Scaling Up Private Action for Nature

Executive summary

The case for scaling up private action

Biodiversity underpins development, economic activity and human well‑being, yet current production and consumption patterns are driving ecosystem degradation, particularly in developing countries where livelihoods directly depend on nature. The private sector both depends on and impacts biodiversity. Sectors such as agriculture, fisheries, forestry, mining, tourism, infrastructure and textiles rely heavily on nature but also drive deforestation, habitat conversion, over-exploitation and pollution, creating systemic economic risks including declining productivity, disrupted supply chains and stranded assets.

Through the Kunming‑Montreal Global Biodiversity Framework (KMGBF), the international community has committed to halt and reverse biodiversity loss by 2030 and align all financial flows with biodiversity goals by 2050. Private momentum for biodiversity is increasing, but alignment remains limited. Key constraints include low awareness of nature‑related risks, limited capacity and high transition costs – especially for small-scale producers. At the same time, the value of biodiversity remains poorly reflected in economic decisions, leading to negative externalities and under-investment.

Public action will remain central to address biodiversity loss, particularly where there are limited incentives and low profitability for the private sector, with public, private and blended finance playing complementary roles across different stages of biodiversity projects. In this context, development co‑operation can help scale up private action for nature through three interlinked entry points: strengthening enabling environments, promoting private sector engagement and mobilising private finance.

Entry point 1: Strengthening enabling environments

A strong enabling environment is essential to halting and reversing biodiversity loss and shaping private sector decision making, encompassing capital allocation, supply chains, and production and consumption practices. Development actors can help strengthen these environments by supporting partner countries to improve policy coherence, design, pilot and scale positive incentives, develop national capacities and strengthen market infrastructure.

Enabling environments operate through complementary levers that address interacting market failures. These include: regulatory frameworks (e.g. sectoral regulation; intellectual property and innovation incentives; property rights for land and natural resources; trade policies and public procurement); economic instruments that adjust price signals (e.g. payments for ecosystem services, biodiversity‑related taxes and fees, biodiversity offsets and emerging voluntary biodiversity credits, and reforms of environmentally harmful subsidies); market infrastructure (e.g. monitoring, reporting and verification systems, registries).

Together, these levers can foster certainty for long-term investment, strengthen investor confidence and translate into private sector responses, while helping to mainstream biodiversity and avoid harm. Achieving systemic change requires effective institutional co-ordination (including finance ministries) and consideration of local perspectives.

Entry point 2: Promoting private sector engagement

Private sector engagement is necessary to translate policy ambitions into changes in business models, value chains, and investment and financial decisions, including by raising awareness and enabling private sector participation in developing countries. Development co-operation can act as a bridge between biodiversity objectives and market expectations, catalysing private sector engagement that aligns trade, market development and nature-positive transitions.

Development co‑operation engages with private actors from both donor countries or partner countries (from both the real economy and the financial sector) through multiple modalities, including direct partnerships; collaboration through international and local intermediaries such as banks, implementing partners, and funds; participation in multi‑stakeholder platforms and public‑private partnerships; and via embassies and country offices. These modalities allow development actors to leverage private expertise, networks and capital. Local presence in particular improves geographical intelligence and enables more tailored and timely engagement and partnerships.

Priority areas for private sector engagement for biodiversity goals include enabling trade facilitation and market access; building productive capacity; promoting sustainable supply chains (e.g. through responsible business conduct standards, environmental safeguards and impact assessments); fostering innovation and entrepreneurship; strengthening traceability systems; enabling informed private sector decision making through data and technology; and supporting knowledge exchange and policy dialogue.

Entry point 3: Mobilising private finance

Private finance for biodiversity remains far below what is needed. A key barrier is the difficulty of structuring bankable projects with scalable revenue streams. Mobilising private finance therefore requires focusing on the underlying assets that generate revenues linked to biodiversity outcomes and improving the risk‑return profile of projects. Development co‑operation can use development finance strategically – including blended finance, guarantees and catalytic capital – to de‑risk projects and attract private investors.

Three revenue-generating pathways are particularly important: revenues generated directly from biodiversity-related assets such as nature-based solutions in infrastructure or biodiversity-linked use-of-proceeds bonds; revenues from broader sustainable investments that are partly redirected to biodiversity outcomes, for example through sustainability-linked loans, debt-for-nature swaps and results-based or impact-linked finance; and revenues generated through existing environmental markets, notably by integrating biodiversity into carbon markets to create additional revenue streams for nature-based projects while improving the integrity of projects. These pathways are complementary, but they all depend on credible revenue models, manageable risk and a supportive enabling environment.

Implications for development co-operation

Achieving the targets of the KMGBF requires progress across all three entry points – enabling environments, private sector engagement and private finance mobilisation. Development co‑operation can play a catalytic role by aligning policies and financial frameworks, strengthening institutions and strategically deploying grants and de-risking instruments to unlock private investment aligned with national biodiversity priorities.

Progress will be incremental and will depend on careful sequencing and stronger partnerships among public and private actors, with trade standing out as an important channel for influencing private sector behaviours through supply chains and value chains.