SFF 2025 Report: Public Leadership, Private Gaps, and Nature-Based Solutions

CONTEXT : The first State of Finance for Forests (SFF) 2025 Report, published by the UN Environment Programme (UNEP), examines global and national forest financing trends. The report underscores the critical role of forests in climate mitigation, biodiversity conservation, and land restoration. It warns that current financing levels are insufficient, and global investments must triple by 2030 to meet these environmental targets.

Global Trends Highlighted in the Report

Severe Underfunding: Only US$14 billion was invested in forests in 2023 (91% public, 9% private), whereas US$50 billion annually is required by 2030 to meet global climate and restoration goals.
Dominance of Public Finance: Governments, led by China and the U.S., account for the majority of funding. Tropical forest nations contribute only 17% of domestic spending, indicating regional disparities.
Low Private Sector Participation: Private forest finance totaled US$1.3 billion, mainly through certified commodity chains (39%) and impact investing (23%). High-risk tropical commodities—responsible for 97% of global deforestation—receive minimal funds.
Persistence of Environmentally Harmful Flows: Environmentally damaging agricultural subsidies reached US$70 billion in 2023, while banks financed US$8 trillion to companies linked to deforestation, far exceeding green investments.
Rising Need for Nature-Based Solutions: Achieving Rio Convention targets requires expanding 1 billion hectares of forests by 2030. US$40 billion annually is needed for protected forests and avoided deforestation, and US$20 billion for reforestation.

India-Specific Trends

Public Finance Dominates: India’s forestry sector relies heavily on public funding through schemes like CAMPA and the Green India Mission, reflecting strong state-led conservation, with minimal private engagement.
Limited Private Investment: Private capital is extremely low, with negligible participation in biodiversity credits or carbon markets, highlighting untapped investment potential.
High Domestic Commitment: India spends over 30 times more domestically on forest protection than it receives in international aid, showing strong national commitment.
Shift Toward Nature-Based Solutions: Programs such as LiFE, Green Credit Programme (2023), and REDD+ pilots align with UNEP’s recommendations for nature-positive, carbon-resilient investments.
Community and Equity Focus: India increasingly incorporates Joint Forest Management (JFM) and tribal livelihood projects, emphasizing inclusive, community-led forest governance.

Positive Developments Noted

Policy Focus on Forests: Greater integration of forest finance into climate and biodiversity agendas, via REDD+, UN-REDD, and ODA grants (80% concessional).
Emergence of Innovative Asset Classes: Growth in carbon markets (US$6 billion), biodiversity credits, and impact investing reflects new opportunities for private sustainable finance.
Gender and Community Inclusion: Initiatives like Ecuador’s gender-responsive credit line (US$1.3 million) for 228 women producers show progress in equitable access.
Public Leadership in Forest-Rich Nations: Tropical countries spend 36 times more domestically than they receive in international aid, reflecting local ownership.
Growing Awareness: Establishment of data-driven forest finance tracking enhances transparency and accountability.

Challenges Identified

Massive Funding Gap: A US$36 billion annual shortfall exists between current investments and the amount required.
Weak Private Participation: Only 10% of forest dollars come from private sources; risk aversion and low returns hinder investments.
Dependence on Harmful Subsidies: Governments continue funding US$70 billion in environmentally harmful agricultural subsidies.
Low Access for Local Communities: Indigenous Peoples and Local Communities received only US$200 million, less than 0.5% of international finance.
Data and Governance Gaps: Lack of consistent tracking of private flows and gender-inclusive policies hampers evidence-based decisions.

Recommendations

Triple Investments by 2030: Scale annual investments to US$50 billion using blended finance, carbon pricing, and subsidy reforms.
Reform Harmful Subsidies: Redirect environmentally damaging subsidies toward nature-positive incentives.
Mobilize Private Capital: Expand green bonds, carbon markets, and biodiversity credits, improving transparency to attract investors.
Empower Communities and Women: Establish direct financing channels for Indigenous Peoples and women-led forest initiatives.
Strengthen Governance and Data Systems: Build robust forest finance tracking frameworks and integrate forests into national climate finance plans.

Conclusion

The State of Finance for Forests 2025 highlights a critical reality: forests are indispensable yet undervalued in global finance. Bridging the funding gap requires systemic shifts—from harmful subsidies to sustainable incentives, and from pledges to measurable investments. As UNEP emphasizes, unlocking the potential of forests is central to achieving climate, biodiversity, and SDG targets by 2030.

Source : UNEP