Sustainable markets

Sustainable markets can be defined as systems or institutions where the exchange of goods and services occurs with a sustainable, ethical, and environmentalist mindset. Sustainable markets value ethical labor practices, recycling, reduced environmental harm, and ethical treatment of animals. Sustainable markets differ from traditional economic markets, as they aim to reflect the true costs of natural resource degradation, environmental pollution, and safe labor practices.[1] The focus on sustainability and environmentalism can come at the expense of free enterprise and profits, although the consequences of sustainable markets are not well known due to a lack of large-scale implementation.

Transition to sustainable markets

To transition to sustainable markets, the use of market governance mechanisms (MGMs) to change the behavior of economic actors has been considered. Examples of sustainable market MGMs include could include fair trade certifications, sustainable production reporting, carbon taxes, pollution control subsidies,[2] and payments for ecosystem services.

Debates

Sustainable market discussion has been limited towards theorizing and debating how to best reach sustainability goals like carbon neutrality. Within discussions, there are questions about the appropriate use of policy instruments or mechanisms, and for which context. In particular, there are debates over which nations, and their respective markets, should face the harshest MGMs, and whether it is ethical to impose market restrictions on developing countries if it comes at the cost of the quality of life of their citizens. These also involve wider debates over how economic globalization and trade can benefit countries where local capacities or institutions are weak.

Furthermore, there are unresolved debates over how much regulation or government intervention is appropriate in order to govern sustainable markets, including the use of ecotaxes.

Broader questions remain over the ability of sustainable markets to fully account for environmental costs, such as pollution and ecosystem collapse. Debates about the main focus of economic models, such as GDP or social wellbeing, also exist. There have been suggestions that a move away from a GDP focus is required for environmental prosperity.

Organizations

A number of organizations are working in the sustainable markets field.

  • The International Institute for Environment and Development's Sustainable Markets Group develops research and analysis towards sustainable markets and the debates and innovations shaping markets.[3] This research also includes a database of market governance mechanisms.
  • The U.S based Skoll Foundation runs a program on sustainable markets which focuses on areas such as responsible supply chains, access to finance for sustainable small and medium enterprises and work on environmental standards and certification.[1]
  • The International Institute for Sustainable Development runs the Sustainable Markets and Responsible Trade initiative.[4] This focuses on the sustainability of international trade, design and implementation of supply chains.
  • The Mistra Center for Sustainable Markets (Misum), based at Stockholm School of Economics, aims to provide policy research and advice to Swedish and international actors. Misum is a cross-disciplinary and multi-stakeholder knowledge center dedicated to sustainability and sustainable markets and contains three research platforms: Sustainability in Financial Markets, Sustainability in Production, and Consumption & Sustainable Socio-Economic Development.[5]

References
  1. Skoll Foundation (2015) ‘Sustainable Markets page’ http://www.skollfoundation.org/issue/sustainable-markets/
  2. US EPA, OP (2014-04-20). "Economic Incentives". www.epa.gov. Retrieved 2022-01-04.
  3. International Institute for Environment and Development (2015) http://www.iied.org/group/sustainable-markets
  4. International Institute for Sustainable Development (2013) ‘Sustainable Markets and Responsible Trade’ https://www.iisd.org/markets/ Archived 2015-04-01 at the Wayback Machine
  5. Mistra Center for Sustainable Markets (2015) http://www.hhs.se/misum
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