Four Key Ways to Successfully Engage the Private Sector in Development Projects: Lessons Learned from Climate Action Planning in Guatemala

Implementors of international development projects as well as countries around the world increasingly recognize the private sector as a key partner to meet development and policy goals. But in order to make these collaborations most effective, there are best practices that all parties should follow, such as having a shared objective, equally investing in the relationship, and setting clear expectations. We discovered this firsthand while successfully working with the private sector on a climate action plan in Guatemala.

From 2014 to 2019, RTI International partnered with USAID Guatemala, the Government of Guatemala, and the country’s private sector to create a national-level Low Emission Development Strategy, or LEDS. A central feature of the project was RTI’s facilitation of seven working groups from key areas of the economy: agriculture, forestry and other land use, waste, industry, energy, transportation, and urban development. Each working group brought together members of the private and public sectors, civil society, and academia, many of whom were previously distrustful of working with one another. Together, we were able to attain the following impact on LEDS with Guatemala's private sector:

• Leveraged $1,187,557 from Guatemala’s private sector.
• Gave assistance to 26 businesses on LEDS planning and implementation, corporate GHG inventory development, and climate change.
• Carried out four training programs with the Chamber of Agriculture (CAMAGRO) and its members, and Cervecería Centro Americana, a large corporation with various business units, on corporate GHG inventories and business-level LEDS implementation, with over 164 staff trained, and developed and/or strengthened greenhouse gas (GHG) inventories in the sugarcane, banana, palm oil, and coffee sectors.
• In 2018, seven private sector counterparts and one municipal government highlighted their LEDS and climate change activities in the Guatemala Productiva supplement in Nuestro Diario, one of Guatemala’s largest newspapers with 250,000 daily copies, reaching an audience of more than 750,000 readers.

We have identified four important ways to positively engage the private sector on development projects in Guatemala and elsewhere:

Seek to understand your private sector partners’ motivations for engaging

In Guatemala, we found that it is crucial to understand the private sector’s differing motivations for engaging. Individual businesses may be more concerned with product quality, accessing new markets, competitiveness, and greater efficiency in manufacturing and operations, whereas trade associations may be more driven by compliance, legal clarity, input into policy processes, and having “clear rules of the game”. Understanding enterprises’ motivations—and how they align or do not align with those of the development community—is the first step toward developing mutually beneficial, shared value approaches.

Invest the necessary time to build relationships with the private sector

Full appreciation of private sector partners’ motivations—and their willingness to candidly share their motivations—can only be gained through an investment of time and relationship building. The LEDS project spent two full years between 2016 and 2018 facilitating the working group process through six sessions in the LEDS action planning methodology. This included reviewing GHG emission baselines and forecasts, establishing a vision for long-term LEDS implementation, and voting to adopt 43 priority policy responses that meet sectoral environmental, economic, and social objectives. As opposed to previous, more succinct policy design processes, the longer, more thorough LEDS working group process enabled participants to be a collaborative partner and provide their input on the policies being discussed. In between working group sessions, we facilitated several technical reviews and working meetings with individual companies to ensure all concerns and questions were addressed before advancing to the next stage of the process. This helped us gain their acceptance of and agreement with the final policies.

Define the 'rules of the game'

The private sector wants clearly articulated “rules of the game”, no matter in which country it does business. Rules of the game provide private enterprises with clear expectations for participation in the market, assurances that the playing field is level, and acknowledgement that incentives for playing fair and disincentives for not doing so will be enforced. In many cases, this means engaging with the government authorities to establish clear frameworks, guidelines, and policies that reflect and uphold the principles being addressed with private sector counterparts. The LEDS project assisted the Guatemalan Ministry of Economy and Guatemalan Norms Commission (COGUANOR) to adopt International Organization for Standardization (ISO) 14064 as a national standard, which provides national and international environmental regulations and standards for Guatemalan businesses to follow on GHG inventory development and reporting to markets.

Build capacity within the private sector to facilitate their contributions to shared value approaches and development outcomes

As businesses adapt to market requirements, consumer demands, and evolving concepts such as circular economy and business sustainability, capacity building on where their operations can contribute to development objectives can go a long way. For the LEDS project, this capacity building focused on helping individual companies and trade associations improve internal GHG accounting and reporting, thus demystifying the process. We designed training programs with CAMAGRO, the Guatemalan Palm Oil Association (GREPALMA), and Cervecería Centro Americana to build the capacity of their staff to monitor GHG emissions as an indicator of efficiency and consider GHG abatement potential when evaluating future investments and improvements. Building businesses’ capacity in GHG accounting and reporting makes them more likely to continue these initiatives in the future. This internal capacity building can also be accompanied with corporate policy – such as corporate environmental and climate change policies – that creates the framework and identifies key areas for businesses to focus their efforts.

Guatemala’s LEDS is now in place and aims to reduce the effects of climate change, reduce greenhouse gas emissions, and grow the economy to reverse the increases in poverty that the country has seen in recent years. As cited by USAID in its Private Sector Engagement Policy, “Enterprise-driven development means aligning with the private sector as co-creators of market-oriented solutions. Together, this drives shared interests and shared risk, while working toward results that create shared value.” The Guatemalan private sector’s participation in the working groups and creation of the LEDS policies ensures that they are sustainable. This is because their achievement is not fully dependent on any one government administration, but rather on a more extensive network where each member is contributing to a common objective.