but provides investors with clear, consistent, comparable, and decision-useful information to guide investment decisions.
States and Cities follow California’s lead
While political aims delay broad national or international implementation of SDGs, states and cities are following California’s lead in individual implementation efforts. The State of Hawai’i, which is (as an island state) particularly susceptible to climate risk, has its own SDG dashboard that is publicly available. Several large to midsize US cities and counties also have set up their own forward goals, plans, and dashboards for sustainability, environmental services, and economic health.
The City of Los Angeles, for example, has a similar SDG dashboard; and New York City was one of the first to pioneer voluntary local review and direct reporting to the UN on SDG implementation. The City of Boston implemented its own Climate Action Plan nearly a decade prior to the development of SDGs internationally and has reporting requirements for emissions and energy efficiency in buildings. Smaller entities with similar implementation strategies include Washtenaw County, Mich.; Fort Collins, Colo.; and Durham, N.C.
According to the Clean Energy States Alliance, California shares its goals for carbon-free electricity with 14 other US states and territories. Many states with said goals fall on the left-leaning side of the political spectrum, but the State of Texas stands out as an example of a traditional red state that is also aggressively pursuing a shift to clean energy sources. Texas relies heavily on coal and natural gas use which makes the state a high carbon-intensive power system, but state leaders are clearly predicting rapid growth in both solar development and offshore wind power generation.
