When the USA Company for Worldwide Growth (USAID) was dismantled earlier this yr, there have been two focal factors of media protection. First, there have been the humanitarian prices. Second, the headlines analyzed geopolitical impacts for the U.S. in dropping its main software in delivering considered one of three legs of nationwide safety (protection, diplomacy and improvement).
However beneath these predominant losses is yet one more: international sustainability efforts. Past humanitarian support and democracy constructing, USAID was additionally the main supplier of overseas support throughout the spectrum of sustainable improvement, from agriculture to vitality to waste administration.
USAID’s collapse will not be solely the lack of a number one mission-aligned associate for a lot of firms. It’s additionally a harbinger of a bigger pattern in shrinking overseas help that’s vital for company sustainability professionals whose scope contains international provide chains and rising markets.
The influence of USAID’s loss on company sustainability
USAID performed a pioneering function in personal sector engagement amongst authorities donor companies. Over the previous twenty years, it developed its strategy from advert hoc collaborations to a extra strategic and systemic mannequin of co-creating and co-funding improvement options with firms of all sizes. Between 2000 and 2020, it carried out over 1,600 personal sector partnerships, known as International Growth Alliances, involving Fortune 500 firms, native companies and business associations — pairing private-sector experience, property and improvements with its funding, native networks and information to construct resilient provide chains and inclusive markets.
Most of the world’s largest firms understood the worth of partnering with USAID. For instance, PepsiCo and USAID had partnered on a $20 million venture to empower feminine farmers in PepsiCo’s provide chains throughout Asia, Latin America and the Center East. Unilever, EY and USAID, in the meantime, had just lately introduced a $21 million venture to handle plastic waste throughout Asia.
USAID had more and more been investing in a lot of these private-public partnerships during the last decade. Whereas the most recent information on the scale of their investments is now tough to search out, an inexpensive estimate is that it invested round $200 million per yr by private-public partnership mechanisms.
However USAID was greater than a check-writer and venture associate. Its $40 billion annual funds helped develop the inspiration of stronger working environments for enterprise actions throughout Africa, Latin America and Asia that allowed company sustainability groups to launch impactful improvements and initiatives, no matter whether or not they had been formally partnering with the company.
The lack of USAID’s direct funding and co-investment will make the enterprise case for sustainable provide chain and market enlargement actions more durable to articulate. It’s simpler to make the case for a $10 million funding over 5 years when USAID matched that funding, than to make the case for a $20 million company funding to attain the identical outcomes.
Whereas USAID is disappearing, it’s vital to notice that overseas support nonetheless has a future in America and is being re-tooled throughout the Division of State with three pillars—strategic humanitarian help, improvement finance for commerce and politically oriented programming. It’s unclear precisely how lengthy it’s going to take earlier than the brand new coverage and initiatives are launched.
A altering overseas support panorama
Along with 83 p.c of USAID applications being lower over the primary half of 2025, international official improvement help (ODA) spending declined 7.1 p.c in 2024, with extra overseas support cuts being introduced throughout Europe. Help from Germany (the second largest donor) is predicted to drop 9 p.c this yr and France is reducing its funds 11 p.c for 2025. The U.Okay. (the fourth largest donor) will nearly halve its ODA funds, shifting $7.6 billion into protection spending.
Total, overseas support is turning into extra transactional, politicized and susceptible to the ideological temper swings of governments. Amid this retrenchment and remaking of “support,” many European governments are pivoting towards sustainable funding initiatives fairly than grants as the main target of their overseas help as a result of they search to get extra direct financial returns for his or her support contributions.
For firms, particularly these headquartered in Europe, this highlights the rising alternative for modern financing partnerships, similar to blended finance mechanisms that permit firms to associate with public capital to de-risk their sustainability investments in rising markets.
How firms can adapt and reply
In a second when our interconnected international challenges name for rising ranges of cooperation, authorities responses are rising extra insular and unilateral. The rising emphasis amongst European donors on investment-oriented fashions provides a brilliant spot by blended finance approaches. These autos — structured to share threat and rewards throughout a variety of stakeholders — allow companies to scale profitable applications as conventional grant swimming pools dry up.
However blended finance is simply a part of the answer. Sustainability groups may also discover pre-competitive and complementary collaborations, notably in geographies the place shared challenges require collective options. One instance of this strategy is the Rimba Collective, through which P&G, Nestle, PepsiCo and Unilever are pooling their funding to ship conservation initiatives within the landscapes of Southeast Asia that provide palm oil for his or her companies.
The following frontier of private-private collaboration shall be much more centered on programs change on the native degree. We’re seeing an rising curiosity from firms exploring partnerships throughout industries inside landscapes and communities of mutual curiosity. For instance, meals firms that supply numerous crops (corn, wheat and dairy) from the identical provide shed are exploring tips on how to work with know-how and infrastructure suppliers to extend productiveness and effectivity alongside the primary miles of world provide chains. By combining enterprise circumstances centered on provide and demand, firms can de-risk their particular person investments and create situations for achievement that additionally enhance social and environmental outcomes.
In the end, the reducing availability of overseas support, particularly grant-based mechanisms, highlights the pressing want for sustainability groups to strengthen their skill to calculate and articulate the enterprise case for company investments of their sustainable provide chain and market actions. Internally, firm executives have to grasp the longer term worth of potential investments to supply the required budgets. Externally, the enterprise case is a vital element of articulating the funding thesis to potential private and non-private companions.
By shifting methods and embracing new partnership fashions, firms can keep international sustainability momentum regardless of the adjustments taking place in government-backed help.
