How to make markets work for sustainable development

© Shutterstock/ extarz | A woman buys organic vegetables at a supermarket in Rayong, Thailand.

Markets are failing to ensure sustainable economic and social outcomes, slowing progress towards the Sustainable Development Goals, experts said at UNCTAD’s September 28 ad hoc expert meeting on competition, consumer protection and sustainability.

To reverse corporate profit maximization at the expense of the planet, countries should address market failures through public policies, including policies on competition and consumer protection.

“Markets can only work for more sustainable development if proper competition and consumer policies are in place and enforced,” said Teresa Moreira, UNCTAD’s director of competition and consumer policy.

“We need to provide clear guidance to businesses and information to consumers about governments’ strategic priorities.”

Power informed consumer

Several experts called for better education and awareness-raising initiatives to empower consumers to encourage environmentally, economically and socially sustainable consumption, particularly through their product choices.

Combating greenwashing and simplifying the understanding of sustainability labels are increasingly the focus of consumer protection authorities.

“Climate change is probably the greatest market failure in human history, requiring immediate action by all stakeholders and warranting an extra step by competition authorities to eliminate any perceived legal risks of coordinated action,” said Martijn Snoep, Chair of the Consumers and Consumers Authority markets of the Netherlands.

Promote sustainable consumption

UN Guidelines on Consumer Protection offer recommendations on how sustainable consumption strategies can be designed and integrated with other public policies.

They call on Member States to develop and implement strategies that promote sustainable consumption through a mix of measures, in partnership with businesses and civil society organisations.

This could include regulations, economic and social instruments, sectoral policies in areas such as land use, transport, energy and housing.

They could also include information programs to raise awareness of the impact of consumption patterns, eliminate subsidies that encourage unsustainable consumption and production patterns, and promote industry best practices in environmental management.

“Sustainable consumption should be an easy option for consumers. We must work to reduce confusion around sustainability by having market players make products safe, durable and resource efficient, and providing clear and reliable information to better help consumers make choices,” said Peter Andrews, Director of Consumer Rights, Innovation and Impact at Consumers International.

Rethink competition policy

The experts also called for a rethink in competition policy. Businesses around the world are increasingly taking responsibility for promoting sustainability by setting higher standards than applicable laws require.

They often act individually, but sometimes coordinated action with their competitors may be required.

Competition law fundamentally prohibits cooperation and could stand in the way of the pursuit of sustainability goals.

However, competition authorities are increasingly providing guidance on what types of sustainability agreements do or do not restrict competition.

Empower market players for change

UNCTAD’s Consumer Protection World Map shows that consumer protection law covers the promotion of responsible consumption in only 31 out of 104 countries that provided information to the organization.

While developed jurisdictions such as the European Union and the UK have issued guidance on competition and sustainability, developing countries have yet to do so.

“The environmental, social and corporate governance agenda is directly related to best competitive practices. UNCTAD is an important forum for developing countries to reach a higher level on this issue and to promote competition policy and sustainability,” said Juliana Domingues, Attorney General at the Economic Defense Council of Brazil.

UNCTAD provides advisory services and technical assistance to developing countries so they can fully benefit from their integration into the global economy and ensure markets function for a more sustainable and inclusive world.