In February, Nepal issued its Climate Finance Mobilisation Procedure, in part to improve local community access to such finance.
Climate finance is funding to support developing countries to deal with climate change. It can be for mitigation projects which cut greenhouse gases from the air, for example by building wind a wind farm. Or it can be for adaptation projects which adjust life and nature to deal with the effects of climate change, such as by building sea walls.
Climate finance sits at the heart of international climate cooperation, and is a frequent source of conflict. Disputes centre on who should deliver finance, how and for what: public or private, grants or loans, mitigation or adaptation.
This aim reflects commitments made in the country’s 2019 climate policy, which states that “80% of the funds of any climate project should reach the local community”, Maheshwar Dhakal, chief of the environment ministry’s climate change division, told Dialogue Earth last November.
Editor’s note:
This article is part of Dialogue Earth’s Indigenous Voices fellowship. The eight fellows are Indigenous journalists and storytellers from across the Global South. The fellowship aims to foreground not just Indigenous issues, but also the storytelling, reporting and insights of Indigenous journalists themselves.
But the mobilisation law contains a critical omission: reference to Indigenous peoples. This is despite Indigenous rights and knowledge being acknowledged in the updated climate action plan Nepal submitted to the UN climate process in May 2025.
According to local community and Indigenous representatives Dialogue Earth spoke to, Nepal’s marginalised communities face considerable challenges accessing climate finance. They suggest that it is too soon to tell if the new government, in place since March, will remedy this.
Nepal’s climate finance policies
The policy framework for managing climate finance has historically been fragmented in Nepal. The Foreign Aid Mobilisation Policy 2025, issued by the finance ministry, provides broad guidelines for all foreign aid, including climate finance. While the 2019 National Climate Change Policy shapes climate finance programming across different sectors and levels of government. The National Adaptation Plan and Local Adaptation Plans for Action also shape the flow of climate finance, but lack a unified approach to mobilising it.
The new procedure aims to streamline these processes to effectively mobilise climate finance from various domestic and international sources. It permits the use of climate funds in private-sector projects. NGOs are also eligible for climate finance through the government’s Social Welfare Council, provided they coordinate with federal, provincial or local authorities to avoid duplication of efforts.
The procedure states that all climate-finance-backed projects should align with Nepal’s climate action plan, known as its Nationally Determined Contribution to the Paris Agreement. Criteria for selecting projects include achieving a good spread across the country and job creation.
However, the law does not mention Nepal’s Indigenous population.
Mankesh Gupta, Indigenous Peoples and Local Communities coordinator at the Center for Indigenous Peoples’ Research and Development, says: “The government’s intention is to channel all climate finance through a single system. The question, however, is whether this approach delivers justice [for Indigenous communities] or whether it creates new gaps.”
The procedure assigns the finance ministry as the administrator of climate funding, coordinating with international agencies, managing project submissions, and overseeing fund disbursements. Characterising it as a “one-door system”, Gupta notes: “While this may improve coordination, it also creates an additional administrative layer and legal hurdle. Accessing finance now requires navigating several government institutions and subsidiary bodies, each adding time, administrative costs and human resource expenses. As a result, ensuring direct access to finance for Indigenous communities remains critically important.”
Nepal’s 35%
Of the country’s nearly 30 million citizens, 35% are considered Adivasi Janajati (Indigenous Nationalities), though some Indigenous organisations and experts say the true figure could be up to half the population.
The government defines such peoples “as a tribe or community… having its own mother language and traditional rites and customs, distinct cultural identity, distinct social structure and written or unwritten history”. It formally recognises 61 of these groups, while 19 more were identified in the 2021 census but are yet to be formally recognised.
Many Indigenous communities continue to face disproportionate levels of poverty, limited access to education and healthcare, and geographic isolation. These vulnerabilities are compounded by the fact that many reside in climate-sensitive mountain, hill, forest and riverine ecosystems increasingly affected by climate change through glacier retreat, floods, landslides and changing rainfall patterns.
Despite the severity of these issues, Indigenous peoples have historically experienced challenges accessing climate finance in Nepal.
Climate finance has not been people-centred or rights based, says Pratima Gurung, founder and president of the National Indigenous Disabled Women Association Nepal. It has also failed to “pierce the multiple layers of structural barriers that discriminate”, she notes.
Gupta points to data collection and submission as example barriers.
“There is a lot of discussion about dedicated funding, but the government continues to demand data as a prerequisite for allocation. Indigenous communities, however, often do not have such data, nor the capacity to generate and submit it,” Gupta tells Dialogue Earth.
He highlights that even applications for small climate funding schemes require evidence of a certain number of prior financial transactions, thereby creating an “indirect barrier” for such communities.
Facilitating Indigenous people’s access to climate finance is a responsibility that lies with the state, Gupta notes. When it comes to evidence requiring data, he suggests that the state document Indigenous peoples’ contributions, communities and oral histories. “We can start anew,” he says. “We can begin with documentation.”
Gurung points out the low technical capacity of communities in navigating international climate funds and domestic bureaucracy. She says marginalised people find themselves unable to apply to access these funds “because the process is so long and complicated”.
Gurung says: “The Nepal government should start the overall climate conversation in simple terms, explaining what climate change is to us, what the international processes are, and how we can relate our lived experiences to this international agenda.”
Even where funding is accessed, distribution can be politically thorny. Gupta points out that the finance ministry channels resources under the Forest Development Fund: 80% goes through a performance-based allocation mechanism for forest management including by communities and the government. The remaining 20% is reserved for operational costs, private forests and benefits to reduce households’ dependence on forest resources.
“The assumption is that when funds are given to community forests, they reach the Indigenous communities within those forests. However, even within community forests, leadership is often dominated by elites, and there are differences and disputes in governance,” he says.
With the mobilisation law, the eligibility criteria similarly presents “significant barriers” to access for Indigenous communities, Gupta adds. “For example, accessing carbon finance requires extensive documentation, including regulatory framework documents, benefit-sharing mechanisms, and verification systems that must be formally approved before funding can be released. These technical and institutional requirements are often beyond the capacity of many Indigenous organisations.”
Gupta notes that the mobilisation law’s one-door system raises concerns about bureaucracy’s impacts on the local community. “What happens if the government delays or withholds the funds? If a five-year project spends three years merely completing administrative procedures, a significant portion of the project’s value and impact is lost,” he says.
He adds that policy incoherence continues to undermine effective climate finance delivery. “Numerous clauses, administrative requirements, procedural loopholes and bureaucratic layers create barriers that disproportionately restrict Indigenous peoples’ access to climate finance. These overlapping and often invisible obstacles make it increasingly difficult for Indigenous communities to directly benefit from the resources intended to support them.”
What next?
At the COP30 climate conference last November, Dhakal from the environment ministry acknowledged room for improvement in delivering finance to Indigenous and marginalised communities, though he insists that “comparatively, we are in a much better position than other countries”.
Following a period of political upheaval that began in September 2025, Nepal witnessed a historic political shift. Former rapper and structural engineer Balendra Shah secured a landslide victory in the March 2026 elections, displacing many of the country’s long-established political forces.
Some of the Shah administration’s proposals have worried Indigenous organisations and experts. For example, it has proposed dissolving the National Foundation for Development of Indigenous Nationalities (NFDIN), among 31 other state agencies, as part of a broader institutional restructuring aimed at reducing costs. Indigenous communities have protested against this decision.
Gupta calls the proposal “a big blow” as NFDIN works for the welfare of Indigenous people. “It has made us wonder how this decision will affect other organisations as well.”
Additionally, he notes that the budget speech for the upcoming fiscal year, delivered at the end of May, was “not very specific or focused on climate change and Indigenous communities”, focusing instead on the private sector. But impacts of these initiatives on Indigenous populations remain unaddressed. “From the voluntary carbon market to hydropower, they have talked about positive initiatives. However, while promoting hydropower projects, we do not know how they will address the rights of Indigenous communities connected to those projects or what will happen if they are displaced.”
Gupta acknowledged the new administration has been “working strongly” in its governance, but said it is too soon to judge its work. “We do not know how the government will work – whether it will be understanding and cooperative or instead create additional barriers [for Indigenous peoples]. For now, it is a matter of ‘wait and watch’”.
The government has recently indicated some commitment to distributing climate finance. In its budget of 29 May, it allocated NPR 12.31 billion (USD 81.3 million) for the forest, environment and climate sector. It pledged to implement a results-based REDD+ programme to reduce emissions, prioritising local communities in the distribution of benefits generated. The government also committed to facilitating private sector access to concessional financing from international climate funds.
But several key questions need to be addressed so Indigenous communities can access climate funding, notes Gurung: “How can we develop the capacity of communities on the ground? Who will teach them these technical and financial terms? Who has access to information? Who has power? Who has money?”
