Forest finance: The flash floods that struck Nepal on August 26 exposed an inequality that financial and environmental assessments often miss. An estimated 43,000 women and girls require immediate humanitarian assistance, according to UN Women. Pregnant and lactating women, persons with disabilities and others unable to reach higher ground were among those most exposed. Damaged roads and water systems have since made food, safe water and essential services harder to obtain. UN Geneva briefing
The lesson extends beyond disaster management. Environmental damage imposes costs that fall unevenly across society. Yet the frameworks used to finance forestry, plantations and other nature-linked businesses rarely measure who loses access to land, income and common resources. Unless those costs enter investment decisions, sustainable finance will remain an incomplete description of what is being financed.
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The social gap in forest-risk finance
Environmental, social and governance standards were developed to help investors assess how companies manage environmental impact, labour practices and corporate conduct. In forest-linked sectors, however, assessments still give greater weight to variables that can be readily measured: tree cover, carbon sequestration, supply-chain traceability and exposure to deforestation.
These indicators are useful, but they do not establish whether an investment has improved the lives of people who depend on the landscape. A plantation may add tree cover while restricting access to grazing land, fuelwood or minor forest produce. A carbon project may generate tradable credits without showing who controls the land or receives the income.
The India State of Forest Report 2023 estimates that about 275 million rural Indians depend on forests for at least part of their livelihoods. Customary land use, common resources and village forest economies therefore belong in any credible assessment of forest risk. They seldom appear in financial reporting with the same weight as carbon or canopy data.
Women work the land but seldom control it
Women occupy a particularly weak position in this economy. The Periodic Labour Force Survey 2023-24 found that 76.9% of rural women workers were employed in agriculture. The female labour-force participation rate for people aged 15 and above was 41.7% nationally. Yet women operated only 13.9% of agricultural holdings in the latest Agriculture Census, for 2015-16.
That disparity between work and ownership shapes access to credit, compensation and decision-making. Women undertake nursery work, planting, harvesting and the collection of forest produce, often as informal or poorly paid labour. Their contribution may not be visible to a lender examining the ownership papers or the accounts of a corporate borrower.
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Forest degradation compounds the problem. When fuelwood, fodder, food or medicinal plants become scarce, households must travel farther, purchase substitutes or forgo income. Women commonly absorb the additional work. Neither the lost resource nor the extra labour is generally recorded as a project cost.
India’s Business Responsibility and Sustainability Reporting framework has begun to widen corporate disclosure. The BRSR Core includes indicators such as women’s share of gross wages and provides for disclosures covering major upstream and downstream partners. This is progress, but wage data from a company and its principal value-chain partners cannot capture unpaid work, informal producers or changes in access to community resources.
Disability and displacement remain poorly measured
Persons with disabilities face a related disadvantage. Census 2011 counted 26.8 million people with disabilities, 69% of whom lived in rural India. Floods, droughts and heatwaves can cut them off from warnings, evacuation, agricultural extension services and livelihood assistance. Infrastructure rebuilt without accessible design can prolong the loss.
These risks are material to a lender. A project that increases a community’s exposure to displacement or leaves some residents unable to use replacement services carries regulatory, operational and reputational liabilities. Yet disability is usually treated as a workforce-diversity question rather than a factor in land acquisition, disaster preparedness and livelihood restoration.
Forest conversion can also displace Adivasi and other forest-dependent communities or curtail their access to food, fuel and income. An environmental assessment may record the hectares affected while a financial report says little about customary tenure, the distribution of compensation or the durability of replacement livelihoods. The apparent profitability of the investment then rests partly on costs borne outside the borrower’s accounts.
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What SEBI and lenders should measure
SEBI and financial institutions need not create a separate reporting architecture. They can strengthen due diligence and BRSR disclosures for businesses whose operations or supply chains carry substantial forest risk.
Companies should report how an investment changes access to common resources, land control, payment arrangements and formal credit. Data should be separated by gender, disability and community status where doing so is lawful and practicable. The purpose is to discover whether income reported at the project level is reaching the people whose land and labour support it.
Banks can use the same information when setting loan conditions and monitoring projects. Dedicated credit lines for women producers would have greater value if funds were paid directly into their accounts and accompanied by evidence of asset ownership or enforceable resource rights. Counting beneficiaries without recording who controls the resulting income would merely reproduce the weakness of existing disclosures.
Investments affecting customary land and natural resources also require meaningful participation by Indigenous Peoples and local communities. Where their rights are engaged, applicable processes for free, prior and informed consent must be respected. Communities need a role before project design and financing decisions are settled, as well as access to monitoring information and grievance mechanisms during implementation.
Consultation is also useful to lenders. Residents can identify seasonal land use, disputed boundaries, dependence on forest produce and barriers faced by people with disabilities long before these become project delays or legal disputes.
Forest finance will be sustainable over the long term only when social risk is measured with the seriousness applied to carbon and tree cover. Nepal’s floods have again shown how environmental shocks follow the fault lines created by unequal access to assets, information and public services. Financial reporting that leaves those inequalities outside its boundary gives investors an incomplete account of risk.
The authors work with CUTS International, a global public policy research and advocacy group.