Integration for greater impact

8.2 Effectiveness

A review of 89 completed projects from GEF-6 and GEF-7 involving the private sector—and not including NGI projects—revealed variation in performance across different engagement modalities. Projects that focused on industry leadership, finance, and knowledge and information sharing tended to show stronger performance, as reflected in their outcome and sustainability ratings (figure 8.5). For example, the Climate Smart Urban Development Challenge (GEF ID 9342, UNDP) project actively engaged business communities and other stakeholders in developing, financing, and implementing climate-smart innovations related to energy, transport, construction, planning, water, and waste management in cities. This project led to the implementation of five private sector–driven initiatives, some of which have already secured outside financing for scaling up at closure.

In Conserving Biodiversity through Sustainable Management in Production Landscapes in Costa Rica (GEF ID 9416, UNDP), strong private sector engagement through knowledge and information sharing on a monitoring system for land use change helped foster greater ownership and adoption of the system. In the engagement through finance category, the Promoting Climate-smart Livestock Management in the Dominican Republic (GEF ID 10054, Food and Agriculture Organization of the United Nations) project helped develop a green funding mechanism to finance climate-smart livestock farming practices in partnership with banks.

On average, projects featuring private sector engagement received higher outcome ratings in Latin America and the Caribbean (90 percent, compared to 79 percent for nonprivate sector projects), and slightly higher ratings in Europe and Central Asia (90 percent, compared to 89 percent for nonprivate sector projects). By focal area, private sector engagement projects in the chemicals and waste, international waters, land degradation, and multifocal area portfolios—in that order—are more likely to receive outcome ratings in the satisfactory range compared to other projects.

In terms of sustainability, private sector projects in the international waters focal area, on average, received higher sustainability ratings. For example, the project Sustainable Management of Highly Migratory Fish Stocks in the West Pacific and East Asian Seas (GEF ID 5393, UNDP) engaged tuna fishing industry associations by sharing knowledge and demonstrating the benefits of data collection and monitoring, including for certification purposes; this contributed to more fishery enterprises adopting these practices to access a wider market.

Across all focal areas (box 8.1), the GEF supports tailored interventions to foster early-stage innovation, mobilize investment, and create enabling environments for private sector engagement. Chapter 9 further highlights the contributions of private sector involvement in technological innovations in the GEF.

Private sector engagement in the GEF’s integrated programs has increased, but effectiveness has been uneven, shaped by differing strategic objectives, capacity constraints, and variable enabling conditions. The Good Growth Partnership and Sustainable Cities Program illustrate contrasting approaches to working with private actors. The former, focused on commodity supply chains, successfully fostered multistakeholder dialogue, but struggled to catalyze downstream private investment or systemic change. Such multistakeholder forums require significant resources, yet in practice they are often underresourced and minimally staffed; for example, in Liberia, the forum operated with only a part-time communications officer. The Sustainable Cities Program achieved public-private collaboration in renewable energy and waste management in select cities, yet broader implementation challenges underscored the need for stronger municipal capacity and clearer PPP frameworks. Other integrated programs, such as the Sustainable Forest Management Impact Program and the Global Wildlife Program, showed more fragmented engagement, often limited to small enterprises or pilots with limited scalability. While initiatives such as traceability tools and performance-based finance show promise, overall private sector involvement has been modest, pointing to the need for more strategic, scalable, and investment-ready models.

Experience across these programs highlights critical design elements for private sector engagement. Too often, interventions were designed as discrete activities—such as farmer training, financial awareness raising, or firm-level investments—rather than looking to leverage the private sector for broader system transformation. In food systems, design gaps included insufficient enabling conditions, lack of long-term commitments, and weak business cases for sustainability. For example, in Brazil and Paraguay, sustainability pilots could not compete with the profitability of land clearing, and engagement with global buyers produced few sourcing reforms. Similarly, environmental, social, and governance–linked finance was undercut by continued access to conventional credit without environmental requirements, demonstrating the need to embed financial structuring and disclosure requirements into design from the outset.

Systemic issues also affect design. The most promising innovations emerged when GEF Agencies engaged new types of partners early in project development; such collaboration has been inconsistent. Country-level capacity gaps further constrain effective design, with many operational focal points lacking the tools and training to assess financial and partnership dynamics. Further, the typical GEF four-year project cycle is too short to deliver the systemic change needed in complex sectors and industries. In such settings, progress depends on a sequence of interlinked steps—policy reform, shifts in demand, changes in production practices, enhanced transparency and certification, and the development of financing mechanisms—all of which are difficult to achieve within a limited time frame.

Taken together, these experiences suggest that stronger design elements are essential to achieve transformational impact. Future private sector interventions will need to better align financial mechanisms with regulatory and governance reforms, integrate supply chain incentives and accountability, and strengthen institutional capacity to co-create solutions that are scalable, investment ready, and sustainable.