Environmental and Social Risks and Opportunities for Indigenous Peoples in Climate and Nature Finance

The critical role of Indigenous Peoples in the world’s responses to the climate crisis is highlighted by their guardianship of over 80% of the world’s biological diversity and their rich climate and nature knowledge. Still, we find a striking disparity in climate and nature financing, where only 0.04% is allocated annually to support Indigenous Peoples and Local Communities’ rights and stewardship of forests. This underinvestment underscores an urgent need for Indigenous Peoples to be strategically and rightfully engaged and empowered in the green and blue transitions, to both minimize risks of doing harm and maximize opportunities for impact. 

This Policy Analysis Exercise is prepared for the Indigenous Peoples and Ethnic Minorities Global Coordination team within the Social Sustainability and Inclusion Global Unit at the World Bank. Our analysis and recommendations are intended to inform their understanding of critical environmental and social risks and opportunities faced by Indigenous Peoples amidst the increasing emphasis on climate and nature finance projects, alongside evaluating existing international standards. 

We employ a methodology that combines primary and secondary research, including field research conducted in Fiji, the Solomon Islands, and Colombia, as well as consultations in Washington D.C., with diverse stakeholders to provide a comprehensive qualitative analysis. An emphasis is placed on interviewing indigenous leaders and peoples within these contexts, representatives of civil society, the private sector, and government. 

Key findings include existing standard practices in climate and nature finance, notably through frameworks and policies established by the World Bank, the Green Climate Fund, and the Global Environmental Facility. Findings also reveal a dual risk typology of procedural and impact risks that pose threats to Indigenous Peoples. 

To address these, this Policy Analysis Exercise suggests several policy recommendations that foster strategic alignment maximizing public value, operational capacity, and political feasibility. These include: 

1) Empowering processes of Free, Prior, and Informed Consent 

2) Sensitizing stakeholders to our risk typology 

3) Institutionalizing dialogues with Indigenous Peoples 

4) Providing legal aid 

5) Enhancing Monitoring and Evaluation mechanisms