Integration for greater impact

8.3 GEF strengths in engaging the private sector

A key competitive advantage of the GEF in private sector engagement is its convening power. The GEF is able to bring together multiple stakeholders—businesses, industry associations, national governments, and communities—across sectors and countries to drive systemic, multicommodity transformation of global value chains (box 8.2). Further, the GEF can combine grants, policy reform, and blended finance in ways few other institutions can. Grant-based market transformation projects are particularly effective in facilitating multistakeholder collaboration through platforms that address both global supply and demand, as well as sectorwide and landscape-level challenges. Examples of the GEF’s convening power are the Roundtable on Sustainable Soy in Paraguay and the Roundtable on Sustainable Palm Oil in Indonesia, which have large local memberships. Roundtables have been an important private sector entry point as they build awareness among government and business leaders of how private sector engagement can complement national development priorities and support climate change and biodiversity objectives. In Africa, the Circular and POPs-free Plastics Project (GEF ID 11049, United Nations Environment Programme [UNEP]) unites regional and global actors—such as the Global Plastic Action Partnership, the Platform for Accelerating the Circular Economy, and the Ellen MacArthur Foundation—to promote circular economy solutions. The Sustainable Rice Landscapes Initiative, active across Asia, includes more than 80 private partners and is developing a $1 billion investment facility with the Green Climate Fund and the International Finance Corporation (IFC). The program’s consortium model simplifies private sector engagement by consolidating efforts under a single coordinated platform.

Through its NGIs and Innovation Window, the GEF has consistently demonstrated its ability to support early-stage, high-impact environmental solutions. Stakeholders widely acknowledge the GEF’s unique capacity to engage in markets and sectors deemed too risky by other financiers. This ability enables the testing and de-risking of ventures that might otherwise struggle to attract capital. Leveraging its risk tolerance, flexibility, and broad environmental mandate, the GEF plays a catalytic role in crowding in private investment and paving the way for replication and scale. The Partial Risk Sharing Facility for Energy Efficiency in India (GEF ID 4918, World Bank) demonstrates how NGIs can catalyze private investment and de-risk markets. With $19.8 million in GEF grants, the project mobilized $119.9 million in private capital, supported energy efficiency through partial guarantees, institutionalized performance contracting, and strengthened stakeholder capacity. Another successful NGI is the above-mentioned Wildlife Conservation Bond in South Africa. The $43 million Innovative Use of Financial Instruments for Biodiversity Conservation and Restoration in Latin America and the Caribbean (GEF ID 11324, IDB) project exemplifies GEF support for sovereign debt conversions aimed at enhancing biodiversity and conservation financing, providing support for debt for nature swaps with convertible guarantees. These and other examples underscore how nongrant resources can be strategically deployed to incentivize conservation outcomes and mobilize private capital.

Stakeholders cautioned that, under current practice, it can be difficult to structure and gain approval for projects that combine grant and nongrant elements; nevertheless, there are successful examples. One such example is the GEF-6 Green Logistics Program (GEF ID 9047, EBRD), which blended NGI and technical assistance to support energy efficient logistics. Piloting Innovative Investments for Sustainable Landscapes (GEF ID 9719, UNEP) also represents this approach and proves the GEF’s aptitude for early-stage risk-taking; this initiative was later scaled up by the Green Climate Fund in the Climate Investor One blended finance facility. The IDB-PPP MIF [Multilateral Investment Fund] Public-Private Partnership Program (GEF ID 4959) has successfully invested in several equity funds in Latin America and has managed to reach environmental and financial goals. This combination of grant and nongrant elements attracted private capital to nature-based solutions, enabling scalable agroforestry models that deliver both financial returns and global environmental benefits. Another example of a project combining both grant (capacity building) and nongrant (concessional finance) elements is the South Eastern Mediterranean EE/ESCO Markets Platform (GEF ID 5143, EBRD). Spanning five countries, this program successfully blended concessional finance with capacity-building efforts. By working closely with operational focal points, EBRD was able to deploy innovative financing mechanisms—such as private-to-private renewable energy contracts and carbon credit–based financing—across high-risk markets. The initiative mobilized over $198 million in cofinancing and demonstrated how technical and financial collaboration can produce replicable, investment-ready models.

GEF Agencies engage the private sector in distinct yet complementary ways, reflecting their institutional strengths and mandates. MDBs—such as the World Bank Group (including IFC and the International Bank for Reconstruction and Development), IDB, AfDB, the Asian Development Bank, and EBRD—have the legal, financial, and institutional frameworks to structure and deploy NGIs at scale. They are equipped to cofinance GEF projects with their own investment capital, leveraging GEF financing into catalytic instruments such as loans, guarantees, and equity. In some cases, this leverage has resulted in high cofinancing ratios, as seen in the Promotion of Non-fired Brick Production and Utilization (GEF ID 4801, UNDP) project, where a ratio exceeding 32:1 was achieved. IFC and IDB have dedicated blended finance units with specialized expertise in structuring layered capital to share risk. This capability has permitted these private sector–facing divisions to manage pipelines of smaller, high-impact projects in accord with GEF objectives under a shared set of environmental, fiduciary, and reporting standards. A precedent for this model was the GEF Earth Fund Platform (GEF ID 4257; World Bank/IFC).

United Nations agencies and international nongovernmental organizations typically focus on creating enabling environments, delivering technical assistance and fostering community engagement—critical foundations for long-term investment readiness, especially in sectors or regions where private finance is nascent. Recognizing and coordinating these complementary roles is essential to scale private sector engagement across diverse geographies and focal areas.