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Sustainable Markets and Responsible
Trade (SMART)

Reducing production and consumption impacts

Over the past two and half decades, there has been a rapid expansion of standards-based and voluntary markets for sustainable products. The rise of "fair trade," "organic" and a wide variety of other social and environmental labels is testament to growing consumer and industry awareness of the importance of individual decision-making power and responsibility in achieving sustainable development.

With the growing awareness, mainstream markets are also increasingly tapping into voluntary initiatives as a basis for reducing the production and consumption impacts global of economic activity. As the presence and multitude of such initiatives grows, policy-makers and supply chain stakeholders alike are faced with an increasing array of opportunities, but also a growing number of questions as to which actions, initiatives or policies are the most appropriate means for addressing core sustainable development issues. Some key questions arising from the increased use of voluntary supply chain initiatives include:

• What are the actual sustainable development impacts of different sustainability initiatives?

• How can consumers and other stakeholders distinguish between initiatives?

• How do initiatives affect stakeholder decision-making and representation along supply chains?

• What are the costs associated with implementing sustainability initiatives and who should pay those costs?

• What are the limits of voluntary initiatives in addressing sustainable development challenges and where is complementary policy support needed?

• What infrastructure is needed to enable the efficient implementation and leveraging of voluntary initiatives?

• What are current market trends with respect to voluntary initiatives?

• How can international voluntary initiatives be linked with international governmental processes?

In addition to helping stakeholders find answers to these and other related questions, IISD’s Sustainable Markets and Responsible Trade (SMART) initiative seeks to build an "enabling infrastructure" for the efficient, equitable and transparent use of voluntary initiatives as instruments for sustainable development. With this in mind, the SMART initiative has identified five core areas for work and project development.

Contents

• Public Policy
  Voluntary initiatives are often conceived of as being independent of public policy. It is clear however, that such initiatives have implications for the public good, particularly where such initiatives are linked to significant market forces. Through its public policy work, the SMART program seeks to identify key linkages between voluntary initiatives and public policy objectives and instruments.

• Standards and Voluntary Initiatives
  Standards and voluntary initiatives can set rules for production, processing, trade, transport, marketing etc. To the extent that such initiatives establish common conditions for market participation across multiple supply chain actors, they operate in a manner analagous to public policy and legislation. Good governance across such initiatives is key to ensuring that they have a positive impact on sustainable development. Through its direct work with standards and voluntary initiatives, IISD's SMART program promotes transparency, inclusiveness and continual improvement in the design and implementation of standards and voluntary initiatives.

• Globalization of Services
  Exploring the movement of service jobs across industrialised and developing economies and its implications for sustainable development.

• Financing
  The implementation of sustainable practices typically requires new investments which are often unaffordable to those "most in need". In order to ensure that the "protection of social and environmental goods" is not in fact a menace to those "most in need", special attention needs to be given to ensuring that the requisite financing is available for enabling equitable access to sustainable markets and their corresponding benefits. The SMART program's financing activities focus on promoting access to finance and the linking of finance to sustainable production performance.

• Technical Assistance
  Although standards and certification systems provide a useful reference point for implementing sustainable production practices, truly sustainable production must be built upon sound business management. Through its technical assistance activities, the SMART program seeks to complement sustainable farming practices with organizational development, financial literacy, risk management, quality control and marketing expertise thereby providing a solid foundation for participation in international markets.

• Sustainable Commodity Initiative
  With more than 2.5 billion people directly dependent upon commodities for their livelihoods commodity production and trade has long been recognized as an essential pillar to sustainable development. Over the past two decades producers, consumers and industry have been taking up the call to adopt proactive strategies for encouraging sustainable development through the development and implementation of sustainability standards. The Sustainable Commodity Initiative was formed in 2003 to assess the real potential of such initiatives and to catalyze best practice in voluntary standards-based initiatives as they move into mainstream markets.

• Sustainable Public Procurement
  Governments are the largest consumers in an economy. On average, the public sector spends between 45 and 65 per cent of their budgets on public procurement, which amounts to 13 to 17 per cent of the GDP. If governments make a concerted effort to purchase environmentally and socially preferable products and services, their substantial buying power will drive the delivery of sustainable development policies and stimulate markets for sustainable products and services.