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Do Investors Care About Biodiversity?

Author

Listed:
  • Alexandre Garel

    (Audencia Business School)

  • Arthur Romec

    (Toulouse Business School)

  • Zacharias Sautner

    (Frankfurt School of Finance & Management; European Corporate Governance Institute (ECGI))

  • Alexander F. Wagner

    (University of Zurich - Department of Banking and Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute)

Abstract

This paper introduces a new proprietary measure of a firm's negative impact on biodiversity, the corporate biodiversity footprint, and studies whether it is priced in the cross-section of stock returns. Using an international sample of firms, we find no evidence that the biodiversity footprint explains these returns, on average. However, event-study evidence shows that, following the UN Biodiversity Conference (COP15), which raised awareness of biodiversity issues, however, firms with larger corporate biodiversity footprints lost value. This response is consistent with investors revising their valuation of these firms downward upon the prospect that regulations to preserve biodiversity will become more stringent.

Suggested Citation

  • Alexandre Garel & Arthur Romec & Zacharias Sautner & Alexander F. Wagner, 2023. "Do Investors Care About Biodiversity?," Swiss Finance Institute Research Paper Series 23-24, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2324
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4398110
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    Cited by:

    1. Colesanti Senni, Chiara & Goel, Skand & von Jagow, Adrian, 2024. "Economic and financial consequences of water risks: The case of hydropower," Ecological Economics, Elsevier, vol. 218(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.
    3. Tobias Schimanski & Chiara Colesanti Senni & Glen Gostlow & Jingwei Ni & Tingyu Yu & Markus Leippold, 2023. "Exploring Nature: Datasets and Models for Analyzing Nature-Related Disclosures," Papers 2312.17337, arXiv.org.
    4. Hackmann, Angelina, 2024. "Bridging the biodiversity financing gap," SAFE White Paper Series 103, Leibniz Institute for Financial Research SAFE.
    5. Kalhoro, Muhammad Ramzan & Kyaw, Khine, 2024. "Manage biodiversity risk exposure?," Finance Research Letters, Elsevier, vol. 61(C).

    More about this item

    Keywords

    Biodiversity; Corporate Biodiversity Footprint; Stock returns;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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