How public-private partnerships can balance people, planet and prosperity

Public-private partnerships are often hailed as vital for addressing today's pressing environmental challenges, but how do they truly function in practice? What are the dynamics of these collaborations? How are they tackling specific environmental issues? And are all voices truly heard in the pursuit of sustainable solutions?

To better understand how USAID is fostering cross-sector, market-driven partnerships that promote biodiversity conservation and support sustainable development for local populations, Innovation Forum and USAID co-hosted a webinar. Below is a summary of the discussion.

Click here to see where HEARTH’s projects are operating

Click here to find out more about HEARTH

What is HEARTH?

The HEARTH initiative stands for Health, Ecosystems, and Agriculture for Resilient, Thriving Societies. Launched in 2019, HEARTH promotes integrated approaches that link human well-being with ecosystem health. USAID has a unique global footprint, with missions in around 100 countries, and tackles complex global challenges such as climate change, hunger, and biodiversity loss.

HEARTH’s transformative partnerships

The HEARTH initiative leverages $75 million in public funds alongside more than $90 million from private sector partners. These partnerships include major corporations such The Walt Disney Company, Starbucks, Nestlé, Olam Food Ingredients, as well as small and medium-sized companies such as Ocean Farmers in Madagascar, contributing to projects that span 12 countries across three continents. HEARTH’s early achievements include planting 2.6 million trees and sequestering 125,000 tons of carbon, equivalent to removing 30,000 cars from the road for a year. The key sectors of the initiative are agro-business, biodiversity conservation, climate mitigation, sustainable tourism, clean energy, water, sanitation, and public health.

Why collaboration is key in tackling transboundary challenges

In addressing the global challenges of climate change, health, and hunger, continued collaboration and expanded partnerships is needed to scale successful integrated solutions that benefit people, the planet, and business by bringing together governments, civil society, the private sector, and frontline communities. These multifaceted issues are too complex for any one actor to solve alone, requiring a partnership approach that leverages the strengths of each sector. Both public and private stakeholders must prioritise resilience and prosperity to develop effective and sustainable solutions. Business investments now account for 90% of financial flows into emerging economies, outpacing traditional donor agencies and development finance institutions. Addressing key issues such as poverty reduction, food security, water access, and deforestation requires strong partnerships across sectors.

Focus on SMEs: access to finance, and de-risking strategies

Financial Barriers for SMEs

Small and Medium Enterprises (SMEs) are vital for economic growth in many African economies, particularly in agriculture, energy, and infrastructure. However, they often struggle to access necessary financing due to a "missing middle" where they are too large for microfinance but too small and risky for traditional bank loans. To effectively de-risk investments in regions such as Madagascar, strategies must address both environmental and socio-economic challenges. This includes engaging local communities and incorporating sustainable practices into investment plans to build trust and ensure long-term success.

How HEARTH is de-risking investments and supporting SMEs

USAID offers significant advantages for the sustainable business industry through its long-standing global presence, local networks, and expertise in policy and regulatory reform. This support helps businesses mitigate risks, address market inefficiencies, and scale impactful solutions. USAID’s collaboration helps companies achieve scalability, reduce upfront costs, and invest in rigorous measurement, paving the way for future integrated programming to advance the "triple bottom line" of people, planet, and profit. HEARTH's de-risking strategies focus on reducing financial risks for SMEs through:

Credit guarantees: USAID offers guarantees to encourage financial institutions to provide loans, particularly in high-risk sectors such as smallholder agriculture, where risks are higher due to market volatility, climate impacts, and supply chain instability. These guarantees reduce the risk for financial institutions, encouraging them to provide loans to companies working in high-risk areas, particularly in rural and developing regions.
Creating enabling environments: Collaborating with local governments to promote policy reforms that secure investments and improve operating conditions for businesses. Examples include improving land tenure systems, simplifying regulatory hurdles, and fostering a transparent legal framework. These reforms help companies operate with less fear of sudden policy changes or legal challenges, making investments more stable.

Case study: Ocean Farmers in Madagascar, presented by Jean Luc Ramahavello, monitoring and evaluation officer

Transforming fisheries through aquaculture:

Ocean Farmers is dedicated to tackling challenges posed by population growth, environmental degradation, and declining fishery resources in coastal areas, especially those facing poverty. Their mission focuses on transforming traditional fishermen into fish farmers, promoting sustainable aquaculture as an alternative to conventional fishing. The model leverages local knowledge and practices while introducing innovative techniques to enhance productivity and sustainability. This sustainable approach helps in regenerating marine life, offering alternative livelihoods to traditional fishing, and addressing food security and climate resilience challenges:

Environmental impact: Seaweed farming is a natural ally in combating climate change. Seaweed absorbs CO2, which helps mitigate the effects of global warming. In addition, it improves water quality by removing excess nutrients such as nitrogen and phosphorus, which can lead to harmful algal blooms if left unchecked. Seaweed farming enhances marine biodiversity by creating new habitats for marine life, effectively serving as an underwater forest. This role is significant in supporting ecosystems that are under threat from overfishing, pollution, and ocean acidification. Because seaweed requires no fertilisers or pesticides, it minimises pollution, eases pressure on freshwater resources and helps in protecting coastlines from erosion—providing a natural defence against some of the destructive impacts of climate change.
Industrial and economic benefits: Seaweed farming has the potential to support various industries, such as food, cosmetics, and biofuel. Seaweed is versatile and sustainable, offering a range of applications, particularly in sectors that are actively seeking more eco-friendly alternatives. Additionally, seaweed farming presents a resilient alternative to traditional agriculture, being more resistant to the adverse effects of climate change. This can be particularly important for coastal and island nations that may be highly vulnerable to rising temperatures, sea levels, and changing weather patterns. The farming of seaweed can complement aquaculture practices, thus offering a diversified livelihood for communities that depend on the ocean for their income. Local communities, who benefit from new jobs and opportunities associated with this sustainable industry. In particular, coastal communities have seen improvements in food security, as the seaweed can be both a food source and an income generator through its sale to various industries.

Click here to learn more about how USAID works with Ocean Farmers through the HEARTH initiative.

What are the benefits for private sector partners?

Risk mitigation in new markets: By partnering with USAID, companies can expand into regions they might otherwise avoid due to uncertainties related to market infrastructure, governance, or environmental challenges. USAID’s partnerships often serve as a bridge, allowing private companies to enter new markets with lower financial and operational risks.
Access to technical expertise: USAID brings technical knowledge in areas like climate resilience, smallholder farming practices, and biodiversity conservation. This expertise helps companies implement sustainability initiatives that not only align with their corporate social responsibility (CSR) goals but also strengthen their business operations.
Leveraging public funds: USAID’s ability to leverage public funds to attract private capital plays a pivotal role in scaling up projects. In the HEARTH initiative, for example, $75 million in public funds has leveraged over $90 million in private sector contributions. This blending of public and private capital maximizes the impact of projects, enabling companies to scale up their investments in a more financially secure manner.
Enabling sustainable livelihoods, particularly smallholder agriculture: De-risking investments in smallholder agriculture is particularly important. Many companies hesitate to invest in smallholder farms due to fragmented supply chains, inconsistent yields, and high transaction costs. USAID helps mitigate these risks through its credit guarantees and by fostering stable market conditions. For example, in the cocoa sector, improving farm productivity not only enhances smallholder incomes but also ensures a more reliable and sustainable supply for companies such as Mondelēz.

Case study: USAID and ofi’s partnership, presented by Imam Suharto, head of cocoa sustainability Indonesia Olam Indonesia

ofi's partnership with USAID has played a crucial role in implementing sustainable agriculture practices across various sectors. These collaborations help smallholder farmers integrate into sustainable supply chains, addressing environmental and economic challenges. Through USAID's support, ofi has been able to drive impactful change, particularly in the cocoa and coffee sectors, contributing to both local community development and global sustainability goals. Imam Suharto highlighted the importance of co-creation, where all stakeholders—governments, private sector partners, and local communities—share responsibility and ownership. This model promotes:

Shared responsibility: Co-creation moves away from the traditional model where one organisation leads and others follow. Instead, all stakeholders, including farmers and local communities, are co-owners of the project. This creates a sense of shared responsibility and mutual accountability.
Empowering local stakeholders: From the start, all stakeholders are engaged and informed about the project’s goals and processes, empowering them to take ownership of the outcomes. This approach is particularly important in community-driven projects, where the success of initiatives like forest protection and climate change mitigation depends on local engagement and participation.
Local and national government involvement: Imam highlights the critical role of local governments in project implementation. In regions such as Indonesia, for example, the support of district-level governments is essential for projects to take root and succeed. National-level political support and awareness are equally important for ensuring long-term impact.

Click here to learn more about how USAID works with ofi through the HEARTH initiative.

Looking ahead: a holistic approach to resilience

In addressing the multifaceted challenges, a landscape-level approach to resilience is essential. This approach recognises the interconnectedness of businesses, communities, and ecosystems, thus the focus must shift toward long-term, sustainable solutions that benefit all stakeholders. USAID and the HEARTH initiative are committed to this vision by prioritising investments in monitoring and evaluation to rigorously assess the impact of their programs. By fostering a continuous learning agenda, they can refine their strategies and allocate resources effectively across various sectors and commodities.

The synergy between private sector innovation and public sector support is critical for driving large-scale impact. By harnessing the strengths of both sectors, we can develop integrated solutions that not only address immediate challenges but also promote sustainable development.

Looking ahead, USAID is actively seeking new partnerships to enhance its efforts in delivering sustainable solutions. By collaborating with diverse stakeholders, we can create pathways that yield lasting benefits for people, the planet, and prosperity, ultimately paving the way for a more resilient future.

This virtual event was hosted in partnership with USAID.