How markets and consumers can drive sustainability
The image above is for illustration and is from Harvard Business Review.
Experts spotlight key areas where competition and consumer protection policies can promote sustainable consumption and production.
Ensuring responsible consumption and production patterns – as outlined in the UN Sustainable Development Goal 12 – requires minimizing environmental impacts, enhancing resource efficiency and reducing waste.
In this regard, experts point out that competition and consumer protection policies are uniquely placed to help.
The UN General Assembly has entrusted UNCTAD as the focal point within the UN system for competition and consumer protection.
“Competition and consumer protection policies are conducive to improving the efficiency and fairness of markets and are therefore well placed to serve public policy goals,” said Teresa Moreira, head of competition and consumer policies at UNCTAD, while opening a high-level session of the UN Trade Forum 2023 on 9 May.
The meeting gathered experts from academia, international organizations as well as government agencies from Austria, Cabo Verde, Greece, Kenya, Russia and South Africa.
Their conversations revolved around a new UNCTAD report, which examines connections among sustainability, consumer protection and competition policies.
They also discussed success stories and potential opportunities where such policies can enable markets to work better for sustainable development.
Addressing challenges to public-private partnerships
Long-term cooperation between governments and businesses, also known as public-private partnerships (PPPs), can help advance sustainability, as evidenced by Kenya’s experience.
Kenya, home to over 50 million people, generates about 22,000 metric tons of waste per day, around 60% of which is recyclable – according to Ninette K. Mwarania, who works on planning, policy and research for the country’s competition authority.
To bolster the circular economy, Kenya is drawing on PPPs to mobilize much-needed private funding for sustainable waste management, which is capital-intensive.
The country also uses PPPs to help connect remote villages to the power grid, expanding electricity coverage while reducing the use of CO2-emitting kerosene lamps.
But such partnerships pose competition challenges too, often foreclosing smaller businesses. Given the long-term nature and amount of investment required to participate in these agreements, only a few private-sector players are eligible.
“Competition regulators need to optimally interpret competition law and policy to accommodate such agreements,” Ms Mwarania said.
Competition guidance to keep up
When sustainability and competition conflict, experts call for clearer guidance on what is permitted under competition law.
Doing so entails identifying sustainability benefits that can lead to efficiency gains – for all citizens rather than individual consumers – to offset anticompetitive effects.
For example, in Austria, draft guidelines recognize biodiversity as an efficiency gain.
“As companies need certainty for their actions, we published guidelines for sustainability agreements in 2022,” said Natalie Harsdorf-Borsch, director-general of the Austrian federal competition authority.
“On this basis, companies can assess whether their cooperation is in line with Austrian competition law.”
Consumer education remains vital
According to UNCTAD’s world consumer protection map, consumer education initiatives related to sustainable consumption cover only 37 out of 104 countries where information is available.
For consumers to make sustainable choices, they need accurate and reliable information about what they buy from markets.
“By ensuring that consumers are well-informed on the impact of their choices and that their rights are protected, we can create a marketplace that incentivizes companies to prioritize sustainability, benefiting both consumers and our planet,” said Jorge Laguna-Celis, who leads the One Planet Network, hosted by the UN Environment Programme.
Policies to forge collective efforts
Fostering sustainable consumerism is a shared responsibility among all market actors, including governments, businesses, consumers and relevant civil society organizations.
As recommended by UN guidelines for consumer protection, countries should develop and implement a policy mix to encourage sustainable consumption and production.
They can enact sectoral policies concerning land use, transport, energy and housing, remove subsidies that contribute to unsustainable patterns and promote sector-specific best practices in environmental management.
Besides, governments should guide businesses in sustainably designing, producing and distributing goods and services.
They should also enforce consumer protection laws against misleading and unfair commercial practices, particularly related to false environmental claims and greenwashing.