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A “Silent Spring” for the Financial System? Exploring Biodiversity-Related Financial Risks in France

Author

Listed:
  • Svartzman Romain,
  • Espagne Etienne,
  • Gauthey Julien,
  • Hadji-Lazaro Paul,
  • Salin Mathilde,
  • Allen Thomas,
  • Berger Joshua,
  • Calas Julien,
  • Godin Antoine,
  • Vallier Antoine

Abstract

This paper contributes to an emerging literature aimed at uncovering the linkages between biodiversity loss and financial instability, by exploring biodiversity-related financial risks (BRFR) in France. We first build on previous studies and propose an analytical framework to understand BRFR, emphasizing the complexity involved and the limited substitutability of natural capital. We then provide quantitative estimates of dependencies and impacts of the French financial system on biodiversity. We find that 42% of the value of securities held by French financial institutions comes from issuers that are highly or very highly dependent on one or more ecosystem services. We also find that the accumulated terrestrial biodiversity footprint of these securities is comparable to the loss of at least 130,000 km² of “pristine” nature, which corresponds to the complete artificialization of 24% of the area of metropolitan France. Finally, we suggest avenues for future research through which these estimates could feed into future assessments of physical and transition risks.

Suggested Citation

  • Svartzman Romain, & Espagne Etienne, & Gauthey Julien, & Hadji-Lazaro Paul, & Salin Mathilde, & Allen Thomas, & Berger Joshua, & Calas Julien, & Godin Antoine, & Vallier Antoine, 2021. "A “Silent Spring” for the Financial System? Exploring Biodiversity-Related Financial Risks in France," Working papers 826, Banque de France.
    • Handle: RePEc:bfr:banfra:826
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    Citations

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    Cited by:

    1. Hutchinson, Mark C. & Lucey, Brian, 2024. "A bibliometric and systemic literature review of biodiversity finance," Finance Research Letters, Elsevier, vol. 64(C).
    2. von Zedlitz, Gerrit, 2023. "Mind the gap?! The current state of biodiversity reporting," SAFE White Paper Series 95, Leibniz Institute for Financial Research SAFE.

    More about this item

    Keywords

    Biodiversity; Financial stability; Environmental risks; Scenario analysis; Financial markets and the macroeconomy; Valuation of ecosystem services.;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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