Scaling Up Private Action for Nature

3. Private sector engagement

Abstract

Development co-operation can promote private sector engagement across actors in the real economy (e.g. MSMEs, cooperatives, farmers) and the financial sector (e.g. pension funds, asset managers, commercial banks) to accelerate the transition towards biodiversity-positive value chains, production systems and investment practices. This chapter explains why private sector engagement is critical to raise awareness, translate policy ambitions into operational change and build momentum for nature-positive markets. It maps key private sector engagement modalities: direct partnerships with private actors from donor and partner countries, indirect engagement through intermediaries (e.g. financial institutions, local banks, implementing partners), participation in multi-stakeholder platforms, and the use of diplomatic networks through embassies and country offices. It highlights priority areas for engagement such as sustainable supply chains, trade facilitation, market access, responsible business conduct, traceability systems, innovation and entrepreneurship, digital tools and capacity development. The chapter also underscores the importance of local partnerships, knowledge exchange and dialogue to build trust, reduce information gaps and support long-term transitions. Development co-operation can play a convening and catalytic role by aligning biodiversity objectives with market opportunities and strengthening the capabilities of private actors to manage nature-related risks and opportunities.

Private momentum for biodiversity is ramping up, but alignment remains limited

While the broader enabling environment shapes the conditions under which businesses operate and investments are made (see chapter 2), private sector engagement is also essential for scaling up private action for biodiversity. For development co-operation providers, private sector engagement refers to efforts to work with the private sector both in their own countries and in partner countries to achieve development and biodiversity results. Activities can include technical assistance, training and capacity development to comply with and respond to environment-related regulatory and market requirements; dissemination of standards and good practices; awareness raising to support changes in business models and operational practices; and support to strengthen biodiversity-based supply chains while fostering employment and income generation.

The private sector spans a very broad and highly diverse spectrum. It includes real economy actors such as MSMEs, smallholder farmers, cooperatives, trade unions and multinational companies. Their operation and supply chains have a direct impact on nature as well as financial sector actors such as commercial banks, asset managers, pension funds, insurers, private investors and other financial institutions. The latter influence nature indirectly through their financing to both the real economy and the financial economy (Zabel, Nanhthavong and Epprecht, 2025[1]; WWF/AXA Group, 2019[2]). In particular, financing moves between a myriad of actors and players that constantly adjust their investment strategies in response to market conditions and over different time horizons. Through their differentiated roles, private actors can either exacerbate environmental degradation or help steer economic activity towards nature-positive pathways.

In recent years, private sector momentum has increased in recognition of biodiversity’s relevance for long-term economic stability and environmental integrity. Businesses and financial institutions are increasingly integrating biodiversity considerations into their decision making processes and engagement strategies (ShareAction, 2023[3]), as well as into their corporate business and social responsibility programmes. In some cases, biodiversity and broader environmental topics are also integrated into commercial strategies, risk management and assessments, supply chain sourcing, and long-term value creation models. This momentum is reflected in collective calls to action such as Nature Action 100 (2024[4]) and act4nature International (2020[5]) and also in a range of sector-wide pledges (Finance for Biodiversity Foundation, 2026[6]; UNEP FI, 2024[7]; Robinson-Tillett, 2023[8]) that show growing co-ordination and awareness among investors and businesses.

Despite this increasing engagement, alignment remains limited. While 85% of the world’s largest companies are highly dependent on nature for their direct operations, only 2% have the necessary biodiversity expertise on their boards (S&P Global, 2023[9]; World Benchmarking Alliance, 2024[10]). In addition, a recent study found that about 8 100 companies on the MSCI ACWI IMI Investable Market Index were strongly misaligned with biodiversity-related Sustainable Development Goals (SDGs) 14 (life below water) and 15 (life on land) (Nair and Balaisyte, 2023[11]). Adverse impacts of their business activities from the use or management of natural resources (e.g. through mining, timber production and unsustainable agriculture) were largely responsible for the misalignment. Overall, most companies are still in the early stages of addressing nature-related impacts and dependencies (Nature Action 100, 2024[12]), and financial institutions typically prioritise environmental issues when these are financially material, affecting risks, returns or long-term value (High-Level Expert Group on Sustainable Finance, 2017[13]).

These limitations are reinforced by low awareness of nature-related risks, limited biodiversity expertise at board and operational levels, and gaps in reliable and harmonised data, methodologies and analytical tools (see Annex A). For example, most private actors do not currently assess, manage or disclose material biodiversity-related risks (OECD, 2021[14]) and few evaluate the broader impacts of their investment decisions on people and the planet. New data, metrics and reporting frameworks are emerging to fill this gap (ShareAction, 2023[3]), among them the Biodiversity Finance Metrics for Impact Reporting developed by the International Finance Corporation (IFC) (2024[15]) and a guide developed by MDBs to support the selection of metrics for monitoring outcomes of nature finance initiatives (Lacey et al., 2025[16]). However, the proliferation of standards and reporting frameworks also creates complexity, increasing transaction costs, uncertainty and the potential for duplication of efforts, particularly for small-scale and innovative actors with limited resources to interpret and operationalise multiple frameworks. Scaling up private action therefore requires not only a better understanding of what interventions work and where (World Bank, 2022[17]), but also efforts to improve coherence and avoid unintentionally adding further layers of complexity.

This chapter examines how development co-operation can support private sector engagement to align private actors with biodiversity-positive pathways. It outlines the main modalities through which development co-operation engages with private actors and examines how these modalities are applied in practice to deliver development and biodiversity outcomes. It also highlights the importance of trade, including sustainable supply chains and market development, as a key channel area for private action on biodiversity.

Private sector engagement modalities

Many development co-operation providers, and DAC members in particular, have a long history of working with the private sector to leverage private capital and technical expertise, develop capacities and integrate biodiversity into market-based solutions. For others, private sector engagement is relatively new to their development co-operation portfolios, especially such engagement in relation to biodiversity.1 Development co-operation providers may partner with private actors in either donor or partner countries, and engagement strategies may vary by sector, geography and partner type (UNEP FI, 2024[18]). But, regardless of their level of experience, development actors overall are looking for new and better ways to engage the private sector in development co-operation.

Development actors can strengthen private engagement for biodiversity through a variety of different but complementary modalities:

• direct partnership with the private sector in either donor or partner countries,

• partnership with (financial) intermediaries,

• participation in collaborative or multi-stakeholder platforms for biodiversity,

• private sector policy dialogue and project support through embassies, country and/or regional offices.

Partnering with the donor country’s private sector can increase collective ambition, promote sustainable practices, strengthen operations and supply chains and mobilise private finance. Belgium, for instance, supports chocolate producers, retailers, trade unions, certification organisations, universities, non-governmental organisations (NGOs) and social impact investors in the Belgian chocolate industry through the Beyond Chocolate partnership to end deforestation and support the living income of cocoa growers (IDH, 2024[19]). Similarly, Italy’s Mattei Plan for Africa seeks to mobilise Italian companies and SMEs in agricultural supply chains across African countries by leveraging Italy’s diplomatic and consular network and partnerships with local institutions, financial institutions and MDBs; the aim is to promote innovation and sustainability and strengthen local value creation in support of food security and the sustainable management of natural resources in line with the EU’s Global Gateway strategy (Presidency of the Council of Ministers of Italy, 2025[20]; Presidency of the Council of Ministers of Italy, 2026[21]).

However, development agencies may lack instruments through which to finance private actors directly (see Annex B), and they are not always directly involved in the process of looking for a local partner, often relying instead on implementing partners or financial intermediaries such as local or international commercial banks, investment funds, international organisations or civil society organisations (CSOs) that work with, or help with the outreach to, local private sector actors. Engagement can also take place indirectly through sovereign counterparts and donors’ own national agencies and executive bodies (e.g. DFIs, enterprise agencies, funds and development banks). Partnering with local intermediaries such as financial actors (including local banks, national promotional banks and microfinance institutions) can help overcome access barriers to markets by facilitating the extension of loans in local currency and reaching smallholder farmers and cooperatives.

Development actors can also tap into other existing collaborative initiatives and work with other governments, DFIs, MDBs and vertical environmental funds such as the Global Environment Facility (GEF), the Green Climate Fund (GCF) and conservation trust funds to stimulate private finance mobilisation and engagement. Another modality is to align with initiatives established by private actors. For example, after Nestlé initiated its Cocoa Plan to promote forest regeneration, good agricultural practices and improve living income in Côte d’Ivoire, Switzerland began supporting the plan through the Swiss Platform for Sustainable Cocoa (SWISSCO) in partnership with cocoa and rubber cooperatives and foundations (Nestlé, 2025[22]).

Indeed, working through intermediaries and partners can help with aggregation, facilitate smaller transactions and help build trust and local engagement. By facilitating better logistics chains, certification systems and dialogue among market and local actors, development co-operation providers can support the creation of viable biodiversity-based supply chains, strengthen fair trade and promote inclusive economic growth.

In countries where providers have embassies, local offices and in-country capacities for engagement, the engagement of private sector actors can generally be more responsive and tailored. Local missions in particular can play an important role in supporting donor country companies and local private actors in partner countries, including by helping to identify local partners; facilitate dialogue; structure and implement projects; provide tailored advisory services and market research; and support awareness raising and information sharing on geopolitical context and upcoming projects supported by official development assistance (ODA) and tenders.

Such modalities are often supported by enabling regulation (chapter 2) and financial support to facilitate the transition for smallholders, trainings and technical assistance, among others. Overall, there is a common trend among development actors to collaborate more closely with private sector companies originating from their own countries (in the case of bilateral co-operation). Together, these engagement modalities enable development co-operation to influence how goods and services are produced, traded and consumed, making them directly relevant to trade policy, market access, supply chain sustainability and the development of nature markets.

Key areas for promoting private sector engagement for biodiversity

Private sector engagement through development co-operation in support of biodiversity outcomes relates to a range of thematic areas of intervention where private sector behaviour, investment decisions and business practices most directly affect biodiversity pressures. In these areas, development co-operation can play a key role by raising information and awareness, reducing barriers and building connections and networks, and strengthening capacities.

While not an exhaustive list, key areas for private sector engagement for biodiversity include the following: trade facilitation and market access, building productive capacity, sustainable supply chains, fostering innovation and entrepreneurship, traceability, enabling informed private sector decision making, and supporting knowledge exchange and policy dialogue. This section presents examples for the different key intervention areas for development co-operation to promote private sector engagement for biodiversity. Annex C presents additional examples.

3.1.1. Trade facilitation and market access

Trade and markets constitute a critical transmission channel through which private sector behaviour, investment decisions and business models shape biodiversity outcomes. Through global value chains, trade links production in one part of the world with consumption in another, influencing how natural resources are extracted, transformed and used across borders. As such, trade provides an opportunity to introduce incentives, business practices and standards for biodiversity that can be instrumental in expanding access and value addition in export markets that would not be feasible in domestic markets alone. Trade facilitation and market access are therefore critical components for scaling up private action on biodiversity as they shape the conditions under which private actors participate in international markets and respond to sustainability-related demand.

Conversely, different and new environmental standards and regulatory requirements in importing countries – such as different (eco)labelling, certification or traceability requirements – can create significant compliance costs and uncertainty for producers in exporting countries, particularly in developing countries. Exporters may need to adapt production processes, maintain multiple product specifications and invest in monitoring and understanding regulatory requirements, which can raise costs and limit their ability to compete in sustainability-oriented markets. This is in particular the case for international markets where trade partners may apply different domestic standards. These challenges are particularly acute for low-income countries, where compliance with NTMs2 tends to be relatively more costly than in high-income countries (OECD, 2025[23]; FAO, 2022[24]). Chapter 2 provides additional information on the impact of trade policies.

The challenges raised by new standards and regulations are particularly relevant for MSMEs, cooperatives and local actors, which are a critical leverage point for sustainable development. MSMEs account for 90% of businesses and more than 50% of employment globally (OECD/WTO, 2024[25]), while cooperatives support more than 100 million jobs worldwide and play an important role in overcoming trade barriers between developed and developing countries through fair trade (ILO, 2014[26]). However, these actors frequently face barriers to scaling operations, accessing markets, or meeting the stringent certification and regulatory requirements for export, with constraints often compounded by lack of awareness, technical capacity and financial resources.

Many importing countries have taken measures to reduce these pressures from the environmental footprints embedded in their consumption and trade, including by conditioning market access on more sustainable production practices. For example, the EUDR, which repeals the EU Timber Regulation and enters into application in 2026-27, will require palm oil, soybeans, wood, cocoa, coffee, cattle and derived products entering the European market to be deforestation free (European Commission, 2026[27]). This and related measures have direct implications for exporters and other private actors involved in partner countries that must adapt productions systems and supply chains to comply with foreign regulatory requirements.

As geopolitical dynamics, uncertainty and national security concerns increasingly shape trade relations, ensuring that the international trading system contributes to nature and sustainable development objectives will require greater efforts from international development actors (Deere Birkbeck, 2025[28]).

Development co-operation can support partner countries in responding to these evolving trade requirements by facilitating awareness, alignment and compliance with environmental regulations. For example, the EU supports the EU-Brazil Green Finance Center for research and training on sustainable finance and EU Green Deal innovations (Ibmec, 2024[29]). The initiative engages Brazilian public and private actors to, for example, raise awareness, prepare for implementation of upcoming regulations (e.g. EUDR) and address competitiveness issues arising from differences in taxonomies (e.g. nature or carbon credits), while promoting the combination of economic growth and the protection of natural resources, such as the Amazon Rainforest.

Beyond the compliance challenge, there is a mismatch between the demand for biodiversity-related investments and sustainable products in the Global North and the supply of investment opportunities and bankable projects in the Global South (Zabel, Nanhthavong and Epprecht, 2025[1]). Development co-operation can bridge this gap by stimulating both supply and demand, including through partnerships and matchmaking platforms that link local project developers, producers and enterprises with investors and buyers (WWF/AXA Group, 2019[2]). Finland, for example, provides support for Finnish companies for their sustainable development partnerships and business opportunities in developing countries, including guarantees to help manage the political or commercial risks associated with export financing (Ministry of Foreign Affairs of Finland, 2026[30]). Similarly, the Italian Agency for Development Co-operation (AICS) has partnerships involving Italian coffee companies, such as Lavazza and Illy, to strengthen African coffee supply chains, upscale production, promote and sell local products, and improve the quality and competitiveness of coffee in partner countries (Italian Agency for Development Cooperation, 2024[31]).

Development co-operation can help reduce trade barriers more broadly by lowering transaction costs, optimising customs procedures and logistics, and increasing competitiveness, thereby facilitating the export of sustainable products and biotrade. These interventions streamline export compliance and integrate local actors into both domestic and international markets. Such support can be particularly impactful for rural and coastal communities engaged in nature-dependent sectors such as sustainable agriculture or ocean-based value chains. For example, Czechia provides business-to-business grants to strengthen sustainable sheep wool supply chains for export from Kyrgyzstan to the EU, improving logistics and value chain integration (Czech Aid, 2024[32]). Austria has partnered with Donau Soja to support the transition of crop producers, businesses and market actors towards responsible and environmental practices in Bosnia and Herzegovina, the Republic of Moldova, Serbia and Ukraine, improving their access to value-added markets and integration into value chains of sustainable, traceable, European and non-genetically modified (non-GMO) crops, thereby also contributing to local economic development and poverty reduction. The initiative also strengthens linkages and trade integration between non-EU and EU value chains by facilitating compliance with emerging EU regulations on deforestation and corporate sustainability requirements (Donau Soja, 2024[33]).

Trade and trade-related policies and measures are relevant to achieving all the targets in the KMGBF (Box 3.1).

Box 3.1. Trade and biodiversity in the context of the Kunming-Montreal Global Biodiversity Framework

International trade can play a dual role for biodiversity, acting both as a driver of biodiversity loss and as a potential enabler of conservation and sustainable use (UNEP, 2024[34]). Through its influence on production, consumption, investment and supply chains, trade shapes pressures on ecosystems across borders. Sustainable trade can support the conservation of ecosystems and species and address drivers of biodiversity loss. In consequence, trade policy and trade-related measures are relevant to achieving all targets in the KMGBF (UNEP/TESS, 2023[35]; Kettunen, 2023[36]). Several KMGBF targets have particularly strong linkages to trade and global value chains, making trade an important entry point for private sector engagement on biodiversity:

• Target 5 (wildlife trade) directly links biodiversity to trade regulation, calling for controls, traceability and restrictions on illegal and unsustainable wildlife trade, including through instruments such as the CITES.

• Target 6 (invasive alien species) is closely connected to trade and transport pathways as living organisms in shipping, ballast water and trade are key vectors and thus require co-ordinated biosecurity and trade-related measures.

• Target 10 (sustainable agriculture, fisheries, aquaculture and forestry) addresses sectors with large export markets where standards, incentives and international trade conditions can shift production towards biodiversity-positive practices.

• Target 13 (access and benefit sharing) has trade dimensions through international research, commerce and bio-based value chains (e.g. seeds and pharmaceuticals), including the exchange of genetic resources and DSI.

• Target 14 (mainstreaming biodiversity) implicitly covers trade and investment policy given the significant biodiversity footprint of globally traded commodities and supply chains.

• Target 15 (businesses disclosure and supply chains) directly affects trade by promoting traceability, due diligence and transparency, influencing how companies manage biodiversity risks across international value chains.

• Target 16 (sustainable consumption) addresses demand-side drivers of biodiversity loss embedded in trade, as imported goods carry hidden biodiversity impacts that can be reduced through sustainable consumption and circular economy approaches.

• Target 18 (enabling sustainable choices on consumption and production) is directly related to trade and to international efforts to reform environmentally harmful subsidies such as the WTO Agreement on Fisheries Subsidies, which aims to avoid the widespread depletion of the world’s fish stocks.

3.1.2. Building productive capacity

Building productive capacity is a core dimension of both private sector engagement for biodiversity and of aid-for-trade programmes, particularly in nature-dependent sectors such as agriculture, forestry, fisheries, minerals and tourism (OECD/WTO, 2024[25]). Engagement in this area encompasses interventions to strengthen how goods and services are produced, processed and integrated to the market. It also includes support of transition to sustainable practices (e.g. supporting farmers to adopt regenerative agriculture or water-efficient systems contributing to upfront costs and new equipment). Development actors often support these efforts through grants and technical assistance, in contrast to economic infrastructure projects that tend to rely more on concessional loans. Private actors can also participate in collaborative platforms for biodiversity such as the Farmer First Clusters initiative, founded by five major agri-business companies as part of the World Business Council for Sustainable Development’s Soft Commodities Forum landscapes transformation efforts to support the adoption of deforestation- and conversion-free soy production in Brazil (Business Action Bank, 2026[37]).

By supporting the development of productive sectors and value chains, development actors can contribute to improving livelihoods, promoting sustainable natural resources use and enabling economic diversification, while also shaping how private actors engage with biodiversity. For example, Czechia is helping private actors in Zambia produce environmentally friendly anti-mosquito repellents (Czech Aid, 2024[38]), stimulating the growth of local manufacturing and value-added production in nature-based sectors.

Providers can also help smaller producers and enterprises participate more effectively in nature markets by supporting them to reach scale (e.g. maximising the capacity of production by working with cooperatives at a regional level) and by strengthening export logistics chains (e.g. organic fruit production) across countries. For example, the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (German international co-operation agency, GIZ) supports Amazonian cooperatives, associations and SMEs to expand their commercialisation in priority bioeconomy value chains, providing trainings on co-operative management and improving access to better and fairer markers in order to protect forest resources (GIZ, 2024[39]). Similarly, the Agence Française de Développement (AFD) and Brazil’s commercial bank Banco da Amazônia, alongside technical assistance from Expertise France, are partnering to finance research and innovation in bioeconomy and socio-biodiversity value chains in the Amazon, support programmes involving Indigenous peoples and local communities, and mobilise private sector participation, while creating jobs, generating local income and protecting biodiversity (AFD, 2024[40]; AFD, 2025[41]).

Building productive capacity also implies strengthening the ability of private actors to meet sustainability standards and adopt improved production practices. For example, through training and institutional support development actors can help establish and operate certification and licensing systems (including on good agricultural and aquaculture practices, forestry standards, and, where relevant, credit certification). These interventions help producers, companies and smallholders improve production practices, reduce biodiversity impacts, and access higher-value and sustainability-oriented markets. Box 3.2 provides examples of how these elements come together in practice through partnerships between development actors and private sector actors to strengthen productive capacity and resilience in sustainable supply chains.

Box 3.2. Partnering with the private sector for sustainable and resilient supply chains: Examples from the Asian Development Bank

The Asian Development Bank (ADB) has expanded its support for biodiversity and natural capital across Asia and the Pacific. It increasingly partners with private sector actors, including companies and smallholder farmers, to promote sustainable and resilient agricultural and commodity supply chains and facilitate export. The ADB also has been mainstreaming biodiversity in loans, grants, knowledge support and technical assistance while mobilising innovative financing, including issuing thematic bonds, to scale up and catalyse investments for nature-positive projects and business practices in developing countries (ADB, 2025[42]).

In the fisheries sector, the ADB and the Thai Union Group PLC (Thai Union) signed a blue financing agreement to improve the sustainability of Thailand’s shrimp supply chain. This partnership provided financing for Thai Union’s requirements for procurement, processing and exports of sustainable shrimp¹ and helped fund extension services such as training shrimp farmers in resilience and financial literacy, certification support, research, and piloting projects (ADB, 2025[43]).

Similarly, in the agroforestry sector, the ADB partnered with PT Dharma Satya Nusantara Tbk (DSNG) through a sustainability-linked loan to promote sustainable sourcing of wood (e.g. replacing timber by farmed native trees), thereby preventing deforestation while also supporting rural livelihood development in Indonesia. Pricing adjustments are linked to the achievement of annual sustainability targets, including training farmers to obtain Forest Stewardship Council certification (ADB, 2023[44]).

Beyond individual firms, the ADB has also supported regional agri-commodity supply chains through investments across India, Indonesia, Pakistan and Viet Nam. In India, the project provided training to smallholder cotton farmers in regenerative farming practices while the client pursued Regenagri certification to improve soil microbial diversity. In Indonesia, the ADB partnered with a forestry company to support smallholder agroforestry farmers and develop a landscape-level certification with the Rainforest Alliance, promoting diversified and sustainable production systems over monocropping (ADB, 2025[42]).

1: According to the ADB, shrimp is considered sustainable when certified under an accreditation recognised by the Global Sustainable Seafood Initiative, such as the Aquaculture Stewardship Council or Best Aquaculture Practices, or when sourced from a credible aquaculture improvement project.

3.1.3. Sustainable supply chains: RBC standards and environmental safeguards

Global supply chains contribute substantially to biodiversity loss (UNEP, 2024[34]). A growing set of policy and market tools – RBC standards, reporting frameworks, sustainability taxonomies, environmental safeguards and EIAs – aim to address this challenge by helping private actors identify, assess, manage and disclose biodiversity-related impacts, dependencies and risks across operations and value chains. These tools can also shape trade practices and market access, by underpinning due diligence and disclosure requirements, including on environmental impacts, across cross-border production networks.

By adopting RBC standards such as the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, enterprises can prevent and mitigate adverse effects while contributing to sustainable development in the countries where they operate (OECD, 2023[45]). Development actors can facilitate the implementation of RBC standards, for example by requiring in their financial support targeting the private sector that the standards be applied, directly or through intermediaries, or by promoting their uptake beyond supported activities, including through voluntary adoption by private actors. As an example, development actors can encourage enterprises to identify, assess and mitigate environmental impacts in their own operations and across global value chains (OECD, forthcoming[46]).

Voluntary and mandatory biodiversity-related reporting and disclosure frameworks complementing RBC frameworks, help translate risk and impact identification into useful information for decision making. These frameworks can help private actors understand nature-related dependencies and impacts, align corporate disclosures with broader environmental goals and inform decisions to reduce environmental risks and support sustainable practices (BlackRock, 2025[47]). Development actors are supporting the uptake of these initiatives. For example, Germany’s International Climate Initiative (IKI) is helping businesses and financial institutions in integrating nature-related financial disclosures in their financial statements (International Climate Initiative, 2025[48]). Additionally, development actors can support the development of tools to assess risks and enable better decision making and portfolio management such as the Natural Capital Protocol (Natural Capital Coalition, 2021[49]) and the Exploring Natural Capital Opportunities, Risks and Exposure, or ENCORE (UNEP, 2026[50]).

Sustainability taxonomies further guide the implementation of biodiversity and sustainability-related investment practices by clarifying which activities contribute to environmental objectives. These tools help investors, financiers and enterprises to allocate capital effectively and align portfolios with biodiversity goals. For example, Finland’s DFI Finnfund along with Finnish family offices developed the Planetary Boundaries Investing Framework, a tool for assessing and monitoring the potential of investments to contribute to nature goals. This framework guides private sector participation in co-investments for development and informs private sector engagement and partnerships (Finnfund, n.d.[51]).

Development actors in particular can encourage or require the use of recognised safeguards within their partnerships, co-investments and procurement processes, thereby creating incentives for companies to adopt higher biodiversity standards. For instance, partners could be required to apply safeguards such as IFC Performance Standard 6 on biodiversity conservation and sustainable management of living natural resources, which provides a structured approach for managing biodiversity-related risk in private sector projects (IFC, 2012[52]). Similarly, development actors can promote or condition support on the use of recognised management standards and certifications, such as those developed by the International Organization for Standardization (ISO) for biodiversity (e.g. ISO 172698), which help companies systematise biodiversity risk management, demonstrate good practice, and meet market and investor expectations (OECD, forthcoming[46]).

3.1.4. Fostering innovation and entrepreneurship

Stimulating entrepreneurship and scaling biodiversity-aligned innovation are essential to create viable business models for nature such as diversified cropping systems, natural habitat restoration within farms and new revenue streams tied to ecosystem outcomes. Development co-operation actors are supporting accelerators, incubators and pilot programmes that help entrepreneurs develop and test biodiversity-positive solutions, connect with markets and investors, and scale their models. The IDB, for example, launched the NaturaTech Latin America and the Caribbean (LAC) to support to biodiversity-focused startups and demonstration and innovation projects by offering strategic guidance and connecting them to the natural capital financial ecosystem (NaturaTech LAC, 2025[53]). The Nature Finance Accelerator Program established by the Asian Infrastructure Investment Bank (AIIB) has partnered with two Chinese banks to create a non-sovereign on-lending facility focused on supporting nature and biodiversity in People’s Republic of China with the aim of catalysing finance and serving as a scalable demonstration model (Asian Infrastructure Investment Bank, 2025[54]).

Private sector engagement can also take the form of calls for proposals, grants competitions or incubation support for local entrepreneurs. For example, the Slovak Republic, in co-operation with the UNDP, launched the Slovak Challenge Fund (SCF) in 2019 to support Slovak companies in developing and scaling solutions to address development goals including natural resources and NbS3 in partner countries while working in partnership with local entities (Slovak Challenge Fund, 2025[55]). Similarly, the IDB Lab’s Digital Tokens for Biodiversity Challenge sought to identify innovative digital solutions (e.g. tokens and crypto-assets) from startups, accelerators, SMEs, non-profits, businesses and public innovation agencies across 21 LAC countries to offer monetary incentives to promote biodiversity conservation, sustainable agriculture, expand smallholder farmer access to credit and ensure transparent, traceable transactions (Inter-American Development Bank, 2023[56]).

In addition, development co-operation providers can support strategic partnerships by working with a range of delivery partners or by tapping into broader emerging or innovative financing solutions to scale biodiversity outcomes. An example is the Danish Ministry of Foreign Affairs supported the Sounds Right multi-stakeholder partnership initiative of the Museum for the United Nations – UN Live, involving the collaboration of musicians, companies, private foundations, nature sound recordists and CSOs. Sounds Right’s innovation was registering “nature” as an official artist on music streaming platforms, and the royalties generated are directed to biodiversity protection and conservation projects (Museum for the United Nations, 2026[57]).

3.1.5. Traceability

Traceability systems enable businesses to track products and their biodiversity impacts throughout the value chain, strengthening transparency, trust and the adoption of sustainable practices (FAO, 2022[24]). Development actors can support the establishment and uptake of traceability systems across supply chains. In particular, they can support the acceleration of digitalisation and use of new technologies to enhance cross-border digital exchanges that increase automation and effective control. Better information on where and how traded products are produced, transported and consumed helps private actors assess biodiversity impacts, comply with sustainability requirements, and respond to consumer and market expectations.

Such support can include digitising certification and customs processes, which can improve supply chain traceability and reduce ecological footprints in cross-border trade while also reducing the administrative burden for legitimate trade and help fight illegal activities, including illegal wildlife trade (OECD/WTO, 2024[25]). Germany, for instance, supports traceability and enforcement efforts to fight illegal wildlife trade across global supply chains from countries of origin and transit countries to consumer countries. This support includes training for enforcement authorities in partner countries on dealing with poaching, with a focus on ivory consumer demand and changing local behaviours, as well as for promoting alternative sources of income for local communities (BMZ, 2020[58]).

In addition, innovative digital tools in nature as an asset class, such as digital tokens, are being explored as mechanisms to raise funds for nature-based projects and provide greater supply chain traceability and transparency (Gómez Mont, Persson and Buenadicha Sánchez, 2023[59]). For example, the IDB has launched a Digital Tokens for Biodiversity Challenge to support startups and enterprises in piloting projects. This includes support for the implementation of a prototype for the tokenisation of natural capital in the Colombian Amazon through the Indii token, whose initial value is based on the valuation of the natural capital of a hectare of Amazonian forest present in the Indigenous reserves (Inter-American Development Bank, 2024[60]; Inter-American Development Bank, 2023[56]). The purchase of these tokens offers the possibility of making financial contributions that are traceable to projects developed by the Indigenous communities.

3.1.6. Enabling informed private sector decision making through better data and technology

Transparency and reliable data on ecosystem conditions, pressures and outcomes all support evidence-based policymaking and strengthen investor confidence in nature markets (Conservation International and EcoAdvisors, 2024[61]). Data is also key to ensure channelling resources to initiatives with proven impact and clear scalability, so that private sector participation becomes a powerful driver of biodiversity conservation and restoration.

However, lack of data and information on biodiversity assets and ecosystem services may constrain public and private decision making and accountability. For instance, gaps still exist in the available evidence of the environmental impacts of agriculture, particularly on biodiversity and soil carbon (OECD, 2025[23]). Moreover, the lack of reliable and standardised indicators makes it hard to assess and price the nature-related risks (See Annex A). These challenges are more acute in regions and countries where baseline data and collection systems are weak, undermining the development of effective legislation, policy and regulation (Nature Finance, 2024[62]). Companies also struggle to assess the long-term impacts of conservation due to gaps in national-level biodiversity data (IPBES, 2019[63]). These uncertainties increase transaction costs and deter private sector participation (European Union, 2023[64]).

Development actors can work to support private sector stakeholders by supporting data generation and technology transfer, by enhancing access to consistent, standardised biodiversity data that can inform investment and business decisions, and improving baseline information useful for the MRV systems mentioned in (chapter 2). Standardisation of biodiversity data can refer to different categories of information, including data on ecosystem stocks (e.g. natural assets or biological resources) and data on ecosystem flows (e.g. ecosystem services, regulation functions and environmental performance), with these informing different types of business risk assessment, valuation and reporting.

As such, this support can include collaboration with data providers, technology developers and other market actors to help build the basis for innovation and market solutions (e.g. biodiversity credits, nature FinTech solutions, for testing technologies like e-DNA remote sensing and bioacoustics) as well as support for farm-level data systems that enable biodiversity-positive sourcing and monitoring of environmental impacts. For instance, the Netherlands’ Geodata for Agriculture and Water (G4AW) Facility supports projects that provide smallholder food producers (farmers, pastoralists and fishermen) with satellite-based information services (G4AW, 2025[65]).

Development actors can also collaborate by exporting science and technology to partner countries to enable them to reduce input use, increase land efficiency and improve soil and ecosystem health. Australia, for example, is looking into the use of artificial intelligence (AI) to support countries on nature conservation and better manage projects and find opportunities for new projects. In this regard, Australia supported the ReefCloud tool for using AI to review photographic images of coral reefs and for blue carbon monitoring and which has been used in Fiji, Maldives, Palau, Solomon Islands and Vanuatu (Australian Institute of Marine Science, 2026[66]). In another example, Slovenia is implementing a water security and sustainable water resource management programme in Kenya, with the Slovenian company SPACE-SI and a local university, to install satellite data to support management of transboundary river basins and ecosystem monitoring (Center for International Cooperation and Development, 2025[67]).

3.1.7. Supporting knowledge exchange and policy dialogue

Development actors can play a catalytic role in facilitating structured dialogues, knowledge exchange and learning platforms that engage both donor country and partner country private actors. While approaches vary across value chains and economic sectors, these collaborative platforms target gaps in technical awareness, such as how to integrate biodiversity considerations into production methods, how to structure financial mechanisms for biodiversity-positive outcomes and how biodiversity can be respected and valued within production lines (e.g. through deforestation-free sourcing standards or biodiversity certification schemes). At the same time, they illustrate how safeguarding nature protects long-term business interests. By convening public and private stakeholders, development actors act as co-ordinators, bringing partners and competitors together to address environmental issues and share best practices. Such engagement facilitates the emergence of strategic partnerships, market development and new biodiversity-related instruments.

In addition, these exchanges build trust, diffuse innovation and strengthen local institutional expertise. For example, the Spanish Agency for International Development Cooperation (AECID), with the International Bamboo and Rattan Organization (INBAR) as an implementing partner, facilitates workshops in Ecuadorian schools on sustainable bamboo construction, building local skills and awareness of circular economy materials, and helps identify opportunities for the use of bamboo (e.g. artisanal crafting) (Spanish Agency for International Development Cooperation, 2021[68]). In addition, AFD and the ADB jointly organised the Paris Dialogue on Innovative Finance for Nature as part of their co-operation on the Nature Solutions Finance Hub (NSFH) to generate productive dialogues and build mutually supportive relationships to mobilise resources for NbS projects (ADB, 2025[69]; ADB, 2024[70]).

Beyond one-off initiatives, networks and coalitions also play an important role in sustaining knowledge exchange, alignment and collective action. Examples include the Coalition for Private Investment in Conservation (2025[71]), which connects conservation project managers and investors to align private sector and government strategies; the International Development Finance Club’s (2025[72]) biodiversity working group, which enables peer learning on mobilising finance for biodiversity and NbS; and the Finance in Common Ocean Positive Coalition, which aims to increase investments in a sustainable ocean economy by focusing on the health of marine and coastal ecosystems (Finance in Common, 2025[73]; Finance in Common, 2024[74]). These collaborations address the need for specialist expertise, helping investors, corporations and fund managers better understand and engage in biodiversity finance and increasing the participation by the private sector in national biodiversity development planning.

Development co-operation actors can also raise awareness on the importance of biodiversity and opportunities to scale up sustainable practices. This includes supporting biodiversity mainstreaming across business strategies and financial decision making. Stakeholder engagement to build awareness can be done with national private and financial institutions, partner country private actors, and local communities and academia. For example, the United Kingdom, through its embassy in Buenos Aires, facilitated a roundtable discussion in Argentina in 2025 between high-level representatives from the private sector and CSOs to raise awareness of nature-related investment opportunities and barriers and to explore possible partnerships and market infrastructure needed to create a nature market. Through its embassy in Colombia, the United Kingdom, along with Sweden and France, supported the Biodiversity Week in Cali to promote environmental education, knowledge exchange and awareness; align leadership; and accelerate innovative financing mechanisms for biodiversity in LAC (Cumbre CEIBA, 2025[75]).

Exploring opportunities for private sector engagement in the context of development and biodiversity

Private sector engagement is essential to translate biodiversity ambitions into changes in business models, value chains and investment and financial decisions. While private momentum is increasing, alignment remains limited, reflecting persistent capacity and technical gaps, lack of awareness, data and technological constraints, and uncertainty around incentives and business cases. In this context, development co-operation can act as a bridge between biodiversity objectives and market expectations by combining partnerships, capacity development and targeted support to enable private participation in biodiversity‑positive pathways, while recognising that progress is likely to be incremental.

Development co-operation providers may partner with private actors in either donor or partner countries through multiple modalities – direct partnerships, intermediaries, multi‑stakeholder platforms, and in‑country networks such as embassies and offices – each suited to different sectors, geographies and partner types. Across these modalities, seven engagement areas emerge as priority channels for action: trade facilitation and market access; building productive capacity; sustainable supply chains (including responsible business conduct standards, safeguards and EIAs); innovation and entrepreneurship; traceability; data and technology for informed decision making; and knowledge exchange and policy dialogue. Local presence can strengthen tailored and timely engagement by improving geographical intelligence, facilitating dialogue and helping identify partners and opportunities where capacity and information constraints are most binding, including to support project structuring and implementation.

Embedding environmental safeguards, EIAs and other standards in project design and implementation – and applying monitoring and evaluation after delivery – can further strengthen the integrity of sustainable supply chains and help manage nature‑related risks. At the same time, avoiding fragmentation and unintentionally adding layers of complexity is important, as the proliferation of standards and reporting requirements can increase transaction and compliance costs – especially for small‑scale and innovative actors with limited resources.

Finally, trade offers a key transmission channel for biodiversity outcomes, as sustainability requirements increasingly shape market access and supply chain practices across borders. By supporting producers and enterprises to meet environmental standards, strengthen traceability and improve compliance capacities, development co‑operation can help align trade, market development and biodiversity objectives, while fostering employment and income generation.

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Notes

← 1.  See Annex B for a detailed breakdown of the state of development actors to mobilise and engage with the private sector for biodiversity.

← 2.  For an overview of NTMs affecting the supply chains of environmental goods, see https://doi.org/10.1787/ca790510-en.

← 3.  According to UNEP, “nature-based solutions are actions to protect, conserve, restore, sustainably use and manage natural or modified terrestrial, freshwater, coastal and marine ecosystems” and calls for more collaboration and resources. See https://wedocs.unep.org/handle/20.500.11822/39864 .