Shaping sustainable markets

A research initiative that seeks to ensure markets work to support, rather than undermine, sustainable development. In brief SSM analyses a wide range of market governance mechanisms — from carbon labelling to diamond certification — to explore how they are designed and how they impact people, the planet and the economy. A market governance mechanism is a set of formal rules consciously designed to change behaviour – of individuals, businesses, organisations or governments – to influence how markets work and their outcomes. Through research we identify which mechanisms are working well and which are not. Ultimately, we want to improve how market governance mechanisms are designed. We also explore the potential of innovative mechanisms that have yet to be tested in the real world — providing new ideas for ‘shaping’ markets. This work will be useful for policymakers, business professionals, and researchers and anyone who has an interest in how markets can work to support sustainable development. Our work Shaping Sustainable Markets builds on existing research. We make sure we don’t replicate work that has already been done but also aim to fill knowledge gaps where possible. Ultimately we hope to design a set of principles to guide policymakers in designing and implementing effective mechanisms. We are looking at individual mechanisms, such as specific payments for environmental services schemes, as well as groups of mechanisms, for example certification, using the typology we have developed. Over time, we aim to also take a broader view across groups of mechanisms to understand their combined impact. Market governance mechanisms Market governance mechanisms can be organised into the following groups: Economic: using price incentives to change behaviour Regulatory: using legal requirements to enforce or ban certain behaviours Cooperative: using agreements to encourage partners (other organisations, governments or individuals) to voluntarily change their behaviour Informational: raising awareness of sustainable development (including poverty or environmental issues, for example) to change consumers’ and investors’ behaviour Economic REGULATORY (HARD) • Taxation • Norms and standards • Subsidies • Environmental liability • Carbon trading • Environmental control and • Conditional environmental financing enforcement • Investment funds • Procurement policy

COOPERATION (SOFT) INFORMATION • Voluntary agreements and • Certification and private voluntary partnerships standards • Principles • Sustainability metrics and reporting

Read more about the different types of market governance mechanisms in our research prospectus, found on the SSM website http://shapingsustainablemarkets.iied.org

Want to know more about specific mechanisms? Our database offers summaries of a range of market governance mechanisms relevant to SSM. Each summary includes a description of the mechanism, information about the regions and sectors where it works and links to relevant research. Use our extensive database of mechanisms to search for mechanisms you’re interested in – by type, region or sector of operation: http://shapingsustainablemarkets.iied.org/database-mechanisms Our publications

LocaLisation and Linkages

Exploring EITI's contribution to sustainable development James Van alstine and emma Wilson – 2013

Due Jan 2014

Localisation and linkages: exploring The state of sustainability EITI’s contribution to sustainable initiatives review 2014: voluntary development standards and the green economy James Van Alstine, Emma Wilson – IISD, IIED – Forthcoming Forthcoming The SSI Review represents the most up- Countries dependent upon exploitation to-date and comprehensive overview of the of natural resources often suffer from a market trends and system characteristics ‘resource curse’, characterised by poor of major voluntary sustainability standards economic growth, low living standards, and initiatives in the banana, biofuels, corruption, and political authoritarianism. cocoa, coffee, cotton, forestry, palm oil, Civil society campaigners have been soybean, sugar and tea sectors. The campaigning for voluntary and legal review provides information on the market transparency in natural resource sectors as performance, governance, criteria coverage a way to combat these issues. These efforts and implementation practices of key helped to establish the EITI; a voluntary initiatives (such as 4C Association, Better global standard for disclosing company Cotton Initiative, Bonsucro, Cotton made in payments and government revenues. Yet Africa, Ethical Tea Partnership, Fairtrade, a decade since EITI was established, it is FSC, GlobalGAP, IFOAM (Organic), PEFC, unclear how to make transparency work for ProTerra, Roundtable on Sustainable development, particularly for those living Biomaterials, Roundtable on Sustainable closest to resource extraction projects. This Palm Oil, Roundtable on Responsible Soy, paper seeks to assess how transparency Rainforest Alliance/SAN and UTZ Certified). can better lead to sustainable development Download free at: within resource-dependent countries. http://pubs.iied.org/16557IIED Download free at: http://pubs.iied.org/16555IIED Direct economic incentives for sustainable fisheries management

The case of Hilsa conservation in Bangladesh Essam Yassin mohammEd and md. abdul Wahab – 2013

Economic incentives for marine Direct economic incentives for and coastal conservation: prospects, sustainable fisheries management: challenges and policy implications the case of Hilsa conservation in Essam Mohammed (editor) – 2013 Bangladesh This book shows how economic instruments Essam Mohammed, Md. Abdul Wahab – can be used to incentivise the conservation 2013 of marine and coastal resources. Direct Direct economic incentive mechanisms such economic incentive mechanisms such as as payments for ecosystem services (PES) payments for ecosystem services (PES) could be a more successful strategy to help could be a more successful strategy to halt fishery decline than the more traditional help halt fishery decline than the more approach of regulation. This case study traditional approach of regulation. Examples on Hilsa fish conservation in Bangladesh, from across the world suggest that PES examines how direct economic incentive can work to protect both livelihoods and mechanisms complement regulatory environments. But to succeed, these fisheries management approaches. It schemes must be underpinned by robust finds that the effectiveness of the scheme research, clear property rights, sound could be enhanced by understanding governance structures, equitable benefit socio-economic and ecological systems; sharing, and sustainable finance. The book identifiying key beneficiaries, assessing explores the prospects and challenges, the preference of fisher communities for and draws lessons from PES and PES-like compensation packages, empowering programmes from across the globe. local fishermen to monitor and enforce Available to purchase at compliance, and enhancing regional http://www.routledge.com cooperation between countries. Download free at: http://pubs.iied.org/16527IIED Learning from 20 years of SuStainability StandardS Payments for ecosystem in China–latin ameriCa trade services in costa rica and inveStment

Ina Porras, DavID n. Barton, aDrIana ChaCón-CasCante A discussion anD MIrIaM MIranDa Emma BlackmorE, Danning li, Sara caSallaS – 2013

Learning from 20 years of Sustainability standards in Payments for Ecosystem Services China-Latin America trade and in Costa Rica investment: a discussion Ina Porras, David N. Barton, Adriana Chacón- Emma Blackmore, Danning Li, Sara Casallas Cascante, Miriam Miranda – 2013 – 2013 Costa Rica’s Payments for Ecosystems This discussion paper summarises initial Services (PES) programme has become evidence on the growing trade and something of an icon in the world of PES. investment between China and Latin America It provides a valuable source of information in mining, forestry and agriculture, with a and inspiration for other countries interested particular focus on Chile, Peru and Brazil. It in exploring ‘policymixes’ of economic explores the use and impact of sustainability and regulatory instruments to promote standards, both international and national ecosystems conservation and regeneration. – for example, Forest Stewardship Council In this paper we explore how the governance certification and China’s national forestry of the PES programme has evolved over certification scheme. After analysing the time, how the context in which it sits has drivers and governance factors shaping changed, and how it prepares to face future the design and uptake of standards, it challenges by incorporating new tools identifies several important questions for and strengthening its alliances with other future research, in this under-researched but institutions. We discuss the policies used by important topic for sustainability. the programme to affect the way forests are Download free at: managed and the reported outcomes on the http://pubs.iied.org/16544IIED ecosystem services they are expected to provide. Since PES is for society as much as the environment, we also look in detail at the impacts on those directly receiving PES, and what policies and personal characteristics may affect how PES funding seeps into rural economies. Download free at: http://pubs.iied.org/16514IIED An older version is also available in Spanish at http://pubs.iied.org/16514SIIED Dispute or Dialogue? EITI and susTaInablE dEvElopmEnT Community perspectives on company-led grievance mechanisms Lessons and new challenges for the Caspian Region EditEd by Emma Wilson and Emma blackmorE – 2013 Saule Ospanova, Ingilab Ahmadov, Emma Wilson 2013

Dispute or dialogue? Community EITI and sustainable development: perspectives on company-led Lessons and new challenges for the grievance mechanisms Caspian region Emma Wilson, Emma Blackmore (editors) – Saule Ospajova, Ingilab Ahmadov, Emma 2013 Wilson – 2013 This book explores the use and impact of The Extractive Industries Transparency company-community grievance mechanisms Initiative (EITI) is sparking renewed interest in the oil and gas, forestry, and mining and debate on issues such as transparency sectors. The book provides an overview of government-company contracts, reporting of recent trends in the design and use on revenues from natural resources by of grievance mechanisms and explores company and by project, and reporting drivers for their use. The book’s findings on revenue expenditure. An overarching demonstrate the importance of having an concern is how to ensure that revenue open and responsive overall approach to transparency ultimately leads to better stakeholder engagement within which a sustainable development outcomes, grievance mechanism can sit. It also offers including socio-economic development, a number of specific recommendations on poverty reduction and environmentally how grievance mechanisms can be designed responsible extractive-industry practices. and implemented to better meet the needs This discussion paper highlights key of communities and to avoid the risk and issues and new challenges related to EITI costs of community disputes for business. implementation, as well as broader issues of Download free at: transparency and good governance in the http://pubs.iied.org/16529IIED extractive industries. Download free at: http://pubs.iied.org/16531IIED FPIC and the extraCtIve IndustrIes

A guide to applying the spirit of free, prior and informed consent in industrial projects

Abbi buxton And EmmA Wilson – 2013

FPIC and the extractive Tipping the balance: policies to industries: a guide to applying the shape agricultural investments spirit of free, prior and informed and markets in favour of small- consent in industrial projects scale farmers Abbi Buxton, Emma Wilson – 2013 Bill Vorley, Lorenzo Cotula, Man-Kwan Chan Free, prior and informed consent (editors) – 2013 (FPIC) is an indigenous peoples’ right A recent wave of large-scale land requiring companies to engage with local acquisitions has raised concerns that small- communities to agree together on how scale producers are being marginalised. projects are implemented. This paper offers What role can public policy play to ensure guidance to those companies who are that commercial investment and agricultural looking to engage with FPIC in a meaningful markets benefit smallholder producers? way. It focuses less on the letter of the law This report identifies key policy levers that and more on exploring ‘the spirit of FPIC’, can tip commercial investments in favour of a deeper commitment to engage with local either small- or large-scale farming. It shows communities to reach shared agreement. how levers influence market governance to It intends to challenge companies to constrain or support the fair sharing of risk move beyond a culture driven by minimal and reward between small-scale producers compliance-based thinking, towards one and the rest of the market. It examines policy based on a greater understanding of the elements that can specifically contribute to importance of stakeholder engagement gender-equitable results. Four country case practices; an understanding which should studies; Guatemala, Nigeria, Tanzania and benefit business as well as communities. the Philippines, support the research. Download free at: Download free at: http://pubs.iied.org/16530IIED http://pubs.iied.org/G03470IIED Climate Change and ColleCtive trademarks agriCulture and bioCultural heritage Can market governance mechanisms reduce emissions from the food system fairly and effectively? Towards new indications of distinction for indigenous peoples in the Potato Park, Peru Tara GarneTT – 2012

Alejandro Argumedo – 2013

Collective trademarks and Climate change and agriculture: biocultural heritage: towards a comparative review of the new indications of distinction for effectiveness and fairness of indigenous peoples in the Potato market governance mechanisms Park, Peru Tara Garnett – 2012 Alejandro Argumedo – 2013 This paper examines some of the market The indigenous farmers of the Potato governance mechanisms that might be Park in Cusco, Peru, produce goods drawn used to address the impact of agriculture from their collective traditional knowledge, on climate change. It assesses the potential biodiversity and fundamental ties to the these tools offer for 1) making food land: their ‘biocultural heritage’. How can production less emissions intensive; and they promote these products, while also 2) for influencing consumers to reduce the protecting their collective intellectual demand for foods with a high greenhouse property? This paper presents the gas footprint (particularly meat and dairy experience of the Potato Park communities products) and to reduce food waste. It in applying for formal protection through a covers the full spectrum of regulatory, collective trademark, and also in adopting economic, cooperative and information an informal trademark for their products and elated mechanisms and assesses their services. effectiveness and fairness. The mechanisms Download free at: analysed – amongst others – include http://pubs.iied.org/16528IIED emissions trading, REDD, payments for ecosystem services, nitrate taxes and carbon labelling. Download free at: http://pubs.iied.org/16512IIED Intellectual property StandardS for change? ISO 26000 and glObal tools for products

ISO 26000 and sustainable development gOvernance fOr based on bIocultural SuStaInable develOpment AdriAn Henriques – 2012 herItage

HALINA WARD – 2012 A legal review of geographical indications, trademarks and protection from unfair competition

Graham DutfielD – 2011

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Standards for change? ISO 26000 and Intellectual property ISO 26000 and global governance tools for products based sustainable for sustainable on biocultural heritage development development Graham Dutfield – 2011 Adrian Henriques – 2012 Halina Ward – 2012 Products developed by In 2010, the International ISO 26000 offers guidance indigenous peoples and Organization for across themes including traditional societies, such as Standardization published ISO human rights, labour, food crops and medicines, 26000: a standard to guide environment, consumer can protect biodiversity and organisations in implementing protection, fair operating provide an important source social responsibility and practices and community of income. This review contributing to sustainable development. The brand explores the intellectual development. ISO is a widely recognition of ISO standards, property (IP) tools of respected authority on ISO’s geographical scope geographical indications, standards worldwide, so their and its credibility among trademarks and rules of unfair venture into this field was market actors mean that ISO competition for promoting significant. But how much 26000 has the potential to these products, and protecting of a contribution can ISO improve the practice of social them from misappropriation, 26000 make to sustainable responsibility in local and misuses and imitation, and development? This report global markets. This paper assesses their potential to looks at what has happened describes the development of contribute to sustainable so far and what the potential the ISO 26000 standard and development. This legal review could be. discusses the dissonances draws primarily on experience Download free at: http://pubs. that emerged in relation in Europe, where GIs and iied.org/16513IIED to policymaking, global trademarks have been most governance and consequently widely used to date, but also sustainable development. includes experience from It suggests a number of developing countries, such as steps that could be taken India’s recent experience with to maximise the positive geographical indications. contributions of ISO 26000 Download free at: http://pubs. to global governance for iied.org/16506IIED sustainable development and offers lessons for the analysis of other market governance mechanisms. Download free at: http://pubs. iied.org/16507IIED InvestIng for How can air travel contribute to tHe sustaInable costs of adapting development? to climate cHange? A review of investment principles – trends and impacts The feasibility of the International Air Passenger Adaptation Levy JUST ECONOMICS – 2011 (IAPAL) as a market governance mechanism

Antonia Custance Baker – 2011

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Investing for sustainable How can air travel contribute to the development? A review of costs of adapting to climate change? investment principles, trends Antonia Baker – 2011 and impacts By 2050, the costs of adapting to climate Just Economics – 2011 change in developing countries could How can investors be encouraged to reach US$100 billion per year, according consider more than purely commercial and to estimates from UNDP and the World short-term gains? Various sets of investment Bank. New and additional sources of principles have emerged in recent years. funding for adaptation are desperately These principles aim to incorporate social, needed. The International Air Passenger environmental and governance criteria into Adaptation Levy (IAPAL) – a proposed investment decisions in order to enhance the new purchase tax on air tickets – offers benefits and reduce the damaging effects a potential source for these funds. This of investment for development. Focusing paper updates the key assumptions on four major sets of investment principles made in the original paper proposing this – the UN Principles for Responsible scheme by Hepburn and Müller in 2006. It Investment (PRI), the Equator Principles, analyses the nature of current international the Environmental and Social Principles agreements to determine the feasibility of of the European Investment Bank (EIB), introducing IAPAL. and the OECD Declaration on International Download free at: Investment and Multinational Enterprises – http://pubs.iied.org/16504IIED this paper takes a first step in assessing the content, take-up, implementation and impact of investment principles. Download free at: http://pubs.iied.org/16505IIED Get involved Sign up to our newsletter We publish a regular email newsletter that provides updates on our work and links to new publications, blogs and news. Sign up on our Project website (see link below). Materials

Publish your research Sustainable markets Shaping Sustainable Markets aims to publish Keywords: Shaping sustainable markets independent, rigorous research that makes a Market governance meaningful contribution to what we already know. Market governance mechanisms Economic incentives We welcome contributions from external Payments for Ecosystems Services (PES) researchers – particularly those from low- and Certification middle-income nations – that meet our editorial and quality standards. We offer support for producing and marketing publications (including coordinating a rigorous peer review process). Join our Community of Practice We’re looking for business professionals, policymakers and researchers to join our Community of Practice. The Community of Practice will be a forum for sharing knowledge, experience and practice relating to the use, design and implementation of market governance mechanisms. Knowledge sharing will happen both remotely – through a dedicated part of the website – and face-to-face through regular events. SSM is hosting its first event on March 21st 2014 in Edinburgh. The event will focus on innovations for equity in smallholder PES and will seek to bridge research and practice. The event is open to all and will be free to attend. Please email [email protected] if you would like to register or would like more information. Visit our website http://shapingsustainablemarkets.iied.org/ Get in touch [email protected]

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