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Eco-innovation under pressure: How biodiversity risks shape corporate sustainability strategies

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  • Tian, Ye
  • Chen, Heng

Abstract

This study examines the impact of biodiversity risk exposure (BRE) on firms' eco-innovation (EI) using a sample of A-share listed firms in China from 2009 to 2021. We measure BRE through a text-analysis-based index and capture eco-innovation via ecological patents. Our findings show a significant positive effect of BRE on EI, which remains robust across various tests. External monitoring strengthens this relationship, while technology diversification weakens it. Additionally, stronger ESG performance, higher environmental regulations, less concentrated supply chain, and non-manufacturing firms enhance relationship of BRE and EI. This research contributes to understanding how biodiversity risks influence corporate innovation, with important policy implications for sustainability and risk management.

Suggested Citation

  • Tian, Ye & Chen, Heng, 2025. "Eco-innovation under pressure: How biodiversity risks shape corporate sustainability strategies," Finance Research Letters, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:finlet:v:73:y:2025:i:c:s1544612324016441
    DOI: 10.1016/j.frl.2024.106615
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