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
Read more about the different types of market governance mechanisms in our research prospectus.
We are looking at individual mechanisms, such as Fairtrade, as well as groups of mechanisms, such as certification or ‘informational’ mechanisms. Over time, we aim to also take a broader view across groups of mechanisms to understand their combined impact. Read more about individual market governance mechanisms — what they are, how and where they work, and what research has been done on them — in our database of market governance mechanisms.
Examples of our research include:
Transparency and sustainable development: the Extractive Industries Transparency Initiative (EITI)
In May 2013 Shaping Sustainable Markets published a paper that explores the use, effectiveness and potential of the EITI in the Caspian Region (Azerbaijan, Kazakhstan and Turkmenistan). The paper sought to influence the biennial EITI conference which took place in Sydney in May 2013. It made a number of recommendations to improve the initiative, including for EITI to: provide further strategic, administrative and technical support for disaggregated reporting of payments to governments (e.g. company-by-company and project-by-project); develop guidance on good practice in subnational reporting, and support pilot initiatives, such as reporting on public monitoring of community development spending; and prioritise capacity building as an essential part of the EITI agenda, especially for local government and civil society organisations. Find the paper here.
In March 2014 Shaping Sustainable Markets will publish another paper that builds on the findings in the first paper. It argues that even though a decade has passed since EITI was established, the question of how to make transparency work for sustainable development remains unanswered, particularly for communities living closest to resource extraction projects. The paper will assess how transparency can more substantively lead to sustainable development and poverty alleviation within resource dependent countries using a number of case studies. The paper will provide a number of recommendations on how EITI can be adapted to improve the link between transparency and improvements in sustainable development impacts on the ground. Watch this space!
State of Sustainability Initiatives 2014 Review
IIED has been collaborating with IISD, ENTWINED, WWF, IDH and Finance Alliance for Sustainable Trade to produce the highly anticipated 2014 State of Sustainability Initiatives (SSI) Review. The SSI Review represents the most up-to-date and comprehensive overview of the market trends and system characteristics of major voluntary sustainability standards and initiatives in the banana, biofuels, cocoa, coffee, cotton, forestry, palm oil, soybean, sugar and tea sectors. The review provides information on the market performance, governance, criteria coverage and implementation practices of key initiatives (such as 4C Association, Better Cotton Initiative, Bonsucro, Cotton made in Africa, Ethical Tea Partnership, Fairtrade, FSC, GlobalGAP, IFOAM (Organic), PEFC, ProTerra, Roundtable on Sustainable Biomaterials, Roundtable on Sustainable Palm Oil, Roundtable on Responsible Soy, Rainforest Alliance/SAN and UTZ Certified). The SSI Review is an important tool for the strategic planning of businesses, policy makers and other stakeholders seeking to build more sustainable supply chains. Watch this space!