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Firm-Level Nature Dependence

Author

Listed:
  • Alexandre Garel

    (Audencia Business School)

  • Arthur Romec

    (Toulouse Business School)

  • Zacharias Sautner

    (University of Zurich - Department of Finance; Swiss Finance Institute; European Corporate Governance Institute (ECGI))

  • Alexander F. Wagner

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

Abstract

We construct firm-level measures of nature dependence, capturing the extent to which a firm's business activities rely on different ecosystem services. The measures cover 26,595 listed firms from 115 countries between 2010 and 2022. Nature dependence is positively correlated with a firm's impact on biodiversity but shows little correlation with exposure to physical climate risk. Nature dependence is neither related to nature-related corporate actions disclosed in the CDP survey nor reflected in firms' corporate disclosures. Interestingly, a firm's nature dependence is positively associated with measures of downside risk. These risk effects stem from high dependences on certain ecosystem services, rather than from low or moderate dependences on a greater number of ecosystem services. Nature dependence also predicts the likelihood of being targeted by BlackRock's biodiversity engagements. Overall, investors start paying attention to nature dependence, while corporate action and disclosure remain limited.

Suggested Citation

  • Alexandre Garel & Arthur Romec & Zacharias Sautner & Alexander F. Wagner, 2025. "Firm-Level Nature Dependence," Swiss Finance Institute Research Paper Series 25-44, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2544
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5196826
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    More about this item

    Keywords

    Nature risk; biodiversity risk; nature dependence; physical risk; shareholder engagement;
    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
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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