Shaping Sustainable markets

April 2013

Shaping Sustainable Markets is a research initiative that explores how the formal and informal rules used to govern markets – called market governance mechanisms (MGMs) – are designed, and how they impact on people, the planet and the economy.

Picture of the Rainforest Alliance logo on a bunch of flowers.

Examples of MGMs include Fairtrade certification and payments for ecosystem services, but there are many others, including market-based instruments and innovative laws and policies. These mechanisms are not equally effective. Through research we identify which mechanisms are working well, and which are not, and we offer lessons on how their design and implementation might be improved. This information is shared on the Shaping Sustainable Markets (SSM) website, the flagship research initiative of the Sustainable Markets group at IIED.

What we do

While all market governance mechanisms — from carbon labelling to diamond certification — aim to improve the contribution of markets to sustainable development,  they can have unintended consequences. Carbon labelling, for example, because of the way in which its measurement system is designed, can inadvertently discriminate against small producers in developing countries – and thereby exacerbate poverty. We shed light on whether these mechanisms meet their aims and any unforeseen impacts they might have.


  • analyse a wide range of mechanisms to explore their impact on sustainable development
  • assess both the individual and combined impact of these mechanisms and
  • generate ideas of innovative mechanisms that have yet to be tested in the real world – providing new ideas for 'shaping' markets.

Our ultimate objective is to improve how market governance mechanisms are designed.

Over time we hope to build a set of principles to guide policymakers in designing and implementing effective mechanisms.

Whether you are a business professional, policymaker or researcher, our results will help you in your work. 

How we do it

We analyse existing literature and carry out primary research to assess the impacts of a range of mechanisms on sustainable development. What impact do these mechanisms have on society, the environment and the economy? Do they help to alleviate poverty and maintain or enhance the environment?

We also question how these mechanisms are designed and implemented. Are they effective, efficient and equitable? And how does their design and implementation shape their impact on sustainable development? This will involve qualitative analysis using a set of questions we have developed ourselves.

We build on existing research to avoid replicating work, and aim to fill knowledge gaps where possible.

We’ve already carried out research into ISO 26000, collective trademarks, mechanisms that can be used to address the climate change impacts of agriculture, payments for ecosystem services and investment principles. Our latest research – carried out in partnership with Oxfam – explores the policies that can be used to tip agricultural investments and markets in favour of small-scale farmers.

Find out more and get involved

Browse our database of mechanisms to explore which mechanisms are being applied to address specific issues in particular sectors or geographical regions, or visit our library to read our latest publications.

Interested in joining a forum for sharing knowledge, experience and practice relating to the use, design and implementation of market governance mechanisms? Join our community of practice. Or submit research to be published under the Shaping Sustainable Markets series. Sign up to our newsletter to get our latest news.