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Sustainable markets are defined as systems or institutions where the exchange of goods and services occurs with a sustainable, ethical, and environmentalist mindset. Sustainable markets differ from traditional economic markets as they aim to diminish the effects of natural resource degradation, environmental pollution, and promote safe labor practices.[1]
In order 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 fair trade certifications, sustainable production reporting, carbon taxes, pollution control subsidies,[2] and payments for ecosystem services.
In the past, the sustainable market discussion was limited only to theorizing how to best reach sustainability goals like carbon neutrality. However, in 2022 California governor Gavin Newsom signed The California Climate Commitment which promised to make California Carbon Neutral by 2045.[3] Over the next two decades, the Climate Commitment aims to:
However, much of the world has dealt with issues in implementing these goals as of 2022.[4]
As more legislation such as the California Climate Commitment becomes commonplace, there are also questions of whether it is ethical to impose market restrictions on developing countries. Many developing countries experience greater negative impacts from climate change[5] but are also more harshly impacted by economic restrictions. 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 well-being, also exist. There have been suggestions that a move away from a GDP focus is required for environmental prosperity.
A number of organizations are working in the sustainable markets field.
